Footwear exporters see silver lining

Leather footwear exports are expected to turn around in two months as the shocks of recession are easing in parts of the world.

Exporters are trying to increase product quality and make prompt delivery to get more work orders from abroad. Simultaneously, they have moved to diversify products to attract new buyers, said industry leaders yesterday.

Local leather footwear and bag exports slowed in July-September, mainly due to the delayed effects of the global financial meltdown.

In the July-September period of 2009, leather footwear exports stood at $56.22 million, which was a 3 percent decline from last year's figures, according to Export Promotion Bureau (EPB) data.

Leather bag and purse exports have also slowed with sold products worth $4 million during the period, a rise of 5.56 percent from a year ago, although they failed to reach the export target set by the government.

But growth in exports of leather bags and purses was more than 90 percent in the April-June period.

Industry insiders said the global financial meltdown has had a delayed effect on demand for finished leather and leather goods that caused a decline in exports.

But the decline will not continue for long, as developed markets demand low-cost footwear, bags and purses, industry leaders said.

Syed Nasim Manzur, managing director of Apex-Adelchi Footwear Ltd, said footwear exports declined as a result of global recession that affected consumer expenditure on fashion accessories, like footwear and bags.

“Export earnings were satisfactory even three months back, but it dropped in September, mainly because of the delayed effects of global recession on demand for luxury fashion accessories," he said.

“Another reason for the decline in exports is the seasonality factor. We take orders twice a year and produce different products in different seasons -- for example, sandals for spring and boots for winter."

“Every time we go for new orders, we have to change the entire factory set-up that slows local production initially," Manzur explained. "But we are trying to smooth the transition further."

He also said the situation will get better in coming months. "There is demand for our products on international markets, as we produce high quality products and many countries such as Italy have stopped producing high quality shoes."

The market size of Bangladeshi-made leather footwear stands at around Tk 1,700 crore, of which about 45 percent is exported. The country exports around six million pairs of leather footwear a year.

Apex-Adelchi Footwear Ltd is the country's leading footwear exporter, claiming more than half of total exports. The company earned Tk 450 crore last year.

Exports of leather bags and purses have also slowed mainly due to lower work order flow during this period. Earlier, the bag exports have risen by more than 90 percent from September 2008.

“We still have a little growth in exports of items like bag and purse, but the flow of work orders have slowed by 50 percent in recent months. Our present growth figures are resultant of the orders we received at least 8-10 months back,” said Ashikur Rahman, managing director of Rahman Leather Bangladesh, a Hazaribagh based leather bag exporter.

"The main reason behind the slower growth is the lack of consistent work orders. Yet we don't have old and loyal customers abroad, as we are quite new in exporting bags in a large scale," he said adding, "We still get orders from newer and irregular buyers."

The annual market size for leather bags and purses stands around Tk 100 crore.

Meanwhile, Rezaul Karim Ansari, chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association, demanded government support to enhance export performance.