Interview with CLIA President Li YuzhongChina, the giant in footwear.
Always at the top of the classification in the worldwide footwear industry, China is a leader in the production, export, and consumption of footwear, staying far ahead of other competitors, holding a 59.1% share of global production (13.58 billion pairs in 2015), 18.4% of consumption (3.8 billion pairs) and 69.1% of exports (9.88 billion pairs). The leadership of the giant that is China, however, is not absolute, and while maintaining its role as a sector leader on a global level; its footwear industry is undergoing a profound transformation that sees it converted from the protagonist of an economic boom to a well-established and mature activity. The direction this country is headed in is explained by Li Yuzhong, President of the CLIA — China Leather Industry Association.
Fresh from his nomination (that took place this past September), which places him at the head of the powerful Chinese Association representing thousands of associated businesses, including tanneries, suppliers of components, and footwear and leather goods manufacturers, Li Yuzhong studied leather production at the University of Sciences and Technology in Shaanxi. He has also worked in the leather industry for the last thirty years, contributing to the development of ACLE – the All China Leather Exhibition in Shanghai, the “Genuine Leather” brand, and many other tanning sectors. Before his nomination as President, he was the Executive Vice President and General Secretary of CLIA.
China is the world leader in footwear production and exports, what are the general trends in production and exports?
The production and exports of Chinese footwear have been keeping a quite positive growth during the years before 2015. But things have become worse in the year 2015, with the export volume and value both witnessed a sharp decline, which was seldom seen in past years.
In 2016, the Chinese footwear industry maintained a similar trend as in 2015. The growth rate of turnover, in the perspective of production, is continuing to go down, although the rate has also maintained a mid-to high single digit. But this rate is the lowest in recent years.
The exports continued to drop, with the growth rate reached -5.7% and -12.5% in terms of volume and value respectively in the first eight months in 2016
According the world footwear report 2016, the China share of global exports drop from 74% in 2012 to the actual 65%: what are the reasons?
I have noticed the figure estimated by World Footwear. The ongoing decline beginning from last year has not stopped until now. The shift of orders to other competitors and the depreciation of the currency are two of the main reasons. The exports of footwear and footwear components dropped by 12.1% in terms of USD in the first eight months, but the number in RMB is -6.3%. Here we can see the adverse effect of currency floating accounts for half of the drop
Is China also experiencing a trend for production relocation as in other parts of the world? if yes, in which direction?
Yes, the footwear industry has always been experiencing industrial transfer in recent years, whether to Southeast Asian countries or central and western China. The relocation can be divided into two groups. For those companies owned by Taiwan and Hong Kong entrepreneurs, which are oriented towards overseas markets, the relocation destinations are both inland China and other countries. Most of these manufactures are in the supply chain of big brands such as Nike. For companies established in China and owned by mainland China entrepreneurs, most of them are upgrading their productivity at their existing locations, and some of them, especially the big players of them, choose to set up new plants in inland provinces in China. We have seen the choice of coastal provinces has been declining and that of inland provinces has been going upwards. Quite few of the mainland footwear manufactures choose to set up new facilities overseas
The quality of Chinese footwear production in the recent years has increased substantially: has this affected the volume production and if so, in which way?
The quality has improved, and the overall export unit price has always been going up in the past years. Some low price orders have also been shifted to other countries. But it’s hard to tell the relationship between the upgraded product quality and the drop of volume of Chinese footwear exports for me
What are the goals you hope to achieve in your term as President of CLIA? Among these, is there also the proposal to hold the next World Footwear Congress in China?
In the footwear sector, CLIA will continue to lead the industry to achieve a much higher manufacturing productivity , a much higher added value not just higher unit price, a more renowned image in the world, and eventually to achieve upgraded development.
China is quite positive in organizing international congresses. The UITIC congresses held in 2013 and 2009 proved to be great successes. Next year, WLC will be held in China for the first time. Right now, we are also keeping close contact with CEC and the potential sponsors on the possibility of organizing the next WFC in China