Rising costs of land, rental and labor and increasingly competitive emerging rivals in S.E. Asia and China over the past two decades have forced many operators of traditional industries, whose labor costs often dictate profitability, in Taiwan to seek greener pastures abroad. Shoemakers on the island have also not been spared of such fate, with many operators having moved offshore in recent decades to southern China, Vietnam to reduce cost. The outmigration has not, however, dethroned Taiwan's footwear sector of its long-established title as the global shoemaking capital; because many of Taiwan's shoemakers have successfully adopted various strategies to make the most of local conditions: for examples the erstwhile available massive, cheap migrant labor in China, and relatively more sophisticated footwear-making know-how in Taiwan.
According to IBIS World, globally largest independent publisher of U.S. industry research, global footwear production volume totaled 12.15 billion pairs in 2010, of which nearly 60% or seven billion pairs were produced in China and plants mostly operated by Taiwanese.
It's hardly news that a few of the major shoemakers in Taiwan have been OEMs to global sportswear brands, who rely on local suppliers' capacity to meet design, material and manufacturing specifications, with smaller makers also engaging in OBM (original brand manufacturing).
Pou Chen Corp. and Feng Tay Enterprise Co. are literally household names to insiders of the sports footwear sector, with the two OEMs turning out some 45% of output for Nike, the American sportswear brand arguably as well-known globally as McDonald's for fast food, Starbucks for coffee, and VW for cars. If including the two other Nike OEMs in Taiwan, Ching Luh Shoes Co. and Dean Shoes Co., then the island accounts for some 75% of all sports footwear labeled with the ubiquitous “swoosh” logo.
Pou Chen Corp.
Founded in 1969 Pou Chen may be a shoemaking pioneer in Taiwan which initially produced canvas and rubber footwear in the days when a pair of Adidas Roms, which were unheard of even in Taipei, would have cost a month's wages for many. Later on the company gradually began producing sports and casual footwear, then expanded into OEM of sports footwear, and retail sportswear in recent years.
Despite having moved, to meet growing global demand, production overseas to Vietnam, Indonesia, Bangladesh, and China, Pou Chen still has its headquarters in Taiwan, where the management oversees the largest OEM of athletic and casual footwear globally that has evolved into a diversified group.
As of the end of March this year Pou Chen claims to have 509 footwear production lines that turned out 287 million pairs of shoes in 2010, with its Hong Kong affiliate—Yue Yen Industrial Ltd.—having produced 162 million pairs of shoes in the first half of this year. Seeing improving business climate, N.F. Tsai, vice chairman of the group, predicts Pou Chen's production volume this year may exceed that of last year.
Pou Chen's plant in Bangladesh mainly fills OEM orders for leather casual shoes for three international brands, one of which being Timberland, with over 4,000 workers producing about 150,000 pairs of shoes monthly that may reach 400,000 pairs by the end of next year, says Tsai.
As early as the 1980s, Pou Chen started to set up production in China, mainly in the southern, eastern coastal areas in Guangdong, Jiangsu and Zhejiang provinces, and then expanded into inland areas as Jiangxi, Hunan, Hubei, Anhui, and Henan, with its currently largest production base of 1,200 hectares in Yangzhou of Jiangsu.
The group recently decided to raise capitalization of its two plants in China, one in Hubei and the other in Guangdong, through Yue Yen Industrial, in which it owns a 49.98% stake.
With around 537,000 staffers working in Taiwan and abroad, Pou Chen assigns about 1,200 Taiwanese personnel to work at overseas plants, which far lags actual demand, due to the tacit consensus that most Taiwanese staffers would rather not be sent abroad. The shoemaker plans to train 1,700 more Chinese personnel at its plants in China to reassign to Vietnam and Indonesia.
Feng Tay Enterprise
Likewise, Feng Tay, Nike's second-largest OEM, also has plants mostly in Vietnam, Indonesia, India and China, where 120 production lines turn out 59.77 million pairs of shoes a year.
C.H. Wang, chairman of Feng Tay, says the company has only one plant in India to fill mainly Nike's orders for children footwear and plans to set up another plant there to turn out canvas shoes for Converse, the All Stars brand, and casual shoes for Salomon, the established brand known for ski, sportswear and athletic footwear gear.
Other than casual and sports footwear, Feng Tay also produces skates and in-line skates as well as having recently developed helmets for ice hockey, which are made in its plant in Fujien Province, China.
Other Taiwanese shoemakers as Ever Rite International Co., Ltd., mostly making women's shoes, and Glory Shoes Industrial Ltd., maker of work boots, have also successfully evolved into global leaders in their niches.
Ever Rite is the leading maker of women's footwear globally that is mainly shipped to Payless, a major discount department store chain in the U.S., as well as supplying shoes to Zara and Nine West, both upscale, international women's shoe brands. In addition to the operations in Taiwan, the company has four factories in China, one in Vietnam and another in Indonesia, whose annual output totals about 50 million pairs of shoes to generate revenue exceeding US$300 million.
Glory, the world's largest supplier of work boots and also a Pou Chen reinvestment, has headquarters in Taiwan and has set up plants in Vietnam and China to meet rising global demands. The OEM has over 20,000 workers who turn out 12 million pairs of work boots annually for famous brands as Wolverine, CAT (Caterpillar), Dr. Martens. as well as custom-made boots for Harley Davidson riders.
|GlobalFootwear Production in 2010 Source: IBIS World|
|Northeast Asia ||7.24 billion pairs or global share of 59% ||7 billion pairs produced in China|
|Southeast Asia ||1.6 billion pairs or global share of13.2% ||Production mainly in Vietnam, Thailandand Indonesia|
|India ||890 million pairs or global share of 7.4% ||Second-largest production base next onlyto China|
|Brazil ||840 million pairs or global share of 6.5%||Major shoemaker in South America|
(by Judy Li)