News / National
Cheap shoe imports choke local leather sector
24 Nov 2024 at 10:10hrs | Views
Local leather manufacturers are facing significant challenges as they are forced to scale down their shoe production due to the influx of cheap imports, which are undermining the viability of domestic producers. Zimbabwe is grappling with a surge in leather product imports, with cheap footwear flooding the market, leading to unfair competition for local manufacturers.
According to ZimTrade, the country's trade development agency, Zimbabwe imports approximately 12.8 million pairs of shoes annually, contributing to a total national footwear consumption of 14.3 million pairs per year, which includes leather, canvas, synthetics, and plastic products. This influx of imported shoes is putting local manufacturers at a disadvantage, especially as domestic products struggle to compete with the lower prices of imported goods.
Arnold Britten, General Manager of Zambezi Tanners, a Bulawayo-based exotic tanning company, explained that the surge in imports has led to a significant drop in demand for locally produced leather goods. "Demand has significantly dropped due to a decline in production output by local leather goods manufacturers. The decline is a direct result of imports of safety and school footwear. This has had a downstream effect of low demand for leather," Britten said.
The situation is further exacerbated by the presence of cheap imports, which are undermining the price competitiveness of locally produced products. According to Jacob Nyathi, Managing Director of the Zimbabwe Leather Development Council (ZLDC), despite the legal imposition of import duties on such goods, imports are still flooding the market at lower prices than local products. "Technically, all such imports are legally subject to punitive import duties, but strangely they still come in and get sold at lower prices compared to local products. This suggests that the correct duties are not being collected or that some imports are evading customs through undesignated entry points," he said.
Nyathi also provided rough estimates of the wholesale landing prices for imported safety shoes, which range from US$9 to US$13, and US$7 to US$9 for school shoes. These imports are then sold at retail prices of US$20 to US$25 for safety shoes and US$10 to US$12 for school shoes, making them significantly cheaper than locally produced footwear, which retails for over US$30 for safety shoes and between US$18 to US$22 for school shoes.
The influx of cheap imports has had a noticeable impact on the domestic leather sector, as highlighted by Stuart Simali, Director of Millennium Footwear. "Cheap imports have led to low sales for leather sector players, resulting in low capacity utilisation for our companies. This, in turn, makes our products uncompetitive on the export market, which has led to a decline in export volumes," Simali said.
The hyperinflationary environment in Zimbabwe is also compounding the challenges facing the leather sector, making it even harder for local manufacturers to remain competitive. To address these challenges, sector players have called on the Government to offer more rebates on imported raw materials. These rebates would help reduce the sector's expenses on importing chemicals and other materials used in production, making locally manufactured products more cost-effective.
Many chemicals used in the tanning and shoe-making process are imported from countries such as South Africa, Germany, and China, adding to the financial strain on domestic producers. By offering rebates, the Government could help local manufacturers cut down on production costs and make Zimbabwean leather products more competitive in the local and export markets.
In response to the challenges faced by the leather sector, ZimTrade has been working with key players in the industry to improve production efficiencies and the quality of local leather products. Through technical intervention programs, ZimTrade aims to reposition Zimbabwe's leather sector as a leading exporter and a significant contributor to the country's foreign currency earnings.
Despite these efforts, the battle for survival in the leather sector continues, with local manufacturers hoping for more robust support from the Government to counter the flood of cheap imports and restore the sector's competitiveness.
According to ZimTrade, the country's trade development agency, Zimbabwe imports approximately 12.8 million pairs of shoes annually, contributing to a total national footwear consumption of 14.3 million pairs per year, which includes leather, canvas, synthetics, and plastic products. This influx of imported shoes is putting local manufacturers at a disadvantage, especially as domestic products struggle to compete with the lower prices of imported goods.
Arnold Britten, General Manager of Zambezi Tanners, a Bulawayo-based exotic tanning company, explained that the surge in imports has led to a significant drop in demand for locally produced leather goods. "Demand has significantly dropped due to a decline in production output by local leather goods manufacturers. The decline is a direct result of imports of safety and school footwear. This has had a downstream effect of low demand for leather," Britten said.
The situation is further exacerbated by the presence of cheap imports, which are undermining the price competitiveness of locally produced products. According to Jacob Nyathi, Managing Director of the Zimbabwe Leather Development Council (ZLDC), despite the legal imposition of import duties on such goods, imports are still flooding the market at lower prices than local products. "Technically, all such imports are legally subject to punitive import duties, but strangely they still come in and get sold at lower prices compared to local products. This suggests that the correct duties are not being collected or that some imports are evading customs through undesignated entry points," he said.
Nyathi also provided rough estimates of the wholesale landing prices for imported safety shoes, which range from US$9 to US$13, and US$7 to US$9 for school shoes. These imports are then sold at retail prices of US$20 to US$25 for safety shoes and US$10 to US$12 for school shoes, making them significantly cheaper than locally produced footwear, which retails for over US$30 for safety shoes and between US$18 to US$22 for school shoes.
The influx of cheap imports has had a noticeable impact on the domestic leather sector, as highlighted by Stuart Simali, Director of Millennium Footwear. "Cheap imports have led to low sales for leather sector players, resulting in low capacity utilisation for our companies. This, in turn, makes our products uncompetitive on the export market, which has led to a decline in export volumes," Simali said.
The hyperinflationary environment in Zimbabwe is also compounding the challenges facing the leather sector, making it even harder for local manufacturers to remain competitive. To address these challenges, sector players have called on the Government to offer more rebates on imported raw materials. These rebates would help reduce the sector's expenses on importing chemicals and other materials used in production, making locally manufactured products more cost-effective.
Many chemicals used in the tanning and shoe-making process are imported from countries such as South Africa, Germany, and China, adding to the financial strain on domestic producers. By offering rebates, the Government could help local manufacturers cut down on production costs and make Zimbabwean leather products more competitive in the local and export markets.
In response to the challenges faced by the leather sector, ZimTrade has been working with key players in the industry to improve production efficiencies and the quality of local leather products. Through technical intervention programs, ZimTrade aims to reposition Zimbabwe's leather sector as a leading exporter and a significant contributor to the country's foreign currency earnings.
Despite these efforts, the battle for survival in the leather sector continues, with local manufacturers hoping for more robust support from the Government to counter the flood of cheap imports and restore the sector's competitiveness.
Source - Sunday News
