INDIA: Footwear market to profit from rising Chinese costs
Leading footwear players like Adidas, Puma and Nike are likely to shift some of their purchasing and production from China to India over the next three years, according to new research, as Chinese products lose their cheap price tag and buyers turn to India for low-cost products.
The sector's buoyancy will be helped by the easy availability of raw material and skilled manpower says the report 'Indian Footwear Industry Analysis' by research firm RNCOS.
It also believes customers are shunning Chinese products after the European Commission in September decided to extend anti-dumping duties on leather footwear imported from China.
According to Shushmul Maheshwari, chief executive of RNCOS: "Demand for high quality footwear made in Europe or other regions of the world will suffer a setback as people will prefer buying inexpensive or medium or low-priced footwear. And India and China definitely have an edge on this front."
"However," he adds, "the rise in labour cost and strengthening currency against US dollar have posed serious problems for Chinese producers."
The cost of labor has grown by about 40% since January this year in China. As a result, Chinese products, that used to be as much as 10% cheaper than Indian products, are now lagging behind.
Figures from January to July 2008 show that European footwear imports from China fell by 1.7% against the same period last year, while those from India rose by 3.5% - suggesting the shift is already underway.
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