The Spanish shoe industry expects output revenues to fall up to 15 per cent this year to €2.3 billion, hurt by a soaring euro, Chinese competition and growing contraband activity, a spokesman for Spanish shoe federation Fice has told just-style.

Exports will continue their weak performance with rates seen plunging 10 per cent from €2 billion in 2003 when they also fell 9 per cent.

Employment rates will also decline further with 5 per cent of 44,500 jobs expected to go this year, up from a 4 per cent drop in 2003.

The sector, a long-time wager earner, remains affected by falling exports to key yet depressed markets in Germany and the US, the spokesman said. This, coupled with rising competition from China and a thriving black market, are keeping the industry in the doldrums.

To survive, industry is lobbying the government to help promote Spanish shoes as a high-quality product for international export, invest more in research and development, and crack down on the black market.

Spanish shoes "lead the world in terms of quality and we still think there's a future for the industry if companies specialise on high quality products," the spokesman said.

He added that despite the export fall, Spanish shoes are fetching higher prices in Asian and US markets, "which is exactly what we want to happen. We are not a high-volume shoe producer anymore."

To offset slowing domestic growth, many Spanish companies are expanding abroad, particularly in the booming Asian market.

One of them is Majorca-based Yanko, which has charted an aggressive "short-term" plan to enter China, the company's President Javier Camp said. Yanko, which makes upmarket, hand-made shoes, has a store in Tokyo, Japan and distributes in Osaka.

Other Spanish expansionist brands include Panama Jack, Pikolinos and Ras Shoes.

Still, if industry does not restructure fast, the future looks even gloomier. According to Diego Macia, the mayor of Spanish shoe town Elche, about 20,000 jobs could go in the near future.

By Ivan Castano.