Footwear manufacturers in Kazakhstan cannot compete with cheap products
Representatives of the footwear industry in Kazakhstan declare that it is impossible to compete with cheap imported products and ask to take measures to protect the domestic market from them. First of all, to limit the import of imports by introducing a minimum price threshold for a pair of shoes at $ 20.
Import reigns supreme
The need to use anti-dumping measures when importing footwear was announced by domestic manufacturers. As the general director of Lux Shoes LLP Gairat Khasanbayev noted in the comments to Kursiv, the main problem of Kazakhstani shoe manufacturers is the dominance of imports, which occupied over 90% of the market.
“If we proceed from the fact that every Kazakhstani needs at least four pairs of shoes a year, according to the number of seasons, then, according to rough estimates, the annual capacity of our market is 70-80 million pairs of shoes. Our market is oversaturated, since a much larger volume is imported. It is difficult to determine exactly how much, as there is uncontrolled “gray” import, ”Gairat Khasanbayev noted.
According to the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, imports of footwear in Kazakhstan at the beginning of 2019 amounted to 96.7%. In the Chamber of Entrepreneurs of Shymkent, Kursivu was presented with its distribution by country: 60% of the footwear market in Kazakhstan falls on China, 20% - in Turkey, 10% - in Russia, 10% - in other countries, including Uzbekistan.
It is difficult for Kazakhstani manufacturers to compete in an unequal struggle with imported cheap footwear at dumping prices. They cannot sell their products below the cost price.
“The average cost of a pair of leather shoes in the world does not exceed $ 30, that is, approximately 12-13 thousand in terms of tenge. The marginality in the world is the same - 10-15%. At retail, on average, shoes are sold in the range of 15–20 thousand tenge. The most expensive models (of the winter season) in our factory cost 18–20 thousand tenge, the selling price for the cheapest models is 10 thousand tenge, "Mr. Khasanbayev presented the price breakdown.
Effect 20
To ensure a level playing field in the market and support domestic manufacturers, the management of the Shymkent factory proposes not to allow imported leather footwear costing less than $ 20 to the Kazakh market, following the example of Turkey. According to the expert, the introduction of such a ban there at the legislative level had a positive impact on the development of the industry in this country. He also cited the example of neighboring Uzbekistan: import customs duties and other measures allowed import substitution and an increase in the share of domestic footwear production to 50-60%.
The introduction of a threshold price for imported footwear in Kazakhstan, according to the general director of the factory, will also change the situation in our market.
“It will be unprofitable to import shoes under such conditions. Its deficit will appear, and this will spur the development of domestic industry. More production facilities will appear, and the existing ones will begin to increase their capacities. Many jobs will be created. The money that went abroad will remain in our country and work for its economy, ”the head of the enterprise predicts.
In addition, according to him, the footwear industry pulls and ensures the growth of 50–70 different industries - leather, lasts, soles, boxes, accessories. That is, its growth and development will also have an additional multiplier effect.
All sorts of measures are needed
Another measure for import substitution, the interlocutor called the localization of production. In this matter, in his opinion, Kazakhstan should be guided by the experience of Russia. Foreign brand companies entering their market and large chain stores locate in Russia 30–40% of their goods production.
The businessman also considers certification of goods to be obligatory. Most of the imports, as he stated, are counterfeit uncertified products. The project of labeling footwear, launched in the country in a pilot mode since July 30, 2019, is intended to combat it. Recall, as stated by MIIR, labeling is necessary to reduce the illegal import, production and circulation of footwear in Kazakhstan. By the way, the Lux Shoes factory was the initiator of this project.
In addition, in order to solve problematic issues that hinder the effective development of the domestic footwear industry, according to manufacturers, a set of measures must be taken. This is a reduction in VAT from 12 to 8%, a decrease in the cost of public services, mirror measures on Uzbek excise taxes, payment of half of the salary of new employees at the expense of the state, 45% of rent in stores for two years, provision of government orders, lending at low interest rates for long periods ...
Gairat Khasanbayev especially emphasized the need to open the specialty "production of men's, women's and children's shoes" in local universities, since, in his opinion, the lack of qualified personnel for manufacturers is a very urgent problem today.
“Our workers were trained almost exclusively at the factory itself. While we are fully preparing them ourselves. We always have more than 20 vacancies, today the factory employs about 60 people, ”said the general director of the enterprise.
The management of the company sent all the developed proposals to the RPP with a request to assist in solving problems and support domestic manufacturers. The expert notes that for a permanent and comprehensive protection and representation of their interests there is a need to create a profile association in Kazakhstan. Moreover, he believes that the shoe industry must be separated from the light industry. Recall that today a number of shoe companies are included in the Association of Light Industry Enterprises (APLP) of the Republic of Kazakhstan.
Win back niches
Expert of the project support department of the Shymkent Chamber of Entrepreneurs Bauyrzhan Berdaliev is sure that the proposed measures will stimulate the development of the domestic footwear industry. At the same time, he noted that, since most of the raw materials and components are imported from abroad, these areas of production are potential niches for Kazakhstani business.
Lyubov Khudova, President of the APLP RK, is also convinced that there is no need to import products that can be produced in their own country, as is done in Uzbekistan.
“Our footwear enterprises meet the needs of the domestic market by only 1.5%. That is, almost 99% is imported. Why not gradually conquer this market and conquer it with your own goods ?! We even import basic slippers. What, we can't produce them ourselves ?! We can. But since they are imported to us in cubes without paying taxes, of course, such a product is cheaper. And it is economically inexpedient for a Kazakhstani manufacturer to make such shoes. Therefore, our companies mainly produce overalls and safety footwear, that is, they survive on government purchases, ”stated Lyubov Khudova.
The Department of Entrepreneurship and Industrial and Innovative Development of Shymkent believes that there is only one way to fight cheap imports - quality. And it is possible to reduce the cost of production by increasing capacities and modern technologies: the release of larger batches will reduce the cost of a single product.
The government agency suggests that the "economy of simple things" program will give a new impetus to the shoe business. By the way, Lux Shoes is its member. Other shoe companies from Shymkent also applied for support under this program.
Some statistics
According to the city administration of entrepreneurship and industrial and innovative development, for seven months of 2019 in Shymkent, leather and related products were produced for 288.6 million tenge, IFO - 135.4%. The industry's share in the republic's volume is 5.5%.
In addition to Lux Shoes, footwear is produced in Shymkent by the Zarya workshop, Kiral Dostyk LLP, and Sophie IP. The companies Turan-Skin, Umalp, AL-SHYM, Kuat-2002, Ontustik teri are engaged in the processing of skins, leather, their dressing and the manufacture of leather products. In addition, it is planned to implement projects for the manufacture of garden and summer footwear, footwear and leather goods in the FEZ "ONTUSTIK".
The largest enterprise in this area is Lux Shoes LLP. The design capacity of the factory is 120 thousand pairs of shoes per year. Launched a year ago, today it operates at half capacity. More than 450 footwear models are produced here for all seasons. Kazakhstani content is now 50%.
“We are already reaching 70-80%. We buy some of the leather in Shymkent. We fill the sole ourselves. We want to bring this figure to 100% by 2022, and reach full capacity by 2025, ”Gairat Khasanbayev said.
According to him, about 25 shoe factories operate in Kazakhstan. According to NadLoc, more than 40 enterprises are engaged in the production of footwear in Kazakhstan, mainly specialized. Last year, according to a study by energyprom.kz, three quarters of all footwear production in Kazakhstan was in Almaty, Zhambyl region and Shymkent.
Among the largest enterprises in the industry in the country LLP "Kazlegprom-Almaty" (capacity - 500 thousand pairs of shoes per year), JSC "Zhetisu" (more than 570 thousand pairs), LLP "TarazKozhObuv" (500 thousand pairs), LLP Semipalatinsk Shoe Factory (200 thousand pairs of shoes per year). As indicated on the website of the organization, eight enterprises in the sphere are members of the APLP.
In 2018, according to the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, over 1 million pairs of shoes were produced in Kazakhstan, for six months of 2019 - 328.2 thousand pairs.
Перевод статьи: Жарасова Сымбат
Источник:https://www.google.com/amp/s/kursiv.kz/news/biznes/2019-10/proizvoditeli-obuvi-v-kazakhstane-ne-mogut-konkurirovat-s-deshevoy-produkciey%3famp
Import reigns supreme
The need to use anti-dumping measures when importing footwear was announced by domestic manufacturers. As the general director of Lux Shoes LLP Gairat Khasanbayev noted in the comments to Kursiv, the main problem of Kazakhstani shoe manufacturers is the dominance of imports, which occupied over 90% of the market.
“If we proceed from the fact that every Kazakhstani needs at least four pairs of shoes a year, according to the number of seasons, then, according to rough estimates, the annual capacity of our market is 70-80 million pairs of shoes. Our market is oversaturated, since a much larger volume is imported. It is difficult to determine exactly how much, as there is uncontrolled “gray” import, ”Gairat Khasanbayev noted.
According to the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, imports of footwear in Kazakhstan at the beginning of 2019 amounted to 96.7%. In the Chamber of Entrepreneurs of Shymkent, Kursivu was presented with its distribution by country: 60% of the footwear market in Kazakhstan falls on China, 20% - in Turkey, 10% - in Russia, 10% - in other countries, including Uzbekistan.
It is difficult for Kazakhstani manufacturers to compete in an unequal struggle with imported cheap footwear at dumping prices. They cannot sell their products below the cost price.
“The average cost of a pair of leather shoes in the world does not exceed $ 30, that is, approximately 12-13 thousand in terms of tenge. The marginality in the world is the same - 10-15%. At retail, on average, shoes are sold in the range of 15–20 thousand tenge. The most expensive models (of the winter season) in our factory cost 18–20 thousand tenge, the selling price for the cheapest models is 10 thousand tenge, "Mr. Khasanbayev presented the price breakdown.
Effect 20
To ensure a level playing field in the market and support domestic manufacturers, the management of the Shymkent factory proposes not to allow imported leather footwear costing less than $ 20 to the Kazakh market, following the example of Turkey. According to the expert, the introduction of such a ban there at the legislative level had a positive impact on the development of the industry in this country. He also cited the example of neighboring Uzbekistan: import customs duties and other measures allowed import substitution and an increase in the share of domestic footwear production to 50-60%.
The introduction of a threshold price for imported footwear in Kazakhstan, according to the general director of the factory, will also change the situation in our market.
“It will be unprofitable to import shoes under such conditions. Its deficit will appear, and this will spur the development of domestic industry. More production facilities will appear, and the existing ones will begin to increase their capacities. Many jobs will be created. The money that went abroad will remain in our country and work for its economy, ”the head of the enterprise predicts.
In addition, according to him, the footwear industry pulls and ensures the growth of 50–70 different industries - leather, lasts, soles, boxes, accessories. That is, its growth and development will also have an additional multiplier effect.
All sorts of measures are needed
Another measure for import substitution, the interlocutor called the localization of production. In this matter, in his opinion, Kazakhstan should be guided by the experience of Russia. Foreign brand companies entering their market and large chain stores locate in Russia 30–40% of their goods production.
The businessman also considers certification of goods to be obligatory. Most of the imports, as he stated, are counterfeit uncertified products. The project of labeling footwear, launched in the country in a pilot mode since July 30, 2019, is intended to combat it. Recall, as stated by MIIR, labeling is necessary to reduce the illegal import, production and circulation of footwear in Kazakhstan. By the way, the Lux Shoes factory was the initiator of this project.
In addition, in order to solve problematic issues that hinder the effective development of the domestic footwear industry, according to manufacturers, a set of measures must be taken. This is a reduction in VAT from 12 to 8%, a decrease in the cost of public services, mirror measures on Uzbek excise taxes, payment of half of the salary of new employees at the expense of the state, 45% of rent in stores for two years, provision of government orders, lending at low interest rates for long periods ...
Gairat Khasanbayev especially emphasized the need to open the specialty "production of men's, women's and children's shoes" in local universities, since, in his opinion, the lack of qualified personnel for manufacturers is a very urgent problem today.
“Our workers were trained almost exclusively at the factory itself. While we are fully preparing them ourselves. We always have more than 20 vacancies, today the factory employs about 60 people, ”said the general director of the enterprise.
The management of the company sent all the developed proposals to the RPP with a request to assist in solving problems and support domestic manufacturers. The expert notes that for a permanent and comprehensive protection and representation of their interests there is a need to create a profile association in Kazakhstan. Moreover, he believes that the shoe industry must be separated from the light industry. Recall that today a number of shoe companies are included in the Association of Light Industry Enterprises (APLP) of the Republic of Kazakhstan.
Win back niches
Expert of the project support department of the Shymkent Chamber of Entrepreneurs Bauyrzhan Berdaliev is sure that the proposed measures will stimulate the development of the domestic footwear industry. At the same time, he noted that, since most of the raw materials and components are imported from abroad, these areas of production are potential niches for Kazakhstani business.
Lyubov Khudova, President of the APLP RK, is also convinced that there is no need to import products that can be produced in their own country, as is done in Uzbekistan.
“Our footwear enterprises meet the needs of the domestic market by only 1.5%. That is, almost 99% is imported. Why not gradually conquer this market and conquer it with your own goods ?! We even import basic slippers. What, we can't produce them ourselves ?! We can. But since they are imported to us in cubes without paying taxes, of course, such a product is cheaper. And it is economically inexpedient for a Kazakhstani manufacturer to make such shoes. Therefore, our companies mainly produce overalls and safety footwear, that is, they survive on government purchases, ”stated Lyubov Khudova.
The Department of Entrepreneurship and Industrial and Innovative Development of Shymkent believes that there is only one way to fight cheap imports - quality. And it is possible to reduce the cost of production by increasing capacities and modern technologies: the release of larger batches will reduce the cost of a single product.
The government agency suggests that the "economy of simple things" program will give a new impetus to the shoe business. By the way, Lux Shoes is its member. Other shoe companies from Shymkent also applied for support under this program.
Some statistics
According to the city administration of entrepreneurship and industrial and innovative development, for seven months of 2019 in Shymkent, leather and related products were produced for 288.6 million tenge, IFO - 135.4%. The industry's share in the republic's volume is 5.5%.
In addition to Lux Shoes, footwear is produced in Shymkent by the Zarya workshop, Kiral Dostyk LLP, and Sophie IP. The companies Turan-Skin, Umalp, AL-SHYM, Kuat-2002, Ontustik teri are engaged in the processing of skins, leather, their dressing and the manufacture of leather products. In addition, it is planned to implement projects for the manufacture of garden and summer footwear, footwear and leather goods in the FEZ "ONTUSTIK".
The largest enterprise in this area is Lux Shoes LLP. The design capacity of the factory is 120 thousand pairs of shoes per year. Launched a year ago, today it operates at half capacity. More than 450 footwear models are produced here for all seasons. Kazakhstani content is now 50%.
“We are already reaching 70-80%. We buy some of the leather in Shymkent. We fill the sole ourselves. We want to bring this figure to 100% by 2022, and reach full capacity by 2025, ”Gairat Khasanbayev said.
According to him, about 25 shoe factories operate in Kazakhstan. According to NadLoc, more than 40 enterprises are engaged in the production of footwear in Kazakhstan, mainly specialized. Last year, according to a study by energyprom.kz, three quarters of all footwear production in Kazakhstan was in Almaty, Zhambyl region and Shymkent.
Among the largest enterprises in the industry in the country LLP "Kazlegprom-Almaty" (capacity - 500 thousand pairs of shoes per year), JSC "Zhetisu" (more than 570 thousand pairs), LLP "TarazKozhObuv" (500 thousand pairs), LLP Semipalatinsk Shoe Factory (200 thousand pairs of shoes per year). As indicated on the website of the organization, eight enterprises in the sphere are members of the APLP.
In 2018, according to the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, over 1 million pairs of shoes were produced in Kazakhstan, for six months of 2019 - 328.2 thousand pairs.
Перевод статьи: Жарасова Сымбат
Источник:https://www.google.com/amp/s/kursiv.kz/news/biznes/2019-10/proizvoditeli-obuvi-v-kazakhstane-ne-mogut-konkurirovat-s-deshevoy-produkciey%3famp