Why Aba must mimic China’s shoe industry model
Estimates show that China produces 12.6 billion pairs of shoes every year. In 2017, country’s footwear industry generated $123 billion, representing a 4.4 percent increase from 2016, according to China Leather Industry Association. The country is world’s biggest shoemaker and exports to nearly every part of the world.
China’s leather strategy is no different from the strategy adopted in other industries. Chinese firms produce for export and are competitive in terms of pricing.
A research was done recently by Anthony Clothier, a United Nations Industrial Development Organization ( UNIDO) consultant, in cooperation with Ferenc Schmél of UNIDO and two other researchers, Song Wen Xian and Su Chaoying. The report says that the quality of China’s shoe industry’s infrastructure is a major contributor to the success of the industry.
The research reveals that one major reason for the success of the industry is discipline of the work force. They accomplish a task within the stipulated time.
Chinese footwear industry has some of the largest factories in the world. It enjoys economies of scale and produces several units per hour. Consequently, as 2005, the largest shoe manufacturing group employed 90,000 people, which is equivalent to the number employed by BATA in Czechoslovakia in 1938, the report says.
Due to small and micro nature of Aba shoemakers, the entire industry employs between 50,000 and 80,000 people. Talks have been on about a mega shoemaker entering the Aba space for long, but this is yet to materialise.
The Abia State government said in 2016 that Huajian Group in Ethiopia, which made shoes for Ivanka Trump, United States president’s wife, would be coming to Aba.
In September 2017, Sherry Zhang, general manager of Huajian Shoes in Addis Ababa, told Businessday in Addis that the company was still interested in setting up a shoe factory in Aba, southeast Nigeria. But this has not happened since then. There are talks that a big manufacturer is in town, but production is yet to start.
China produces for the export market. China has comparative advantage in renewable energy, which helps its manufacturers to produce cheap goods, including shoes.
It is the world’s frontline country in electricity production from renewable energy sources, with a total capacity of 728 GW of renewable power, mainly from hydroelectric and wind power as of 2018. But the opposite is the case with Nigeria where even the socalled hydrocarbon energy generated and distributed cannot power Lagos State.
Accord ing to Euromonitor’s April 2019 report on Chinese footwear, sports footwear is a fan favourite as it garners strong loyalty among all demographics.
Sports footwear is an emerging market in Nigeria and players say it is money-spinning. But many shoemakers in Aba are yet to key into this market.
“Moreover, sport s footwear is strongly supported by the government policies that promote healthy living and the urban fitness boom,” Eurpmonitor says.
“The footwear category in China is comparatively fragmented due to there being many local brands and private label products. However, the bankruptcies of Belle and
Daphne in 2018 reshaped the competitive landscape,” Euromonitor adds.
The major challenge in Nigeria is that there is little support for Aba footwear. The federal and state governments have patronised the industry, but analysts say it is not enough.
“We are already struggling to meet demands,” said Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria ( ALAN), who produced Nigerian armed forces shoes in 2016.
“But the problem is that we in Aba have no good machines,” Anyanwu said.
“The Bank of Industry has done its best by giving some of us N300,000 each, but it takes $250,000 to N750,000 to set up a standard shoe factory. So, what can N300,000 do when the industry is capital intensive?” he asked.
One million pairs of shoes are produced by more than 80,000 leather makers in Aba each week. With 48 million pairs produced each year at an average price of N2,500 a pair, the industry is said to be worth up to N120 billion.
Traders from West African neighbours storm the industrial city every week to buy different product designs, just as Southern African schools are beginning to place orders directly from the shoe makers. Canadians, Europeans and the Chinese are also in the party, placing orders themselves directly or through their Nigerian proxies, Businessday was told in Aba.
The Abia leather industry is made up of shoes, trunk boxes and belts. It provides employment for tens of thousands, with many specialising in different stages such as designing, patterning, cutting, skiving, stitching, peeling and finishing. It is made up of clusters such as Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, and Ochendo Industrial Market, comprising input supplers, among others.
However, the industry is in thriving in chaos as the majority of shoe makers in the industrial city are poorly structured and are not registered at the Corporate Affairs Commission. Exports are made informally, making tracking and planning difficult.