Initiatives focus on sustaining viability

	This women's sandal from Longing has PVC straps and an EVA outsole. It comes in sizes 36 to 41.

China manufacturers of men’s and women’s sandals continue to struggle against threats to profitability as exports are still in a slump.

Between January and November 2009, the country shipped out $9.9 billion worth of footwear with plastic or rubber uppers. While the value increased 3 percent YoY, volume was down 58 percent.

Likewise, sales generated from the export of models with leather uppers reached $7.5 billion. This is 15 percent lower than the amount earned in 2008.

Various factors are hindering the industry’s recovery from the downturn. For one, buyers in key markets still have reduced spending power and most of them ask for steep discounts even with small purchases.

Rising material costs and other expenses, however, prevent businesses from giving in to such requests. To stay profitable, several enterprises are forced to refuse orders if the price demanded is too low.

Compounding suppliers’ difficulties are the antidumping duties imposed by several countries. In December 2009, the EU decided to extend by another 15 months the 16.5 percent tax levied on genuine leather footwear made in China. Russia, Canada, Brazil, Argentina and Peru also enforced similar tariffs last year.

The depreciating currencies in India, Vietnam, Brazil and other low-cost hubs are a cause for concern as well. With the exchange rate pegged generally at 6.82 yuan to a dollar, some clients are opting to source from the alternative production centers.

Given these challenges, manufacturers are adopting various measures to widen profit margins. Several companies, for instance, are offering value-added models that justify higher quotes.

Olicom (Quanzhou) Imp. & Exp. Co. Ltd, one of the interviewees for this report, has introduced unisex sandals featuring a three-layer curved sole. The EVA footbed is covered with textile treated to resist microbes, while the middle portion comes in PU. Rubber is used for the outermost part.

This design is said to help simulate the motion of walking on soft sand or grass, and allows the user to travel long distances comfortably. Due to its special function, the product goes for at least $8 per pair, almost double the average export price of regular cemented releases with synthetic leather uppers.

A number of businesses are also boosting output of thong-type sandals for men. Suitable for casual occasions, this kind of cemented footwear enjoys high demand from the US and the EU. Genuine or synthetic leather is commonly adopted for the straps.

To enhance aesthetic appeal, makers trim the latest releases with sequins, beads, patches, or embossed or printed motifs. Bold colors such as red, pink, fuchsia, blue and turquoise are popular for women’s designs. Beige, black, white and otherneutral hues prevail in the men’s segment.

Materials & pricing
Production hubs

	Fujian Rich & Fine is offering women's sandal model RFYX021, which has patent PU leather upper, lining and insole.

Sandals from China come in various styles, including slide, thong, T-strap, slingback and gladiator. Women’s sizes are between 35 and 41. Men’s versions range from 40 to 46.

In terms of construction, models can be classified as injection-molded or cemented. As suggested by its name, products under the former category are made by injecting liquefied plastic into a mold. Cemented types are those with outsoles attached to the uppers by an adhesive rather than via stitching or other bonding methods.

Most injection-molded releases come in PVC or EVA. Rubber, PU or TPR is sometimes employed for the outsoles of upscale designs.

Cemented sandals are offered with canvas, denim, nylon webbing, or genuine or synthetic leather uppers. Cow split and suede are the popular choices among the different kinds of animal hide.

Pigskin, suede, PU leather, EVA, cork, straw or seagrass is adopted for in- and midsoles. The outsoles can be in rubber, EVA, TPR or PU.

Materials are domestically procured, either from suppliers in the same area as the factory, or in neighboring cities or provinces.

Prices of China-made sandals, which start at $0.85 per pair, depend primarily on the construction and materials used. Cemented versions usually have higher quotes compared with injection-molded types because they are more complicated to produce.

The pattern application method and embellishments adopted also affect product value. A water-transfer printed motif, for instance, will add about $0.60 per pair.

Quotes are projected to increase by about 5 percent within the next six months because of rising material costs. Animal hide, for instance, is about 50 percent more expensive now than in early 2009. Suppliers of PU and PVC leather imposed markups as well.

The possibility of yuan appreciation may also contribute to the upward movement of prices.

	Model HK9H091-1 from Olicom is a unisex sandal with a PU nubuck and mesh upper.

More than 7,000 sandal manufacturers and traders are based in Guangdong, Fujian and Zhejiang. At least 80 percent of China’s shipments in the line come from these provinces.

Guangdong exported approximately $7.6 billion worth of sandals between January and November 2009. Suppliers in the area focus on upscale models and have the highest prices among the three hubs. In the same period, Fujian generated foreign revenue of about $3.9 billion. Most of this came from the sales of injection-molded EVA footwear.

Zhejiang shipped abroad roughly $3.1 billion worth of products during the 11-month period. Suppliers there often adopt synthetic leather for the straps or uppers of their cemented releases.

To reduce expenses, several makers from these hubs have set up factories or subcontracted some processes to the interior provinces, where land, labor and utility costs are lower. Jiangxi, Hunan, Guangxi, Sichuan and Henan are among the popular locations.

While these steps help in decreasing outlay, businesses still face challenges such as immature logistics and underdeveloped support industries.

Consequently, many companies are keeping their headquarters, R&D centers, and upscale manufacturing lines at the coastal plants.