Children's casual shoes: Overcoming challenges through cost efficiency

Manufacturers of children’s casual shoes in China are implementing different strategies to survive the challenging economic situation.

The country’s heavily export-oriented footwear industry was affected significantly by the financial crunch that hit most developed nations in the latter part of 2008. Between January and May this year, only 750 million and 570 million pairs were sent to the US and the EU, respectively. A YoY comparison shows that these figures represent a 10 to 15 percent decline in shipments due to slowed demand.

Compounding suppliers’ difficulties is the enforcement of more stringent mandatory standards. The US’ CPSIA, for instance, restricts the amount of lead and phthalates in children’s products. This is compelling makers to source compliant materials and perform various tests, which are both costly and time-consuming.

Similarly, the EU recently banned dimethylfumarate or DMF in consumer goods, including shoes, soft toys and sofas. Used as a desiccant by many enterprises, the substance has been found to be an allergic sensitizer. As such, companies need to employ drying agents without DMF, driving up expenses five to seven times.

China’s price advantage has been weakened as well because of the high exchange rate, which has been maintained at 6.80 to 6.90 yuan to a US dollar since 2H08. Currencies from competing hubs such as India, Indonesia and Brazil, in comparison, depreciated at least 10 percent.

To sustain viability, most suppliers are boosting exports to nontraditional destinations where requirements are not that stringent. Shipments to Africa, in particular, increased roughly 30 percent YoY to 420 million pairs during the first five months of 2009, making the continent the third-largest importer of China-made footwear.

In addition, companies are increasing output of shoes that come in plastic or textiles. This is more cost-effective for them because the materials are less expensive.

Allocations for developing ODM and OBM models are also being limited to maximize cash flow. OEM orders continue to be the mainstream.

Furthermore, businesses generate savings by controlling the use of water and electricity during operations and reducing wastage in staff canteens.

China-made casual shoes for children come in sneaker, moccasin, clog, deck, bootie, ballet fl at and Mary Jane types. While these share similar features with adult counterparts, footwear for the younger age group boast more colorful patterns and trimming. Yellow, orange, green, pink, blue and red, in particular, are typically adopted.

Quotes range from $3.50 to $9 per pair and are determined primarily by the materials used for the upper and the outsole.

Less-expensive releases usually have plastic, rubber, canvas, denim or corduroy uppers, while midrange and high-end versions come in PU or genuine leather. Of the last, cowhide and cow split are popular choices.

Rubber is used for the outsoles of products across all price points. Other material options are TPR and PU for low-end and upscale models, respectively.

Children’s footwear can have PU, mesh fabric, fleece, plush, Nylex or pig split lining. EVA is adopted primarily for the insoles.

Trimming also affects quotes. Beaded or sequined shoes may be priced $0.10 to $0.50 more than unadorned models.

Some sneakers are fitted with flashing lights powered by button cells. About $0.40 is added per pair for the bulbs and batteries. Sizes above 27 are about 10 percent more expensive than smaller versions.

China is the world’s largest producer of footwear, accounting for about 70 percent of global supply. In 2008, exports in the line reached 8 billion pairs worth $28 billion, 10 percent of which consisted of children’s models.

There are more than 3,000 makers and traders of children’s shoes and boots in the country. Locally owned companies make up 60 percent of the supplier base, while foreign-invested enterprises and joint ventures comprise 30 percent. The rest are state-owned.

Most manufacturing facilities can be found in Guangdong, Zhejiang and Fujian. More than 60 percent of China’s total output and exports come from these provinces. Guangdong is considered the leading source of footwear, including those for children. It exported nearly 1.4 billion pairs between January and May 2009, posting a 2 percent increase in volume YoY.

Most suppliers are located in the city of Guangzhou. They specialize mainly in midrange or high-end models.

Footwear shipments from Zhejiang reached 410 billion pairs in the first five months of the year. Wenzhou is among the province’s main production centers, with more than 900 makers clustered there. They offer casual, dress, sports and rain shoes for the low-end and midrange markets.

In early 2009, Fujian sent 760 million pairs of footwear abroad. Quanzhou, which turns out about $1.5 billion worth of children’s shoes, is one of its key hubs. Many leading domestic brands are from this city. Casual and athletic releases dominate production.

This article "Children's casual shoes: Overcoming challenges through cost efficiency" is originally posted in Global Sources.

China Ningbo Cixi Imp. & Exp. Corp.
Kellywell Enterprises Co. Limited
Olicom (Quanzhou) IMP. & EXP. Co.,Ltd
Shanghai Light Industrial Products Import & Export Co. Ltd