19 Sept 2018
Long-Remembering Turkey Yet to Forgive Chinese Footwear Industry
With Turkey's consumers and the stalwarts of its shoe sector still painfully recalling the toxic mainland-originated footwear imports of 2014, Chinese manufacturers still have a lot of making-up to do if they are to return to the market in force.
It's still a tough job for any Chinese footwear company looking to sell into Turkey, at least according to many of the exhibitors at Aymod, the twice-a-year Istanbul-based expo that is now the second-largest shoe fair in the world, with only Milan's Micam said to be bigger. The problem stems from four years ago, when the fallout from the toxic material found in several shoe imports saw China banned from the event. This year, six suitably-chastened mainland companies, all from Wenzhou, exhibited at the expo, representing a tiny proportion of the 400-plus companies participating in the show and a massive scaling back compared with the huge Chinese presence back in the pre-2014 days.
At present, Turkey's local footwear industry produces about 325 million pairs of shoes a year. While its shoe and leather industry dates back to the 15th century, it was the technological transformation initiated in the 1970s and 1980s that created Turkeys' currently huge footwear manufacturing sector.
Today, the country has 14 state-of-the-art industrial areas dedicated to footwear production, with all of them said to be compliant with a strict environmental-protection regime. According to the latest government figures, the footwear industry employs 26,954 people across 4,750 companies. Looking to the future, Ruken Mizrakli, Chair of the Turkish Leather Foundation (TURDEV), says the sector is now working towards a US$5.2 billion export target for 2023, the 100th anniversary of the founding of the Turkish Republic.
In addition to its own tarnished reputation and the strength of the domestic footwear industry, many at the event believed Chinese exporters targeting Turkey faced several other problems. Doğan Özünal, a Sales Representative for Akar, an Istanbul-based men's footwear manufacturer, for instance, maintained that pricing was a problem, saying: "Trade is trade. We live in a global economy and Chinese manufacturers are going to find it a struggle.
"When it comes to price points, they just can't compete. While they've tried to lower their overheads by relocating their production facilities to countries with lower labour costs, I am yet to be convinced it will be a success."
Özünal, who is also a board member of the Footwear Industrialists Association of Turkey, did concede, however, that his company still sourced some components from China, despite the continuing distrust that many Turkish consumers had towards Chinese shoes. Drilling down into China's lingering reputational problem, he said: "We actually buy some accessories – buckles mainly – from China, but there is still a suspicion about mainland-originated shoe products.
"Four years ago, a number of people had an adverse reaction to toxic elements in the illegally-used adhesive in a range of China-made shoes, with one Turkish company alone having imported 10,000 pairs before the problem was identified. Despite having moved on from that, most Chinese companies still persist in only offering low-cost, low-quality copies of other lines. In today's marketplace, they really need to be doing something different."
At present, rather than importing, Akar is actually exporting shoes to China, where it has a number of affiliate agencies and dedicated showroom facilities. Another Istanbul footwear company selling into China is Bro. Despite its commercial connection to the country, it was less than complimentary about the mainland's own products, with Company Representative Onur Kasapoğlu saying: "We are simply not interested in buying shoes or parts of shoes from China. The quality is just not good enough."
Indeed, the view that Chinese-origin footwear was intrinsically inferior to its Turkish counterpart was pretty much ubiquitous at the event. How much of this was down to a genuine conviction and how much was down to enlightened self-interest on the part of Turkey's long-established domestic footwear industry is, of course, debatable.
For Ahmet Arısal, the Sales Manager of Vesba, a 60-year-old Istanbul-based upmarket footwear brand, the matter was clear cut. Comparing his company's offering with that of a typical Chinese manufacturer, he said: "Our shoes sell in many of Turkey's most stylish outlets, including Beymen, Damat and Kemal Tanca, and cost somewhere in the region of US$200.
"About 50 people work on every pair of our shoes, with many of our staff having more than 30 years of experience in the industry. They are true craftsmen and take real pride in their work. You simply cannot find that level of expertise in China."
Despite this not entirely neutral perspective, some Chinese exporters have maintained a client base in Turkey. Marcomen, for instance, Turkey's third-biggest shoe manufacturer, which operates factories in Istanbul and Malatya, sources inputs and some shoe ranges from China.
Outlining the nature of the relationship, Mehmet Berktaş, the company's Import / Export Manager, said: "We have had a partnership with one Chinese company for about two years now. We buy uppers and soles from them and, sometimes, full shoes, but not in particularly large volumes. While the Chinese are, admittedly, very hardworking, Turkey's shoe industry is very mature and is quite buoyant at the moment."
Another company partly sourcing from China was Izmir-based Altis, a mid- to high-end footwear business, supplying such outlets as Elle, Beta and Greyder. Primarily, it buys accessories from China, including costume jewellery and decorative stones.
Explaining the rationale behind this, Senior Manager Fazilet Kale said: "We buy these kinds of items from China simply because we cannot source them in Turkey. I am aware, however, that quite a few Turkish companies have stopped buying from China on account of the rising costs."
Despite the clear lack of warmth from their host nation, the small number of Chinese exhibitors at the event remained noticeably upbeat about their export prospects. Reflecting on his first visit to Turkey, Yao Yang, Sales Manager of Wenzhou Yaoyang Shoes, said: "Overall, China has some good quality and quite unique footwear designs on offer. While we know that import tax, transportation and other costs can add up to 50% to the price, we live in hope that, one day, the tax might be reduced."
With the Turkish leather industry notoriously strong, a number of Chinese exhibitors had made the tactical decision to focus on footwear produced from other materials, including Wenzhou-based Zoenndesign. Outlining the 11-year-old company's strategy, Deputy General Manager Geri Chen said: "We have a 15-strong design team and our business is entirely export-based. We only use synthetic materials as we don't want to go head-to-head with Turkey's leather-footwear producers.
"This is our first time here and we are really keen to showcase our latest range. We already have good contacts in Italy and Germany and we are hoping to strike up similar relationships in Turkey."
Chinese exhibitors were also acutely aware of the rising price pressure on mainland-produced goods. Alex Zhuang's firm, Wenzhou Eliyu Footwear, has a factory employing 280 people and claims to have strict quality-control procedures in place. He said: "There has been a shake-up in China's shoe industry. About 60% of factories have closed in the past three years because of rising labour costs and because fewer people opt to do factory work. I see automation as the real way forward for us."
Although a tough market for Chinese companies to crack, Turkey is seen as more than just one market, with many regarding it as the gateway to a huge number of other prospective customer bases. Acknowledging this particular aspect of the country's allure, Jin Xiudan, the Sales Manager of the Enquan Trading Company, a Wenzhou-based manufacturer of sports shoes, said: "Turkey is the gateway country to Europe and the Middle East, both of which represent huge opportunities for us."
Perhaps the most realistic assessment of the situation came from Zhihao Chen, Sales Manager of YeQi Footwear Design, a Wenzhou leisure-shoes manufacturer. Acknowledging that any real breakthrough may still be a distant prospect, he said: "We are under no illusion about the scale of the challenge when it comes to selling into Turkey. We know it won't be easy, but we're here and we'll persevere."
The Aymod International Footwear Fashion Fair 2018 took place from 4-7 April at the CNR Expo Center in Istanbul.
George Dearsley, Special Correspondent, Istanbul