Shoemakers flee South China as golden era ends

Although almost half of the shoe makers in southern China's Pearl River Delta closed in the first five months of 2008 and the number of pairs exported fell, the value of exports jumped, customs figures released on Monday show.

Additionally, industry officials said that big producers were getting bigger and small ones were seeking out niche markets, while those in the middle ranks were largely being driven out.

The world's largest footwear production region, located in Guangdong Province, lost 2,331 shoe firms between January and May, but exports rose 9.4 percent to $3.97 billion, the customs office in Guangzhou, the provincial capital said.

The closures left 2,428 shoe producers, who shipped 1.35 billion pairs of shoes overseas in the first five months, down 15.5 percent year-on-year.

China Customs attributed the exporters' exodus to pressure from the appreciation of the yuan, the Chinese currency, and soaring wages and labor costs, which crimped profits.

Asian Footware Association secretary general Li Peng said that 62 shoe makers now account for half of the export orders placed in the Pearl River Delta region. They saw a combined increase of 16.5 percent in export value in the first five months.

Meanwhile, he said, "small and nimble producers are rapidly adjusting their production to explore new export markets, grabbing small orders from Russia, the Middle East and African countries."

He said that mid-sized plants employing 800 to 3,000 workers were being battered worst in this round of market adjustment.

Many shoe makers have been adjusting their sales strategy by shifting their focus from exports to domestic sales, said Wu Zhenchang, a shoe businessman in Guangdong.

He said he believed that this round of industry restructuring will help eliminate weak companies and drive up the unit price of China-made shoes.

The shoe industry in Guangdong experienced a golden era from 2001 to 2007, when the value of shoe exports more than doubled from $4.3 billion to $9.2 billion.