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VIET TRADE - LEFASO VIETNAM
THE ABC’S OF FOOTWEAR MARKETING
MARKETING GUIDELINES FOR
VIETNAM FOOTWEAR PRODUCERS
(Making the Transition from Shoe Processing to Full Production)
Produced by: LEFASO VIETNAM
Assistance Provided by:
INTERNATIONAL TRADE CENTRE
UNCTAD / WTO
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INTRODUCTION
In developing this product, a great deal of material was reviewed including
international marketing textbooks, export marketing guidelines generated by
various international experts, and material contained within the websites of
many companies and international organizations. While this information
was helpful and generated ideas, it was not of the practical, step by step,
nature needed by a company trying to determine if export marketing is a
viable option.
Virtually all the information contained in previously mentioned export
marketing publications deals with marketing branded products rather than
the private label products that Vietnamese companies are called upon to
produce by international buyers. This guidebook’s primary focus is on
marketing private label or customer branded footwear. This does not mean
that Vietnamese companies should not make a greater effort to produce
products for the domestic market nor does it mean companies should not
consider developing their own brand names. Both of these are viable
options and could be a more profitable alternative for many companies now
attempting to export.
This guidebook uses the methodology of analyzing individual companies
from the viewpoint of an international buyer, who has a choice of thousands

 Are you currently producing footwear for the Vietnamese domestic
market?
 Do you have your own retail outlets?
 Do you have your own sales organization or a network of wholesalers
covering the entire country or regions of the country?
 Do you produce goods under a brand name?
 Is this brand name recognized and legally registered?
 If 10 consumers were asked if they were aware of your brand name
would at least 5 likely say yes?
 Do you participate in domestic bids and tenders from government and
private companies and are you aware of most of these opportunities?
 Do you have a process for determining the exact cost of shoe’s you
produce?
 If you produce products under a brand name can you explain what the
brand name stands for and do you try to develop products around that
theme?
 If you produce products under a brand name do you know how much
of your business the top 10% of the shoe styles represent?
 When developing new styles, do you first meet with your dealers or
focus groups of consumers to get their reactions?
 Do you understand how to identify the footwear you produce in
categories other than men’s, women’s, children’s?
 Do you understand the meaning of niche markets? Do you compete
in at least 3 niche markets and how do you make your customers
aware of this?
 Is someone in your company responsible for meeting and dealing
with your customers 100% of his/her time and is that person willing
and able to give you bad news as well as good news concerning
customers?
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joint ventures?
 Have you developed a business card and basic written profile of your
company in Vietnamese and English which provides information on
your company (production, years in business, employees, etc.) to give
to potential customers?
 Have you ever attempted to export cut and fit uppers?
 Do you have a specific plan to use the exhibitor guides of foreign
trade shows for a marketing prospect list? Have you attempted this?
 Are you aware of every foreign trading company that has an office in
Vietnam and are they aware of your company and its capabilities?
 Do you understand the various methods of pricing your shoes (fob,
c&f, cif, etc.) and can you quickly produce quotes using these
methods?
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 Have you made major upgrades to the machinery and processes in
your factory over the past 5 years? Are your lasts and molds in
European or American sizes? Do you understand the various
international foot sizes?
 Do you frequently visit the main country you export production to?
 Are you aware of the foreign and domestic producers of raw materials
and components located in Vietnam and have you approached them to
see if their products are a good option for you?
 Do you have a person on your staff that devotes 100% of their time to
dealing with customers? Does that person speak English and have e
mail capability?
 Do you have a formal product costing system that lets you identify
material and labor cost for each product you manufacture?
 If you purchase your raw materials have you developed at least 2
sources for every product and do you receive competing quotes?
 Do you have a person on your staff whose responsibility it is to use

interested in producing in Vietnam.
In discussions with Mr. Nguyen Gia Thao, Chairman of LEFASO, a major
objective of the industry must be the transformation of companies from
processing export contracts to full shoe marketing and production. Many
Vietnamese companies have been able to successfully make this move but
many others have expressed concerns as how to accomplish this move and
question whether their company should make the attempt. This section will
discuss the steps a company should follow in order to make the move, the
requirements in process and knowledge, and the challenges.
In today’s business there are several phases in the life of a style of footwear:
Concept Phase – Research, Design
Production Phase – Engineering, Materials Procurement, Manufacturing
Distribution Phase – Logistics, Wholesale Marketing, Retail Marketing
These percentages aren’t this exact, but to illustrate our point let’s assume
that each of the 8 tasks above represent 12.5% of retail value of a shoe. A
company that operates under a processing contract has the opportunity to
add only 12.5% of the value to a shoe whereas a company that is engaged in
full production has the opportunity to add up to 60% of the value to a shoe
depending on its ability to sell to the retailer or a distributor.
The characteristics of a typical company operating under an export
processing regime:
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In order to be successful, companies operating under this type of process
must have the skills to obtain and train a workforce, understand their
production costs, and have access to a building and machinery. Some
machinery and the product dies and patterns will likely be supplied by the
customer. They are not participating in the concept phase or distribution
phase of the shoe and only 30% to 50% of the production phase. They are
adding a very small amount of value by selling only labor. Even so, they
still may not be able to turn a profit as their labor cost will be compared to

• Trained Materials Sourcing & Purchasing Employees.
• Trained Sales & Customer Service Employees.
• Trained Export Documentation Employees.
• Trained Finance Employees.
• Upgrade of Production Process & Machinery.
The next stage of the process is defined at Full Stage II Production. These
companies take the previous stage a bit further and add value to the process
by fulfilling the functions of the trading companies. Instead of marketing to
trading companies, they are marketing their products to importers or
volume retailers located outside of Vietnam. Several Vietnamese
companies are operating at this stage. Many others have attempted the
transition but have either not understood the process or have not allocated
the necessary resources to be successful.

Requirements for Stage I Production Companies to Move to Full Stage
II Production
• Upgrade of Product Development Commercialization Staff.
• Upgrade of Materials Sourcing & Purchasing Staff.
• Upgrade of Customer Service Staff.
• Development of a Fully Trained Marketing Staff with International
Offices and/or Agents.
• Upgrade of Export Clerks to Fully Trained Logistics Staff.
• Upgrade of Finance Clerks to Fully Trained International Credit Staff.
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Companies at Stage II are able to add a portion of the concept phase, all of
the production phase, and the majority of the distribution phase value steps
to each shoe they produce giving them the ability to charge higher prices
than any of the companies mentioned previously. There also comes more
risk in that this company has a higher fixed overhead and a higher

but the sphere of companies you will be contacting for this purpose
will be small and can be done directly by you, as the company
director. The joint venture partner will bring many strengths which
combined with your will make you both better companies.
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2. If you are committed to direct international marketing, consider hiring
a manager from outside your company and let him/her choose the
staff from within and outside your company.
3. Locate the operation in another building or another city. The new
operation needs to be able to respond quickly to its customers and
provide the services needed at minimum cost but maximum quality.
The theme should be looking forward and not so much the history of
the parent company.
4. Communicate well to everyone in the organization that the new
international exporting operation may be the future of your company
and it is imperative that its needs and requests are supported by the
rest of the company. If this message comes from the top it has a
much better chance of being understood and accepted.
5. Consider licensing an international brand name for distribution in
select countries. Licensed brand names in footwear and clothing have
become multi billion dollar businesses. Many international licensing
agencies have been skeptical about the distribution of their products
in many Asian countries, including Vietnam, because of potential
illegal use of brands and trademarks. An established domestic
company has a much better chance of obtaining the licensing rights to
an international brand than an upstart company. Accurate records and
timely licensing payments made and domestic success can allow
expansion to countries within the region.
There are examples in Vietnam of companies who have begun as processing
companies, formed joint ventures, and have begun direct export marketing.

how to convince a buyer in another country to buy your product.
Experience teaches us that selling is not rocket science but occurs when a
buyer understands that what the seller offers is of enough value to cause him
to spend his money. It’s that simple. The difficult part is locating the buyer
and convincing him that you are the right person to supply that product.
Here is a 6 step approach that should give you the best opportunity for
success:
1. Contact LEFASO VN.
2. SWOT Your Company.
3. A Professional Presence.
4. Familiar Is Better.
5. Selling Begins With A Discussion.
6. Success Follows Persistence.
7. A Critical Mass Is Necessary For Long Term Industry Success.
Contact LEFASO
LEFASO should be your first point of contact as soon as you decide that
exporting is the right path for your company. Membership in this
organization brings with it benefits in the years of experience that LEFASO
has. It would be helpful to explain to the LEFASO staff what you wish to
do and ask them what types of information they can provide you from
previous foreign trade missions, inquiries, and from other member’s
experiences. The ability to use the information LEFASO can provide will
put you a step ahead in the export process. LEFASO has very nominal
membership fees and you should take full advantage of the services they
offer. The same is true of your local footwear trade associations which
should also be a point of contact.
SWOT Your Company
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A huge mistake that companies make is in not understanding what they
have to offer a potential buyer or company with which they want to develop

2. 1 individual with previous export experience who speaks English
and Russian. Has training in export document preparation. No
experience in footwear.
3. 1 individual with design and patternmaking experience. Can
duplicate samples from pictures or supplied sample.
4. 1 individual with purchasing and material sourcing experience.
Can locate materials necessary for samples and select reliable
sources.
5. 1 engineer with experience in formal costing.
6. I (owner) speak Italian and Vietnamese. My expertise is finance.
7. We have e mail, which we check every 2 hours.
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The total of the above inventory is your resources. How you put these
resources to use becomes your company’s strengths. Use the same
inventory to determine your weaknesses. Here is an example:
1. Our process equipment is for making vulcanized footwear. If a
customer wished cement lasted or stitchdown footwear we cannot
produce that without major equipment changes.
2. We can make 800 pair per day per shift or 1600 pair per day on 2
shifts. We now sell 600 pair per day so to sell more than 1000
additional pair per day will require longer delivery times or another
factory.
3. Our molds are made in European sizes and widths. It will take major
expenditures to make Japanese sizes and widths.
4. We cannot obtain raw materials for leather shoes in less than 60 days
after an order receipt.

We follow the same process on opportunities and threats. Here are
examples:
1. We had very good interest at the shoe fair in Russia. We had an order