Mexico Event Examines Trade, E-Commerce

LEON, Mexico — Nations must curb protectionism, and brands must accelerate e-commerce expansion to boost their fortunes in a time of cutthroat competition, said delegates at the World Footwear Congress here.

The event, held Nov. 24-25, saw hundreds of top industry executives attend a series of strategic conferences in Mexico’s shoe- manufacturing hub.

High Duties

Xiaobing Tang, market-access adviser at the World Trade Organization, called for global governments to slash tariffs to bolster shoe trade.

“Footwear tariffs are quite high, especially in major exporters like China, where they average 13 percent, while in Brazil, they are as high as 16 percent,” Tang said, adding that in more-developed countries, they average 4 percent.

Non-tariff barriers (NTBs) are also a hindrance, notably safeguard and anti-dumping measures, though the latter are declining, Tang said. Other restrictions linked to product safety, labeling, human health, conformity assessment and animal welfare must also be streamlined, he added.

Domenico Fornari, head of the EU’s Mexico commercial section, agreed, saying developing countries could benefit from further opening their borders and that trade barriers must be removed to bolster global economic growth, investment and employment.

“Economies that [are open to] international trade experience greater economic growth, much more than closed ones,” Fornari said, adding that the EU has followed this approach and now has a large number of free-trade agreements in place.

Open trade is crucial to cut manufacturing costs and integrate global supply chains.

“Raising import costs makes products less competitive,” Fornari added, and these days, “more and more countries need to import for re-export, so further integration is needed.”

Matt Priest, president of the Footwear Distributors and Retailers of America, said removing trade restrictions would benefit U.S. brands and exporters.

“In 2013, we imported $2.3 billion, but we also paid $2.5 billion in duties,” he said.

Regarding the Trans-Pacific Partnership, another hot event topic, Priest said the FDRA strongly supports the creation of the 11-country bloc, adding that it could bring $2.5 billion in additional business for American labels.

Priest said China remains the U.S.’s top supplier, followed by Vietnam and Indonesia.

Speaking to the Mexico-based suppliers in the room, Priest said their tiny fraction of the U.S. market could increase if suppliers made a greater effort to learn about local markets and brands’ needs.

Legal Commerce

Ysmael Lopez, president of the Guanajuato Shoe Industry Chamber (Ciceg), backed the call for free commerce. However, he said this must be pursued legally and fairly.

In a blow to China — which Mexico continues to slam for flooding it with low-value goods — he reiterated calls for the international body to ensure that members stick to fair-trade rules.

Mexico recently approved an aggressive aid package for the footwear sector that contains higher duties against Chinese and other Asian goods, as well as a slew of additional measures.

“I’m here with my colleagues from Argentina, Brazil, Ecuador, Chile and Uruguay,” Lopez told the conference, adding that Latin America makes 1.5 billion pairs a year. “We are once again asking the WTO to act more forcefully to ensure members meet existing agreements governing international trade.”

Internet Revolution

Other key discussions revolved around brands’ need to more efficiently marry physical products with their digital technologies in a way that’s both compelling for consumers and profitable for brands.

Claude Eriq Paquin, president and GM of French boutique chain JB Martin Paris, said the Internet is “changing everything” and that his company waited too long to establish an online presence. Once it did, though, sales soared.

Meanwhile, Basilio García Morón, CEO of Spanish shoe brand Callaghan, said his firm is enlarging its online portal Callaghan.com; it now accounts for 1 percent of the company’s 35 million euros in annual sales.

“We hope to increase online sales to 3 percent in three years,” he said, adding that he is set to introduce responsive smartphone technology in coming days to further lift sales.

Morón said more compelling product descriptions and website design will help woo shoppers to online stores. However, strong customer service is just as crucial, he said.

Danny Lam, managing director of Cornerstone International Group in China, said e-commerce could hit as much as 600 billion renminbi ($97 billion at current exchange) there by 2020. That will translate into huge opportunities for brands, especially those targeting China’s growing teen segment and consumers under 40.

“E-tailing is exploding and changing the market,” he said, adding that 26 percent of people search for products on the Internet and then try them on at stores before purchasing them online. Moreover, 58 percent of Internet users shop on the web at least once a week — and that number is set to increase sharply.

In Russia, Elena Petrova, CEO of Avenir, said online commerce comprises 2.5 percent of footwear sales in Russia and is set to grow rapidly in coming years.

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