The problem is growing in the shoe industry. The sector gave a foreign trade deficit after 6 years. The 9-month deficit approached USD 80 million. The deficit is USD 140 million for the last four months.
Stating that they are fighting with counterfeit products in the domestic market, sector representatives said that closures have increased in the last 7-8 months and the loss of employment has exceeded 80 thousand.
Due to many developments such as high costs, suppressed exchange rates and the contraction in export markets, the footwear industry started to run a foreign trade deficit for the first time this year after 6 years and the blood loss in the industry accelerated. The foreign trade deficit in the sector reached 140 million dollars in the last 4 months and 80 million dollars in 9 months.
Stating that imports continued to remain high, albeit at a slower pace, and that the counterfeit market outpaced the legal market, sector representatives emphasized that the developments led to downsizing, closures and concordats. Business people estimated that the loss of employment in the sector, where nearly 350 thousand people are employed, has exceeded 80 thousand in the last 7-8 months.
“No normalization until the second half of 2024”
Turkish Footwear Manufacturers Association (TASD) President Berke Icten said that the contraction in important export markets, especially in the EU, continues. On the other hand, Icten stated that big players such as China and India returned to the game with great support and continued as follows: “Increased price sensitivity led buyers to turn to these countries. The exchange rate has also been suppressed for a long time due to the monetary policy in Turkey. High costs, especially labor, make it difficult to compete with these countries abroad. While exports remain flat on a foreign currency basis, there is a decline on a quantity basis. We expect this situation to continue for another 7–8 months. We do not expect normalization before the second half of 2024.” Icten said, “The shoe industry is a labor-intensive sector. About 350 thousand people are employed. Companies know that they cannot continue in this way for another 7-8 months. Since there are also difficulties in accessing loans, both company closures and employment losses have increased. We estimate that 25 percent of employment has been lost in the last 7-8 months.”
Counterfeit market exceeds 200 million pairs
With the regulation made in September for the sector, customs tax rates were indirectly increased through the reference price in imports. Emphasizing that this decision is positive, but the growth in the counterfeit shoe market stands against them as a new and bigger problem, Icten said, “The counterfeit shoe market is now a very big problem. Foreign brands are not affected by this. This issue puts local brands that act legally in a difficult situation. It threatens them more. They cannot compete with fake shoes. We estimate that the sales volume of imitation shoes exceeds 200 million pairs per year. Measures need to be taken in this regard. We are not saying that a police measure should be taken here, that the facilities should be raided. We want these factories to be made legal production by the state. Otherwise, local brands can no longer survive.”
Foreigners who leave don’t come back
Yılmaz Polat, President of the Turkish Footwear Industry Research Development and Education Foundation (TASEV), said that this situation was also reflected in the activity at the fairs. Explaining that customers continue to flee due to the suppression of the exchange rate and high costs, Polat said, “It is difficult to get a foreign company and when you get it, it does not leave you easily. It is also very difficult to bring them back when they leave. We are currently in a period where we are missing such customers. There is a very serious loss. Sector players used to look at export income as a source of financing. That source does not exist now. That is why companies are experiencing working capital shortages. Last week, one of our manufacturers, which produces 4 thousand pairs daily for foreign companies, declared concordat.
EXPORT MARKETS BECOME EXPORTERS
Explaining that new producers have also started to emerge in the sector, Yılmaz Polat said, “Production has started in Uzbekistan, both in the sub-industry and in the end product. Labor wages are USD 200-250. We used to export to Uzbekistan, Kazakhstan, Turkmenistan and Azerbaijan. Now they not only produce their own needs but also export. They buy sole machines, shoe machines. They are growing aggressively. We are losing those markets both in the sub-industry and in the end product. Our chain stores rightfully continue to buy from abroad.”
Counterfeit market surpassed the legal market
Explaining that all this has led to a serious loss of employment, Polat continued as follows: “There are too many companies that have dropped from 200 to 70 workers, from 130 to 60. These problems will not be solved easily. It is difficult for foreigners to return. The counterfeit product market is also a very big problem. We cannot measure it, but the estimates are that the counterfeit market has surpassed the legal market. Cami Street in Gedikpaşa is now Brands Street. They are openly sold and traded,” he said.