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Ethiopia: Local shoe factories vie against global brands

Thursday, March 31, 2016 > 10:25:13
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(Video News By Abebech Tamene)

‘The quality and export capability of global and domestic firms are like different worlds,’ says industry spokesman

As global footwear brands establish more of a base in Ethiopia and manage to take nearly 70% of the export market, local firms are struggling to push exports and compete with imported shoes, officials said.

Berhanu Serjabo, leather industry development institute spokesperson, said that over the last few years, world-renowned brands like George Shoe, Fontenina Shoe Factory, Huajian International Shoe City, Mohan PLC, and Oliberti Shoe have opened up factories.

“And they are exporting high-quality footwear labeled ‘Made in Ethiopia’ to various countries,” he said.

Two different worlds

According to Berhanu, there are about a dozen domestic companies competing with high-quality brands.

“Their quality and export capability of the global and domestic companies are simply incomparable – they represent two different worlds,” he said.

According to Berhanu, over the first six months of the Ethiopian fiscal year – July to December 2015 – a total of more than 2.4 million pairs of export shoes were produced by 17 shoes factories operating in Ethiopia.

“Over 1 million pairs of those shoes were produced and exported by five foreign companies.”

Among these 17 factories, five are foreign owned and did 68.6% of the total shoe exports, or $12.09 million.

Domestic factories earned $4.2 million from footwear exports during the first seven months of the fiscal year, Berhanu said.

‘We have the edge’

One of the foreign factories belongs to Taiwan-based George Shoe Ethiopia Plc., established at a cost of $9 million in 2014.

Company director O.K. Kaul told Anadolu Agency that “the factory, which has the capacity to produce 3,000 pairs of shoes a day, is one of the leading manufacturers producing comfortable shoes in the world.”

“We export to big fashion houses in China and Japan and earned $3.8 million last year,” he said.

“Ethiopia’s abundant cattle, young labor force, and stability attracted the factory to invest here.

“There are minor difficulties like an electric power shortage the factory has been facing; however, we have extraordinary support from top Ethiopian government leadership.”

George Shoe is undertaking an expansion on 26 hectares of land in Modjo, approximately 70 kilometers east of Addis Ababa, he said.

Competitive factors

The oldest shoemaker in Ethiopia, Anbessa Shoe S.C., was established in 1927.

“The factory has been exporting its products to the U.S., France, Japan, South Korea, and Hong Kong for three years,” said the company’s export manager, Berhanu Deresse.

He added, “There are challenges in competing in the global market, as our competitors utilize state-of-the-art machines and chemicals.”

“Shortage of foreign currency and difficulties in getting certification from organizations like the International Organization for Standardization (ISO) are some of the challenges,” he said.

“Market demand for our durable products has been rising compared to that of the glittering imported shoes; however, we cannot say that we have won the domestic market,” he added.

Why Ethiopia?

Getahun Negash, public relations director of the Ethiopian Investment Agency, told Anadolu Agency that foreign footwear makers invest in Ethiopia because export shoe manufacturing is a priority area of the government.

“We give packages of incentives to them.”

“Capital goods are imported 100% tax free, while a 5- to 7-year tax holiday is given to the manufacturers. The tax holiday is extended by two years if the manufacturers fail to make a profit from exports.”


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