China’s Footwear Market
29 September 2017
I. Market Overview
As the disposable income of China’s huge population continues to rise and consumer demand for higher quality footwear grows, sales in the sector are not only enormous, but are increasing steadily. According to a survey by Euromonitor, the total value of mainland footwear sales in 2016 was RMB360.9 billion, a 2% year-on-year increase. Of this, the sales of men’s shoes delivered RMB136.3 billion in revenue terms, accounting for 38% of the total, while the sales of women’s footwear brought in a further RMB176.6 billion (49%). Sales of children’s shoes, meanwhile, accounted for RMB48 billion (13%). By 2021, it is estimated that the mainland footwear market will be worth around RMB438.2 billion.
Footwear Sales in 2012-2016 (RMB million)
2012 2013 2014 2015 2016 Children’s shoes 32,595.8 36,181.3 39,980.3 43,978.4 47,980.4 Men’s shoes 104,587.9 114,837.5 124,483.8 131,081.5 136,324.7 Women’s shoes 153,735.8 169,878.0 177,182.8 178,954.6 176,628.2 Total 290,919.4 320,896.8 341,647.0 354,014.5 360,933.3
Source: Euromonitor International
Leather shoes market: Office workers are the primary purchasers of leather shoes, a group that is now placing greater emphasis on the design and style of their footwear. It is also worth noting that male and female consumers have totally different criteria when it comes to buying shoes. While men tend to attach more importance to traditional designs, women are more focussed on current and up-and-coming styles. Generally speaking, the received wisdom that women own more pairs of shoes than men is borne out by factual analysis.
According to a 2013 consumer survey on China’s leather goods market conducted by the HKTDC, the mainland’s primary footwear purchasing traits can be summarised as follows:
Leather shoes are probably the most popular leather goods, while their rate of wear and tear is also the fastest. In the 12 months prior to the survey, almost all respondents (84.9%) had bought leather shoes, averaging out at 2.8 pairs per person. Both the proportion and average number of leather shoes bought in cities in eastern China were slightly higher than those in other regions.
For 56% of the respondents, the preferred leather material was sheepskin (lambskin), followed by cowhide (47.3%) and suede (26.9%).
In the 12 months preceding the survey, the average spend of the respondents on each pair of shoes was RMB1,075. At RMB1,236, the average spend of people in the eastern Chinese cities was the highest.
Consumers also indicated that they visit leather goods stores frequently, with nearly 80% visiting such an outlet at least once a month, mostly during the weekend or on a public holiday.
In terms of sales channels, more than 50% of the respondents said department stores were their preferred choice for purchasing leather goods. As a result, Hong Kong companies wishing to set up new sales outlets should consider marketing their products alongside other leather goods brands in department stores.
Sports shoes market: Sports shoes can be classified into general sports shoes, professional training shoes and professional sports shoes, according to their specifications. The most commonly purchased sports shoes are sneakers, travelling shoes, basketball shoes, football shoes and tennis shoes. As sporting events are becoming more and more popular and people’s interest in their personal fitness continues to rise, the cost of participating in sports-related activities has become a significant part of many individuals’ monthly spending. Among all such items, the sports shoes sector is seen as the most brand-led. Over recent years, in addition to such well-known global brands as Nike, Adidas and Li Ning, a number of domestic brands – most notably, 361 Degrees, Peak, Anta, CAN·TORP and XTep – have been growing in popularity, particularly in the second- and third-tier cities.
Leisure shoes market: As the concept of ‘leisure’ is becoming increasingly important in the lives of many Chinese consumers, the market for leisure shoes is also growing rapidly, with style and comfort seen as the two primary selling points in the sector. Typically, purchasers of leisure shoes tend to be aged between 18 and 45 and more demanding than average in terms of brand culture and individuality, with students and office workers forming the mainstay.
Slippers market: Following the diversification of footwear trends and the development of urban leisure, slippers have undergone their own evolution. They have shifted from being traditional worn-at-home items to becoming fashionable and a reflection of the tastes of modern urban trendsetters. As a consequence, sales of outdoor slippers, led by leisure slippers and fashion slippers, have been growing rapidly.
Children’s shoes market:
According to Euromonitor, China’s children’s shoes market was worth RMB48 billion in 2016, a year-on-year increase of 9%. For the same period, figures released by China’s National Bureau of Statistics show that there were 230 million children aged 15 and under living in the country, and 17.86 million babies born throughout the course of the year. In view of this, the children’s shoes market clearly has enormous growth potential.
In recent years, many of the leading children’s footwear brands have attached increased importance to product quality, while there has also been a greater emphasis on producing healthier footwear. Inevitably, elements such as the style, quality and comfort of shoe products directly influence consumer buying decisions.
Various adult footwear brands have also entered the children’s market over recent years. In addition to the established international brands, such as Nike and Adidas, several domestic brands have also entered the children’s garment, footwear and accessories market, including Li Ning, Anta, 361 Degrees and Xtep. Apart from developing additional revenue areas, building an extended brand allegiance has also been a priority for many of these domestic brands.
Inevitably, keen competition has led to the segmentation of the children’s shoes market. At the same time, many players have sought to expand their market share through the continual improvement of their products and services.
As the ‘low-carbon, eco-friendly’ trend is drawing more and more public attention, various brands in the footwear industry have launched low-carbon society campaigns, with some of them introducing low-carbon products utilising green raw materials, energy conservation and recyclability in a move to enhance their brand and attract consumers. Reebok, for instance, has developed a system for making leisure shoes using industrial corn and organic cotton. When these eco-friendly shoes are worn out and discarded, their biodegradable materials turn directly into fertiliser without any negative consequences for the environment.
Imports of selected footwear products in China in 2016:
HS Code Description Import Value
6401 Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes 2.9 -3.6 6402 Other footwear with outer soles and uppers of rubber or plastics 306.9 20.6 6403 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather 1,308.5 -9.6 64031200 Ski boots, cross-country ski footwear and snowboard boots 0.08 -9.1 64031900 Other sports footwear 15.1 -26.4 64032000 Footwear with outer soles of leather, and uppers which consist of leather straps across the instep and around the big toe 4.6 -14.2 64035900 Other footwear, covering the ankle but not covering the knee 169.9 -12.6 64039900 Other footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather 869.8 -9.1 6404 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials 1,0747.6 47.6 64041100 Sports footwear, tennis shoes, basketball shoes, gym shoes, training shoes and the like 86.4 137.8 64041900 Other footwear with outer soles of rubber or plastics 958.3 46.3 64042000 Footwear with outer soles of leather or composition leather 29.9 -18.2 6405 Other footwear 37.6 45.6
Source: Global Trade Atlas
II. Market Competition
The mainland footwear market is dominated by domestically made products. There are currently four major footwear industry clusters in the country, predominantly located in the southeast coastal regions. The Guangdong footwear industry base, with Guangzhou and Dongguan at the heart of it, focuses on medium to high-end shoes, while Zhejiang, with its footwear sector centred around Wenzhou and Taizhou, primarily produces medium to low-end men’s shoes. In the case of the western region, its footwear industry is spearheaded by Chengdu and Chongqing, with medium to low-end women’s shoes accounting for the majority of its output. Led by Quanzhou and Jinjiang, meanwhile, Fujian’s footwear industry specialises in sporting shoes.
Basically, three different kinds of businesses are targetting the mainland market. Firstly, there are the imported brands, which mainly come from the US and Europe, with Italy and Spain particularly well-represented. Here such brands as Santoni, the Italian handmade shoes company, tend to target the higher end of the market. Then there are the Sino-foreign joint-venture enterprises. Primarily headquartered in Hong Kong or Taiwan, their financial resources and design capabilities once saw them dominate the mid-market. More recently, however, a number of domestic brands, most notably Shenzhen-based Belle, have made successful incursions into this particular sector. The overall picture is completed by the vast number of domestic manufacturers who primarily service the lower end of the footwear market.
At present, an increasing number of footwear companies are investing heavily in their technological resources, while prioritising innovation, in a bid to remain competitive and refine their production techniques. It is, therefore, widely anticipated that new technologies, materials and processes will change the face of the footwear industry. In turn, this is expected to transform the mainland footwear market, with a new emphasis on style, quality and value-for-money pricing emerging. In a clear example of this, Anta, the Xiamen-based sports shoes company, has set up dedicated research facility with a brief to reinvent the company’s range of basketball, running and table tennis shoes. At the same time, a number of footwear manufacturers that have competed more on price terms have been looking to relocate their production to lower cost regions. This has seen Wenzhou’s footwear industry, for instance, looking to migrate to the western region of China where labour costs are expected to be lower.
With many international brands already well-established on the Chinese market, a number of domestic companies have also begun to realise the importance of developing their own brand equity. This has seen several well-regarded mainland footwear brands emerge, including Li Ning, Belle, Aokang, Anta and XTep. Partly on account of this, the market share of domestic brands rose notably in 2016, although mass-market pricing and an expansion into the less-developed cities also contributed to this growth. Despite this, many of the international brands also reported steady sales growth, with the rising income of many mainland consumers seen as fuelling this.
Overall, though, intensifying competition has led to further market segmentation. This has seen many of the better-known international and domestic sports shoes brands, for instance, focusing their efforts largely on the adult market. As competition continues to increase, however, the market is expected to become still more segmented, which will give companies in the sector scope for targetting additional niches and sub-categories. As an example of this, with hiking having become widely popular across the mainland, a number of footwear companies have taken the opportunity to launch specialist hiking and walking footwear.
Despite these increased opportunities for specialisation, many mainland manufacturers remain concerned over the renewed challenges coming from elsewhere in Southeast Asia, with several countries now offering considerable labour cost advantages over China, while also having improved access to better-resourced local industry chains. As the capacity of these countries is limited and their industry chains remain comparatively undeveloped, China has, for the time being at least, retained its role as the world’s favoured workshop. With one eye on the future, however, a number of mainland footwear companies have developed strategic relationships with their Southeast Asian counterparts. One of the fruits of this policy was the June 2013 launch of the China-ASEAN Footwear Industry Cooperation Committee.
III. Sales Channels
Department stores, large shopping centres and warehouse-style shopping malls are the leading footwear retail channels in China, although specialty and franchised stores have been growing in popularity over recent years. Part of the appeal of these specialty stores lies in their robust brand image, fast cash flow and prompt and effective customer feedback. In terms of their disadvantages, some customers have complained of the homogeneity of their products and brands. Despite this, many companies are still opting to use specialty stores – now a common sight on the mainland – as their primary sales channels, including such high-profile businesses as Le Saunda and Aokang. A slightly different approach, however, has been taken in the northern cities, where customers still favour department stores, with many footwear brands now available via the shop-in-shop format within these larger outlets.
In Wenzhou -- the city seen as the ‘footwear capital’ of China – several trade associations have established a one-stop footwear products and services platform as a means of promoting the city’s footwear material and footwear manufacturing industry. This dedicated site, billed as ‘China’s footwear and footwear material city’, has signed up more than 500 tenants, all of them currently active in the sector. With a huge variety of footwear and footwear materials on offer, many from well-known brands, the platform now attracts buyers from across China and the whole of the world. This innovative marketplace is now seen as playing a key role in the sustained development of Wenzhou’s footwear sector.
Taking a different approach, a number of manufacturers have started to channel more of their products through hypermarkets, outlets where different types of shoes under different brands are usually grouped together and offered for sale under one roof. By doing so, they have ended their reliance on single-brand specialty stores, opting instead for the more diversified opportunities offered by the hypermarkets. Typically, many of the well-known brands will set a lower price point for the items they sell through hypermarkets, with middle-aged and younger consumers seen as their target purchasers.
Chain operations are also seen as having a strong competitive advantage in the footwear sector. As a consequence, large-scale chain operations are becoming ever more popular on the mainland, with both Shenzhen’s Zhengdahua of Guangzhou’s Darloro having adopted this model.
Aside from the importance of the conventional retail sector, footwear manufacturers and distributors have also been keen to seize the opportunities offered by the mainland’s burgeoning love affair with e-commerce. This has already resulted in several landmark developments:
In August 2010, www.cnxz.cn, a mainland-based footwear e-commerce site, linked up with a number of China’s footwear manufacturers to launch an online wholesale mart. This resulted in many of these manufacturers opening dedicated online shops within the wider portal, allowing for the integration of the online and offline resources of the mainland’s footwear sector. Overall, it provided a comprehensive business platform for both footwear manufacturers and traders by offering a range of specialised services, including online display, brand promotion, online marketing, business matching and industry information dissemination.
In April 2015, Alibaba, China’s e-commerce giant, launched its “made with good quality in China” campaign, an initiative backed by a number of local quality supervision departments and several industry and trade associations. This led to a substantial number of domestic footwear brands featuring on the platform throughout the course of the campaign.
According to recent research, the three most popular categories among mainland e-shoppers are garments, headgear and footwear. Typically, online shops list the sizes of their products and feature colour photos of the range on offer. As most online clothing and footwear shops offer free returns, consumers feel confident in making a purchase and then returning the items should they prove unsuitable. With many mainland consumers feeling that there are now too many physical stores selling an ever-changing range of clothes and shoes, it is seen as impossible to see everything that is on offer. Online search engines, however, can help consumers find what they want easily and quickly, while potential buyers can also ascertain the strengths and weaknesses of individual products by browsing online user reviews.
Despite the growth in significance of online sales, footwear marts housing large numbers of manufacturers and suppliers remain important wholesale trading platforms for footwear products across the mainland. Among the most popular examples are the footwear commercial district on Guangzhou’s Zhanxi Road, the Hehuachi footwear wholesale mart in Chengdu, the shoe city in Wenzhou and the Taipingyang (Pacific) shoe city in Changchun. At present, many of the specialised footwear wholesale marts in the larger cities are looking to move upmarket, while also setting out to expand their operations. This should help boost the sales of more fashionable footwear, while increasing its influence on the wider marketplace and increasing both footfall and sales within these specialist marts.
China’s wide range of footwear trade fairs, which take place in several locations across the country, are seen as one of the key means for industry players to stay informed of the latest developments within the sector.
Selected Footwear and Related Products Exhibitions in China
Date Exhibition Venue 31 Oct -2 Nov 2017 Canton SF Shoe Fair Poly World Trade Center Expo, Guangzhou 27-30 March 2018 China (Dongguan) International Footwear Machinery & Material Industry Fair Guangdong Modern International Exhibition Center 30 May -1 June 2018 Shoes & Leather - Guangzhou China Import and Export Fair Complex, Guangzhou 25-27 August 2018 China (Wenzhou) International Leather, Shoe Material and Shoe Machinery Fair Wenzhou International Convention and Exhibition Center
IV. Import and Trade Regulations
It is important for any overseas companies looking to enter the Chinese footwear market to take note of the relevant standards that apply. Under the Standardisation Law of the People’s Republic of China, which came into force on 1 April 1989, there are four levels of standards – national, industry, local and corporate. The national standards are subdivided into mandatory (GB) and recommended (GB/T). The industry standards are similarly divided – mandatory (QB) and recommended (QB/T). Overall, footwear falls into the light industry category, where the local standards are mandatory standards enforced within particular administrative regions, while the corporate standards apply internally within any given enterprise. For all enquiries with regard to the relevant standards, visit the website of Standardisation Administration of China.
- For 2017, the tariff rates levied by China on selected imported footwear products are as follows:
HS Code Description Tariff rate
6401 Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes 24 6402 Other footwear with outer soles and uppers of rubber or plastics 10-24 64031200 Ski boots, cross-country ski footwear and snowboard boots 24 64031900 Other sports footwear 15 64032000 Footwear with outer soles of leather, and uppers which consist of leather straps across the instep and around the big toe 24 64034000 Other footwear, incorporating a protective metal toe-cap 24 6404 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials 12,24 6405 Other footwear with uppers of leather or composition leather 12,15 6406 Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles and parts thereof 15
Under CEPA, in principle, all Hong Kong products manufactured in compliance with the rules of origin can enter the mainland market with a zero tariff rate. As such, footwear products are entitled to zero tariffs and Hong Kong companies can clearly benefit from this arrangement when accessing the mainland market.
As of 1 September 2015, however, a new set of standards – Technical Specification for Export Footwear (SN/T 1309-2015) – has been applicable to the inspection of China’s footwear imports and exports, replacing the previous SN/T 1309.1 – SN/T 1309.7 series of standards.
China has also updated certain footwear product standards and related testing methods, as shown in the table below:
Testing Method/Standard Standard Code Standard Title Replaced Standard Executed Date 1 GB/T 33393-2016 Footwear --Test method for whole shoes -- Measurements of heat and moisture resistance under steady state - 1 Jul 2017 2 GB/T 33426-2016 Rubber shoes -- Determination of organotin compounds - 1 Jul 2017 3 GB/T 33393-2016 Footwear -- Test method for whole shoes -- Measurements of heat and moisture resistance under steady state - 1 Jul 2017 4 GB/T 32435-2015 Footwear -- Test method for volatile organic compounds - 1 Jul 2016 5 GB 30585-2014 Safety technical specifications for children’s footwear - 1 Jan 2016 6 GB/T 30907-2014 Rubber shoes -- Test method for shock attenuating properties of athletic shoes - 1 Dec 2014 7 GB/T 30909-2014 Rubber shoes -- Determination of migration of acrylonitrile - 1 Dec 2014 8 GB/T 30910-2014 Rubber shoes -- Determination of migration of 2-Mercaptobenzothiazole and 2,2’-Dithiobis (benzothiazole) - 1 Dec 2014 9 GB/T 31278-2014 Brand valuation -- Apparel, shoe and hat industry - 1 Dec 2014 10 HG/T 2877-2014 Determination of pull-out force of upper bands from bottom of slippers or sandals HG/T 2877-1997 1 Oct 2014 11 HG/T 3663-2014 Test method for antibacterial activity of rubber shoes HG/T 3663-2000 1 Oct 2014 12 HG/T 3664-2015 Test method of the resistance of all rubber boots (shoes) to water penetration HG/T 3664-2000 1 Oct 2015 13 HG/T 3689-2014 Test method of discoloration for footwear HG/T 3689-2001 1 Oct 2014 14 HG/T 4620-2014 Footwear -- Test methods of rubber parts -- Blooming - 1 Oct 2014 15 HG/T 4805-2015 Rubber shoes -- Determination of adhesion between rubber parts and textile fabric - 1 Oct 2015 16 HG/T 4806-2015 Rubber shoes -- Test method for outsoles -- Compression set - 1 Oct 2015 17 HG/T 4807-2015 Rubber shoes -- Test method of anti-perspiration for insole, lining and in socks - 1 Oct 2015 Product Standard Standard Code Standard Title Replaced Standard Executed Date 1 GB/T 22756-2017 Leather sandals - 1 Dec 2017 2 GB/T 33384-2016 Rubber footwear terminology - 1 Jul 2017 3 GB 19340-2014 Adhesives for footwear and luggage GB 19340-2003 1 May 2015 4 GB/T 30779-2014 Water-based polyurethane adhesives for shoes - 1 Dec 2014 5 HG/T 2018-2014 Casual rubber shoes HG/T 2018-2003 1 Apr 2015 6 HG/T 2870-2014 Professional sports shoes for table tennis HG/T 2870-1997 1 Oct 2014 7 HG/T 4621-2014 Latex foam for footwear - 1 Oct 2014 8 HG/T 4808-2015 Mesh for shoes - 1 Oct 2015 9 HG/T 4809-2015 Cross-country rubber shoes - 1 Oct 2015
Source: Customs Import and Export Tariff of the People’s Republic of China 2017