MARKET PROFILE

Footwear, outer soles of rubber/plastics uppers of leather, nes

TO
GERMANY

Bangladesh

June 2015

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 Market Profile

SMEs face difficulty in identifying potential and existing export market of a particular product. As a
result, with comparative advantage in terms of raw materials or labor force, SMEs are unable to
exploit these advantages by targeting a prospective foreign market. Market Analysis tools of
International Trade Centre (ITC) help to identify export market opportunities. It provides data and
information on international trade trends, national export performance, export markets and help to
analyze market in depth. SME Foundation has taken an initiative to prepare product-wise market
profile using Market Analysis Tools and Market Profile Template developed by ITC. The main
objective of the project profile is to guide and help the SME entrepreneurs to analyse international
market of their products.

This market profile provides data, information and analysis of a exportable product which includes HS
code, production, consumption, world import and export, annual growth in value and quantity, demand
and supply analysis, country trade performance, Time series analysis, graphical analysis, market
screening, identify potential attractive market, competitor analysis, tariff advantage in potential
markets, target market selection, PEST analysis, market access (Tariff and non-tariff measures),
packaging & labeling regulations, price, distribution channels, promotion, buyer list and many other
issues.

Although, the material included in this document is based on data/information gathered from various
reliable sources; however, it may differ from case to case. As the data are dynamic, it is changing
frequently. Further study and in some cases professional advice are required before taking any
decision to act upon the information. The actual results may differ substantially from the presented
information due to various factors. SME Foundation does not assume any liability for any financial or
other loss resulting from this document.

The annual data in this market profile is based on COMTRADE, the world’s largest trade database
maintained by the United Nations Statistics Division, and monthly or quarterly data are collected by
ITC from national custom offices or regional organizations. The market access data is directly
retrieved from the Market Access Map application.

Prepared by:

SME Foundation
Royal Tower, 4 Panthapath, Dhaka-1215
Phone: +88 02 8142983, 9142907, 09669300001-4
Fax: +88 02 8142467
E-mail: [email protected]
Website: www.smef.org.bd

Market Analysis Tools &

Market Profile Template Developed by:
International Trade Centre UNCTAD/WTO
Market Analysis and Research
Division of Market Development
54-56 rue de Montbrillant
Palais des Nations, 1211 Geneva, Switzerland

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 Table of Contents

Executive Summary 4
A Product Description 5
A.1 Definition and description of product and its application(s) 5
A.2 Production 5
A.3 Consumption 7
B Global Trade Overview 8
B.1 World Trade characteristics for selected product 8
B.2 World imports characteristics 8
B.3 World export characteristics 9
C Country trade performance for your selected product 10
C.1 Your country’s export performance for selected product in the world 10
market
C.2 Tariff faced by Bangladesh in the world 11
C.3 Graphic Analysis 12
D Market Screening 14
D.1 Identify attractive potential markets 15
D.2 Target Market Selection 16
E PEST Analysis 17
F People & Product 18
G Permission: Market Access 19
H Packaging and Labelling Regulation 20
I Price 21
J Placement: Distribution Channels 21
K Promotion 22
L Potential Prospects 23

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 Executive Summary

This market profile reviews the Germany market for Footwear, outer soles of rubber/plastics
uppers of leather, nes and its future prospects for new suppliers entering the market. The purpose of
this market profile is to guide possible new entrants into the Footwear, outer soles of
rubber/plastics uppers of leather, nes market.

The Germany market for Footwear, outer soles of rubber/plastics uppers of leather, nes is a growing
significantly in the last few years.

A total of 29,819 million US$ of this products is imported and 30,642 million US$ of this product is
exported in the world in 2014.

The demand for Footwear, outer soles of rubber/plastics uppers of leather, nes has been increased.
Annual growth of world import is increased by 1 % between 2010-14. USA, Germany and Hong Kong,
China are the largest importer of this product.

Bangladesh already exports this product. Export earnings from spices was US$ 225 million in 2014.
Bangladesh is winning market share in the world market. Annual growth rate (in value) of Bangladesh
was 17% in 2010-2014 while world average growth rate was 3%. The major importing countries are:
Japan, Germany, Italy, Netherlands, USA, Hong Kong, China, UK, France, Poland and so on.

Germany, USA and Netherlands are the attractive markets for the Footwear, outer soles of
rubber/plastics uppers of leather, nes exported by Bangladesh. Among these countries, Germany has
been selected as target market for this market profile for the following reasons:

- Germany is the 2nd largest importing market of footwear commanding 8.3% share of world imports.
- Germany is the 2nd largest importer of this product from Bangladesh (19.3% share in Bangladesh’s
export) .
- Germany import has grown by 1% over the last 5 years in the world.
- Germany is a growing market for Bangladeshi footwear over the last 5 years (32% growth in value).
- There is a prospect for market diversification of Bangladeshi footwear in the Germany market
(bubble graph).
- Tariff applied by Germany to Bangladesh is 0% for this product.

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 A. Product Description

This market profile illustrates the Germany market for Footwear, outer soles of rubber/plastics
uppers of leather, nes and is intended for the use of producers and exporters of Footwear, outer
soles of rubber/plastics uppers of leather, nes in Bangladesh.

A.1 Definition and description of product and its application(s)

 Perhaps as little as a century ago, footwear use outside of the home was ubiquitous only in
economically advanced countries. Now it is almost universal. Even in the world’s poorest
countries, only remote small sub-populations remain barefoot. For some the wearing of
footwear is used (unknowingly) to continue an ancient decorative tradition of using foot
ornaments as a fashion statement or to signify social class.

 Traditionally German people mostly buy a new pair of shoes out of necessity and regard
comfort more important than fashion.

 Product Groups: Casual footwear, Sports footwear, Formal footwear, Evening footwear.

HS code

Specific codes to identify the product category are as follows:

HS (Harmonized System) Code1:
4-digit HS: 6403 6-digit HS: 640399

A.2 Production

World production

According to the World Footwear Yearbook the production of footwear in 2010 was 20 billion pair. The
production of footwear in 2013 crossed the 22 billion pair threshold for the first time.

China alone produces more than 62% of the world total. Its regional neighbours India, Vietnam,
Indonesia, Pakistan, and Thailand are also among the top 10 world producers,producing another 20%
of the total. Outside Asia, Brazil is the most important producer, with 4.4%. Mexico, Italy, and Turkey
are also among the world’s most significant manufacturers. Together, these ten countries account for
90% of the world footwear production.

1 HS Codes are internationally standardized names and numbers that classify traded products that
are developed and maintained by the World Customs Organization (WCO). The WCO is an
independent organization of 160 countries based in Brussels, Belgium. The HS system represents
almost 98 percent of world trade, which includes 200 countries. www.wcoomd.org

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 Source: World Footwear Year Book 2011

Manufacture of footwear is heavily concentrated in Asia, as can be seen in Chart 1, this continent now
produces 87% of all the pairs of shoes produced worldwide

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Bangladesh production

Footwear production of Bangladesh: export oriented footwear 22 million pairs

[Source: 2nd Dhaka Leather Goods Fair–1997, GTZ, Dhaka 1997, page 22]

Export earnings from this sectors was $550 in FY2013-2014(EPB).

The footwear sector estimates local (approximate) demand of 190 million pairs was made by local
footwear manufacturers.

A.3 Consumption

 German consumption of footwear was € 8.6 billion in 2008, or 330 million pairs.
 4.0 pairs per capita, spending € 104 per year

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 B. Global Trade Overview

B.1 World Trade characteristics for selected product

B.1.1 How much in total of this product is imported in the world in 2014?

Value imported in 2014 (USD thousand) 29,818,795

B.1.2 How much in total of this product is exported to the world in 2014?

Value exported in 2014 (USD thousand) 30,642,214

B.1.3 Have the world imports grown or declined in the last 5 years? Annual growth in value
between 2010-2014 (%)
Annual growth in value between 2010-2014 is 1%.

B.1.4 Is there a difference between the world’s growth rate in value and world’s growth rate in
quantity?
N/A

B.1.5 Approximately how many countries import and export the selected product?
Approximately 210 Countries import and export the product

B.2 World imports characteristics:

B.2.1 which countries are the 3 largest importers (in value in 2014) of the product?

Ranking Importers Share in World Imports, %

1 United States of America 22.5

2 Germany 8.3

3 Hong Kong, China 7

B.2.2 What share of world total imports do the 3 main importers make up together? 37.8%

B.2.3 Does this indicate that the world demand for this product is concentrated?
NO

B.2.4 Among the list of top 20 importers (in value) in 2014 is there country for which the trade
balance (in value) is positive in 2014. Please account for the possible reasons that could
explain this difference.
Name of the countries: Italy, Belgium, Netherlands, China, Spain,
Reason:
Exports > Imports

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B.3 World Exports characteristics:

B.3.1 Which countries are the 3 largest exporters (in value in 2014) of this product? What is the
value of their exports?
Ranking Exporters Share in World Exports, %
1 China 26.9

2 Vietnam 12.2

3 Italy 9.5

B.3.2 What share of world total exports do the 3 main exporters make up together?
48.6%

B.3.3 Does this indicate that the world supply for this product is concentrated?
NO

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 C. Country trade performance for your selected product

C.1 Bangladesh’s export performance for selected product in the world market

C.1.1 Does Bangladesh already export this product? YES

If yes, what is Bangladesh’s ranking in world exports and world market share of this product in 2014?
Ranking: 23 World Market Share: 0.73%

C.1.2 How much in total of this product is exported by Bangladesh to the world?
225 million US$
Quantity: N/A

C.1.3 Is Bangladesh winning or losing market share in the world market?

Annual growth rate (in value) of
Bangladesh is winning market share in the world market.
Bangladesh was 17% in 2010-2014 while world average growth rate was 3%.

C.1.4 Who are the three biggest importers for your product in 2014?

1. Japan 2. Germany 3. Italy

Trade Indicators
Exported growth in value between

Exported growth in value between

partner countries between 2010-

Ranking of partner countries in

Total import growth in value of

Share in Bangladesh's exports

Tariff (estimated) faced by

Share of partner countries in
Exported growth in quantity
between 2010-2014 (%, p.a.)
Exported value 2014 (USD

Trade balance 2014 (USD

Exported quantity 2014

Unit value (USD/unit)

Bangladesh (%)
2010-2014 (%, p.a.)

2013-2014 (%, p.a.)

world imports (%)

world imports

2014 (%, p.a.)

Quantity unit
thousand)

thousand)

Importers
(%)

No
quan
Total 224849 219306 100 0 tity 17 3 9 100 1
Japan 71639 71639 31.9 2960 Tons 24202 16 7 -8 9 2.9 10 94
Mixe
Germany 43493 43493 19.3 0 d 32 39 2 8.3 1 0
Italy 12250 12250 5.4 671 Tons 18256 0 -9 -13 6 5 -5 0
Mixe
Netherlands 10101 10101 4.5 0 d 44 49 10 2.8 -2 0
United States of
America 10077 10077 4.5 261 Tons 38609 19 13 -16 1 22.5 0 6.4
Hong Kong,
China 7691 7622 3.4 199 Tons 38648 215 11 3 7 -4 0
United Kingdom 7571 7570 3.4 306 Tons 24742 8 -6 42 4 6.3 0 0
France 7544 7544 3.4 263 Tons 28684 -15 -11 -27 5 6 1 0
Poland 7068 7068 3.1 409 Tons 17281 62 68 410 18 1.1 8 0
Russian
Federation 4740 4740 2.1 137 Tons 34599 98 102 30 8 3.2 -4 6.6

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C.2 Tariff faced by Bangladesh in the world

 Tariff faced by Bangladesh in the world.

 Geographical distribution for tariffs applied by all importing countries to Bangladesh
 Product: 640399 - Footwear, outer soles of rubber/plastics uppers of leather, nes
 Trade year: 2013
 Applied tariff data source: ITC (MAcMap) complemented by WTO (IDB)
 Trade data source: ITC Normalized trade matrix
 AVE Methodology: AVE based on the World Tariff Profile (WTP)

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C.3 Graphic Analysis

Time Series Data

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Bar chart

Bubble graph

Note: When Bangladesh export growth to partner < Partner import growth from the world
That means Bangladesh is losing market share in partner countries

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 D. Market screening
Which importing countries have the highest imported value in 2014? And what are their
respective annual growth rates in value and in quantity between 2010 and 2014, share in world
import and Average tariff?

Annual Share in Average

growth in World tariff
Imported Annual growth in
Importing quantity Imports (%) (estimated)
Sl value in 2014 value between
country between applied by
(millions USD) 2010-2014, %”
2010-2014, the country
%” (%)
1 United States of 6720 0 -5 22.5 4.6
America
2 Germany 2462 1 -2 8.3 2.1
3 Hong Kong, 2093 -4 7 0
China
4 United Kingdom 1888 0 -5 6.3 2.1

5 France 1799 1 -7 6 2.1

6 Italy 1499 -5 -13 5 2.1

7 Belgium 991 8 3.3 2.1

8 Russian 940 -4 -7 3.2 13.3
Federation
9 Japan 866 10 5 2.9 115.6
10 Netherlands 844 -2 -9 2.8 2.1

Which countries would you consider as potential attractive markets for the footwear exported
by Bangladesh?

1. Germany
2. USA
3. Netherlands

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D.1 Identify attractive potential markets

D.1.1Which are three attractive markets for exporting this product?

Annual Share in Average tariff

Unit Growth Annual World (estimated)
Value
Target Value Rate in Growth Rate Imports applied by the
Imported
Country (US$/un value in quantity (%) country (%)
(million $)
it) 2010-14 2010-14 (%)
(%)
1 Germany 2462 36688 1 -2 8.3 2.1

2 USA 6720 38634 0 -5 22.5 4.6

3 Netherlands 844 33936 -2 -9 2.8 2.1

D.1.2 Who would be your main competitors in these countries and why?
Target Your country’s main competitor in target Market Share in Gaining or loosing
Country market 2014 (%) market shares
Germany Italy 9.9% Loosing by 1%
A China 8.9% Gaining by 1%
Slovakia 8.5% Gaining by 5%
USA China 59.5% Loosing by 5%
B Vietnam 15.7% Gaining by 13%
Indonesia 7.3% Gaining by 14%

Netherlands Belgium 19.8% Gaining by 3%

C China 13.5% Loosing by 8%
UK 10.6% Gaining by 50%

D.1.3 Identify the tariffs and tariff advantages in your potential markets?

Identify the tariffs and trade regimes that Bangladesh faces in the three attractive markets
identified in the last section (question B.3.1)

Target Country Trade Regimes Tariffs applied

Germany Preferential tariff for Least Developed 0%

A
Countries
USA MFN duties (Applied) 0%
MFN duties (Applied) 5%
B
MFN duties (Applied) 8.5%
MFN duties (Applied) 7%

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 MFN duties (Applied) 10%

Netherlands Preferential tariff for Least Developed 0%

C
Countries

Do you have tariff advantage advantages/disadvantages vis a vis your main competitors in the
three target markets?
Tariffs faced by competitors
Target Country Competitors
average
Germany Italy 0%

A China 7.7%

Slovakia 0%
USA China 6.4%

Vietnam 6.4%
B
Indonesia 6.4%

Netherlands Belgium 0%

C China 7.7%

UK 0%

D.2 Target Market Selection

Taking into consideration the trade patterns that you observed in the last section and the
market access considerations that you just reviewed, which of these countries should you
select as a target market for this Market Profile and why?
Target market is: Germany
Comments:
- Germany is the 2nd largest importing market of footwear commanding 8.3% share of
world imports.
- Germany is the 2nd largest importer of this product from Bangladesh (19.3% share in
Bangladesh’s export) .
- Germany import has grown by 1% over the last 5 years in the world.
- Germany is a growing market for Bangladeshi footwear over the last 5 years (32% growth
in value).
- There is a prospect for market diversification of Bangladeshi footwear in the Germany
market (bubble graph).
- Tariff applied by Germany to Bangladesh is 0% for this product.

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 E. PEST Analysis

POLITICAL ECONOMIC
 The government is parliamentary, and a  The German economy the 5th largest
democratic constitution emphasizes the economy in the world and Europe’s largest.
protection of individual liberty and division of  GDP of $3.747 trillion and GDP growth of
powers in a federal structure. 1.8%.
 When exporting to Germany, various aspects  The economy follows free market principles
have to be considered: Customs and taxes, with a significant degree of government
quality and environmental standards, regulation and generous social welfare
Trademark and competition rules etc. programs and protections.
 Economic life in Germany is more
international in nature than in most other
major industrial nations.
 The service sector contributes around 70% of
the total GDP, industry 29.1%, and agriculture
0.9%.
 Leading exporter of machinery, vehicles,
chemicals, and household equipment.
 Around 2/3rd of the world's leading trade fairs
take place in Germany.

SOCIAL TECHNOLOGICAL
 Germany has about 82 million inhabitants. It is  There are independent laboratories,
by far the largest country in the EU in terms of comprised of both the national laboratories
population. and private research.
 Passionate about lifestyle and politics.  The Ministry for Science and Technology, an
organization coordinates and sets priorities
for the entire national science and technology
program for Germany.
 Germany’s greatest strength is its automobile
industry. 3rd largest automobile producer in
the world.

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 F. People & Product

 German consumption of footwear was € 8.6 billin 2008.

 German people bought 330 million pairs in 2008, which meant 4.0 pairs per capita, spending
€ 104 per year, being above the EU average of € 100 per capita (4.2 pairs). German women
buy an average of 6 pairs, while German men buy 2 pairs per year. [CBI Market Survey]
 Product Groups:
Footwear Sales
Casual footwear 52%
Sports 22%
Formal 20%
Evening 6.3%

 According to the IFM (Institute for market research), the most popular shoes for women in
2008 were: In summer: Pumps/ballerinas, laced casual shoes/sneakers, mules, sandals and
boots. The main colours were black (40%), brown (13%), blue (9%), grey (9%) and other
colours (29%). In winter Boots with warm linings, all other boots, formal shoes/slippers, laced
casual shoes/sneakers. The main colours were black (49%), brown (29%), grey (6%) and
other colours (16%).
 German Footwear Consumption by user in 2008: [CBI Market Survey]

User %
Women 61.8
Men 22.3
Children 15.9

 Market Trends:
A reduction in weight, softer leathers (supple lambskin and Napa), velvety nubuck to improve
walking comfort and fit. More combinations of different leathers.

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 G. Permission: Market Access

G.1 Tariffs

Germany

Tariff Total ad
(estimated valorem
Market
applied by Tariffs faced equivalent Trade Regime
share
Germany %) Tariff

Preferential tariff for

Bangladesh 0 0 0% Least Developed
1.8
Countries

Tariff Total ad
<<Bangladesh’s>> (estimated Tariffs faced valorem Tariff advantage
Market applied by equivalent
main competitors in by Trade Regime for Bangladesh
share Germany (%) Tariff
target market competitors (yes or no)

9.9 0 0 0% European Union rate

1. Italy

8.9 7.7 8 8% MFN duties (Applied)

2. China
8.5 0 0 0% European Union rate
3. Slovakia

G.2 Non-tariff measures

Technical barriers to trade

Important link: http://exporthelp.europa.eu/thdapp/index.htm

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 H. Packaging and Labelling Regulations

Packaging

Care must be given to the packaging of products if one intends to export to Germany. It is obvious
that the packaging must be travel-steady. As required, products should also be protected against. The
elements, changes of temperature, rough handling and theft. Besides these basics of travel- and
handle-durability, some importers may have specific demands concerning packaging, like information
concerning the order printed on the boxes (order number, box number, name department or contact
person etc.).

For environmental reasons packaging made from materials like PVC is less popular with consumers
and in some cases is or will be forbidden by government. Exporters in developing countries should be
prepared to discuss this issue with potential clients and should anticipate building the cost of special
packaging into their price, if required.

The European Directive on Packaging and Packaging Waste (94/62fEC) establishes overall
legislation for the treatment of packaging waste, consisting of quantitative objectives to be achieved
by Germany and other EU member states. The member states have the responsibility to translate the
Directive into national legislation. It is becoming increasingly difficult and expensive to dispose of
waste in Europe. In principle, the importer is held responsible for disposal of the packaging waste for
all goods from outside the EU. It is therefore crucial, when planning exports to the EU, to take the
packaging of your products (both sales packaging and transport packaging) into consideration. To
lulfil the requirements of the target market, good communication with the importer about packaging is
necessary. Leather shoes are generally packed in individual boxes per pair and 12 to 18 pairs in a
carton, but cheaper plastic and textile shoes may also be packed in plastic bags or in bulk. Here too,
importers will most likely specify their packaging requirements.

Labeling

The aim of labeling is to foster trade, inform consumers, and highlight the visibility. The obligatory
labeling, as described in the EU shoe labeling Directive 94/ll/EC, concerns information about parts of
footwear, namely the upper, the lining and insole sock, and the outer sole of the footwear article. The
information must be conveyed by means of agreed pictograms or textual information, as defined and
illustrated in the Directive, and must relate to the material which constitutes at least 80 percent of the
surface area of the upper, the lining and insole sock, and at least 80 percent of the volume of the
outer sole. However, if no single material accounts for at least 80 percent, information must be given
concerning the two principal materials in the composition of the product. The manufacturer or his
authorized agent in the EU has to use at least the language or languages of the EU member state of
consumption. Exporters should be aware that the labelling should involve affixing the required
information to at least one article of footwear in each pair, either by printing, sticking, embossing or,
attaching a label. Moreover, the labelling must be sufficiently large, visible and understandable, so as
not to mislead the consumer.

At the moment, eco-labels are to a limited degree applied to footwear. The increasing market share of
self-service outlets, like grocers' supermarkets and variety stores, has enforced the inclusion of
information on packaging or product.

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 I. Price

Average price of footwear: 36,688 US$ per ton (Trade Map)

Consumer prices: Average prices of various types of footwear, €

Men’s leather shoe € 70

Men’s leather boot € 97
Ladies’ heeled fashion shoe € 50
Ladies’ fashion knee boot € 115
Ladies’ textile sneaker € 47
Source: Retailer websites (2009-10)

J. Placement: Distribution Channels

 The distribution of footwear in Germany is mainly carried out by specialised (retail) traders.
 Using agents, wholesalers and importers to access the German market.
 Agents are important either operating on a regional basis, or on an exclusive basis, but they
tend to mainly deal with larger brand names.
 Share of footwear retail distribution in Germany

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 K. Promotion

Trade Fairs

The main trade fair for the footwear industry in Germany are:

 The GDS Fair - http://www.gds-online.com- in Dusseldorf which is an International Event for

Shoes and Accessories, takes place twice a year in March and September, although more
emphasis is on footwear.
 The Munich Fashion Company - http://www.munichfashioncompany.com– which organises
 fashion fairs in Munich.
 Import Shop Berlin – http://www.messe-berlin.de- which takes place in November also
 features footwear.
 Bread & Butter - http://www.breadandbutter.co- is a specialist trade fair for street and urban
fashion, including accessories and footwear. It usually takes place twice a year in Berlin.

Trade associations

There is information on the footwear industry in Germany at the website of the German Footwear
Federation (http://www.hds-schuh.de). Some manufacturers featured may be looking to develop
relationships with developing country exporters. Other useful contacts are:
 The Association of Footwear Retailers (http://www.bdse.org) and the Institute of Textile
Traders (http://www.bte.de).
 The shoe portal for the footwear trade http://www.schuhe.de, which also includes information
on footwear trends.
 Another shoe portal with useful links is http://www.schuhmarkt.de.
 Market information and trends can also be found at the German Footwear Institute
(http://www.schuhinstitut.de).

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 L. Potential Prospects

Sl Organization Country Contact no. Website

1 Deichmann SE Germany, Phone: 49 201 867600 http://www.deichmann.com
Marketingabteilung Essen FAX: 49 201 8676733
Executives: Heinz-Horst
Deichmann (Owner)
2 ORION ITALIANA GmbH Germany, Phone: 49 5231 60500 http://www.wortmann.com
& Co. KG Detmold FAX: 49 5231 605236
Executives: Horst Wortmann
(General Manager)

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