Despite limited growth in the global footwear industry in the first three months of this year, the Pan Group, Thailand’s largest shoe exporter, is still confident of achieving double-digit revenue growth this year.
Citing unfavourable conditions including the Iraq war, the Sars outbreak and a sluggish global economy, the group’s adviser, Narong Chokwatana, said the worldwide footwear market was flat in the first quarter, while the value of Thailand’s footwear exports grew by 10 percent year-on-year at most.
However, the Pan Group, with 56 subsidiaries in the footwear and supporting industries, expects its revenue to reach 20 billion baht, an increase of 11.1 percent from 18 billion baht posted in 2002.
“Were optimistic about full-year performance. With support from product development, competitive prices and speed of delivery, we should gain a larger share in the global market,” Mr Narong said.
With diversified export destinations, including the United States and the Middle East, he said the group had not yet seen any drop in orders from abroad.
“We have spent roughly 100 million baht annually to expand production output to maintain our status at the forefront of the footwear industry,” he said.
The Pan Group is a subcontracting manufacturer for several international footwear brands including Nike, Reebok and Ecco. It has two factories: in Si Racha, Chon Buri, and in Sena district of Ayutthaya province.
“Small shoemakers could be affected by global market conditions but the big brands are still seeing strong demand from customers,” said Mr Narong.
Bo Eklund, senior vice-president of Ecco, agreed with Mr Narong that the global footwear market could be affected by uncertainty about the world economy. The Danish shoe company anticipates modest growth in worldwide demand which was roughly 10 billion pairs of shoes in 2002.
About half of the world’s shoes were now made in China, where wages were half of those in Thailand, he said.
As the seventh largest footwear brand in the world, Ecco targets total sales of 12 million pairs this year, a 15 percent increase from last year.
Of the total, nine million pairs are produced at Ecco’s own factory in Thailand, its largest manufacturing base, and the balance are subcontracted to Pan and some companies in China and India.
Improved sales are expected to be driven by an increase in brand recognition and the strengthening of retail distribution. Ecco (Thailand), a joint venture between the Danish company and the Pan Group founded in 1994, just entered the retail footwear market in Thailand last year.
Ecco plans to double the number of its stand-alone retail outlets to four this year, while adding 24 sales points to its existing network of 29, mainly in department stores.
