NEWSLETTER ISSUE NO 1 – January 2023

15 January 2023

Table of Content

Topic 1:

Dear members, alas we have all had to come a long way and be resilient time and time again. And we at SAFLEC are ready and raring to go for 2023. We are sure that everyone is now back and settled.

Some background

As an export council over the years, SAFLEC have done our best to prep you for exports and provide export opportunities. Let’s look at a few of these.

  • From 2014 SAFLEC have built a database of over 15 000 International retailers which we have sent out to the entire industry.
  • Arranged training courses in export, compliance, design, market access, testing and more.
  • Negotiated with partner stakeholders like WESGRO, TIKZN, ECDC, Productivity SA, SES German Program, and many more to ensure that they were including the Footwear and Leather Industry in all their export related and training opportunities. So, if you have benefited from them in any way it is solely because of SAFLEC intervention on your behalf and for your benefit.
  • In 2014, accessed dtic funding for trade fairs for the first time. This allowed more companies the opportunity to exhibit overseas.
  • Created a virtual design portal, free for members, that allows them to access the latest global trends for design and development and to gauge consumer buying behaviour. Buying that information would cost members around R250 000.
  • Given members access to DSM reports that provide information of what HS code countries are importing, to find market entrance strategies.
  • Provided members with case studies that assist industry when drawing up their market access strategies.
  • Provided marketing support on free websites, company advertising videos and the quarterly worldwide distribution of directories with members’ details.

SAFLEC can equip, connect, and provide you with the trade platforms, but it is expected, that your commitment to exports as business requires that you handle the actual export deal. It’s your deal, and you’re in the driving seat. Rest assured though, that we are here to support you through it and provide the necessary guidance and process info.

We live in South Africa, so as your Export Council, we know the challenges you face.

SAFLEC is aware of the challenges our members have experienced over the past 3 years: limited cash flow, logistics price increases (x 10 in some cases), availability of raw materials, permits that cause delays and additional costs, covid, riots, floods, constant power cuts, and continuous port issues from strikes to surcharges and broken-down gantries. Some members still do not have access to water and are subject to water cuts. We know there are limitations on what South African footwear manufacturers can make – for example, and for various reasons, they can’t make athleisure (which currently accounts for a 37.6% share of the global footwear market, according to reports). SAFLEC has had reports from members of containers taking 6 months to get to Australia. And we have heard that approximately 200 000 pairs have been blocked by Kenya for – apparently new – non-tariff barriers (ludicrous testing requirements for fashion shoes). South Africa’s stance on the Russia/Ukraine war also affects how our country is perceived in target countries. We have had much as an industry to face.  But we have remained resilient.

Topic 2:
2022 South Africa Experienced a Drop in Exports

Without making excuses, real problems were behind the drop of exports of to global markets, as opposed to the increase in exports to other parts of Africa. (Total figures for 2022 are still awaiting the inclusion of December figures).

Whilst we at SAFLEC do all that we can to promote and grow exports, we are sometimes limited due to external circumstances. In 2020 and part of 2021, when the world came to a standstill, we pivoted to become known as the first entity in the world to have started virtual trade. The first entry advantage positioned us, and the world got to know us a little better. Though world exports declined in 2020 (including ours), South Africa’s footwear and leather goods exports to the UAE, one of the regions we were actively doing virtual trade in, went from R1.4 m to approx. R14.5m. However, like every product life cycle, the idea of virtual trade declined, especially when the world’s physical trade events started towards the end of 2020 and beginning of 2021. Buyers became hungrier to attend physical events as opposed to virtual. So, here’s something you may NOT know. SAFLEC is only able to do global trade events through dtic funding and this funding has been closed since March 2020. Everything SAFLEC did for industry through the period of covid, was done on its ability to negotiate with partner stakeholders and because of the strong international network of relationships it has built since 2014. 

Post lockdown, the likes of India and Turkey as well as Pakistan and Brazil, came out in full force to gain territorial advantage over China, especially when many buyers were now looking for alternative sources as a result from lessons learnt during covid. An example of the full force we speak about, is over 100 Indian exhibitors at the trade show in Australia, supported by the Indian Government. And over 40 Turkish exhibitors. 

Theoretically, South Africa can take a maximum of 20 companies to a trade show supported by SA Government SSAS, but due to exorbitant international stand costs, can only fit 10 companies within the budget allowed. South Africa was not able to gain the same first entry advantage as our counterparts post lockdown. WHY? Well, there were simply no funds as the dtic physical funding remains closed until April 2023.  To put an application through to the division, it must be done at least 4 months in advance. This, collectively with trade show timings, meant that SAFLEC’s first physical trade show took place only in October 2022.  The team at SAFLEC continued, however, to use all the means available to us, such as marketing with local retail to buy more for their African branches. We also embarked on a few Africa trade outward selling missions into Angola and Mozambique with stakeholder partners WESGRO, leveraging off a National Pavilion. 

We would also like to thank Bata for keeping to the commitment with us and buying from our South African manufacturers for their African stores. As the saying goes, when South Africans face a challenge, “ons maak ‘n plan.” All things said and done, we have deliberated and sent out an extensive calendar of this year’s events we are doing alone and with partner stakeholders who we have painstakingly taken time to negotiate with for the benefit of more export opportunities for our members and hope that you have recovered from the effects of covid, the floods, the riots, and strikes and hope that there is resolution to our continuous power-cuts, so that we can collectively put our best foot forward. After all, South Africa…we are a team and must work together.

Topic 3:
A view of world exports (as reported by World footwear)

These are statistics as per The World Footwear Yearbook, the party that sends out World Footwear News. We hope this information will assist you when 

  • Reviewing and comparing exports against total production, 
  • Establishing the size of competing countries’ industries by reviewing total production (Note that SAFLEC prefers SARS statistics. 2022 total figures are still to be published) 
  • Please note that World Footwear uses data where there may be varying considerations such as different year ends e.g.: the latest India stats in footwear news for 2022 reflect that it calculates its stats from April to March using a fiscal year base. Other countries do theirs differently, some July to June and some Jan to Dec. Please click here to access the pages of World Footwear for more country comparisons.

Topic 4:
A view of world exports (as reported by World footwear)

The Asics Japan-based sportswear company has reported that India saw the highest growth globally in 2022 due to the post-pandemic running and fitness boom

In a recent visit to India, Yasuhito Hirota, Asics’ President, CEO and COO, said that the sportswear brand is targeting a 25% growth CAGR in the country over the next few years. With more than 50% of the business in the country coming from performance running, the company intends to promote a running culture in India. In fact, running has grown exponentially in India, where the number of registered runners has jumped from 30 000 in 2004 to 2.5 million at present, and the trend is expected to continue.

Hirota pointed out that “the running boom in India started in 2015, so we were not late entering the country”. Asics first entered India in 2010 through a five-year partnership with Reliance Retail, a subsidiary of Reliance Industries, but then set out independently in 2015. It now has a retail presence of 81 mono-brand stores and 700 points of sales, with plans to open 20 more mono-brand stores already in 2023 and projections of points of sales to increase up to between 750 and 800.

The President of Asics also said to Economic Times that in the future the company would like to use India as a global sourcing hub, most of which currently happens from China and Vietnam. He highlighted that the company has benefited from India’s government policies in the last years, making it easier for Asics to do business in India.

Topic 5:
Jim Green – An Example of a Company that has taken the Baton and Run with it

Jim Green Shoes continues to make waves in USA. It started by sending 30 pairs and now exports 40-foot containers. It is growing slowly through the careful planning of Gareth Crouch. His millennial ways of marketing and strong attitude to push and not to give up has stood out and shows in American interest for his shoes. Drop shipping now to 3 major retailers with additional on the way with Macys and a stockist in California.   This barrier breaker is self-funded and exhibited in Dallas and Salt Lake City this January and again made waves. A true example of a manufacturer that has received some support but has put in his own initiative, drive, and willpower behind getting his brand into USA to grow exports. Export takes this sort of commitment.

Topic 6:
Social Media

Our social media platforms have been hitting record-breaking hits. Our recent campaign obtained over 14,800,000 impressions and over 540,000 engagements, boosted to followers in the rest of Africa, Europe, Middle East, and North America. We encourage you to take advantage of our efforts to promote you. Send us content to push your company and brands. Also like, follow, and forward our links to your contact lists. Let us build the following globally so that we can show the world our capability.

Instagram: @saflec_team
Youtube: SAFLEC 

Topic 7:
Upcoming Events

Productivity SA Kaizen & Green Webinar – 08 Feb 2023

Retailer Compliances & Trends Webinar – 22 Feb 2023

Pure London Trade Show – 12-14 Feb 2023

ARSUTORIA Durban One Week workshop – 17-21 April 2023

ARSUTORIA Cape Town One Day Workshop – 24 April 2023

Zambia Outward Selling Mission – April 2023