CERTIFICATE OF ORIGINALITY

I hereby certify my authorship of the thesis submitted today entitled:

EXPORT OF FOOTWEAR AND LEATHER PRODUCTS
FROM HO CHI MINH CITY TO LAGOS – NIGERIA

In terms of the statement of

Requirements for Project in Master’s Programs

Issued by the Higher Degree Committee

Ho Chi Minh City, 2012

ANDREW AZUKA MARAH

ii


RETENTION AND USE OF THE PROJECT

I hereby state that I, Andrew Azuka Marah, being the candidate of the
degree of Master in MARKETING, accept the requirements of the University
relating to the retention and use of Master Project deposited in the Library.
In terms of these conditions, I agree that the original work of my Project
deposited in the Library should be accessible for the purposes of study and
research, in accordance with the normal conditions established by the Library for
care, loan and reproduction of Thesis.

Ho Chi Minh City, 2012.

Andrew Azuka Marah

iii


ACKNOWLEDGEMENTS

I wish to express my sincere and deepest gratitude to my supervisor
Professor Marianne Claes at the Universite Libre De Bruxelles in Belgium who
believed in me right from our first meeting and volunteered to supervise my
project. As a model of mentors, without her moral support, directions and
encouragement, this work would hardly be completed.
I would like to give my special thanks to Professor Jean-Pierre Baeyens
the Dean for Solvay Brussels School, Dr. Tran Anh Tuan and Professor Daniel
Van Houte for their helpful encouragement throughout my studies at Solvay
School in Vietnam. My sincere thanks to Nguyen Thi Mong Thuy and Serge
Bywalski coordinators in the post graduate school for their kindness and
friendliness. I owe a lot of thanks to all my lecturers for their helpful instructions
during the master course. To my classmates, a big thanks for their friendly and
brilliant feedbacks.
Finally, my warmest appreciation and thanks to my family particularly my
wife Dr. Tran Kim Hang for her understanding, support and encouragement to
make this study a success.

iv


ABSTRACT


This thesis examines Export of footwear and leather products from Ho
Chi Minh City to Lagos – Nigeria. 14 Nigerian companies’ representatives in Ho
Chi Minh City were interviewed to fill the questionnaire designed with 14
questions, which were divided into 05 parts. We try to create a passage of
information to Vietnamese footwear industry about the size of Nigeria’s market
as far as Africa market potentiality is concern. On the other hand, we want to
support and encourage Nigerian business communities in general and most
especially the representatives in Ho Chi Minh City. We would like to enlighten
them more about the size of Vietnam’s footwear industry, capabilities and value
in the world export market.
The data obtained are then subjected to descriptive and qualitative
analysis. The findings indicate parity between theory and practice. Many
Nigerian firms are able to order directly from Vietnamese companies because of
their business representatives and registration in Ho Chi Minh City though they
must pay by cash and use different types of methods to source for shoe
manufacturers. Sports and ladies shoes are given most attention in Lagos market.
Nigerian companies’ representatives have the advantages in preparing export
documentations and availability of carriers and forwarders while they have
v


disadvantages in delivery and non-adherent to contract agreement. There is no
market rejection or strong request for special modification for Vietnam’s
footwear and leather products regarding quality and style. Vietnamese companies
should consider the small sizes of Nigerian’s order as they are still in the early
stage.
The findings give rise to the improvement of export of footwear and
leather products not only from Ho Chi Minh city to Lagos but probably also from
other cities (which have the same circumstances) in Vietnam to different cities in
Nigeria.


The

implications

relate

to

Vietnamese

businessmen, Vietnamese and Nigerian governments.

vi

companies,

Nigerian


TABLE OF CONTENTS

Certificate of Originality ------------------------------------------------------------- i
Retention and use of the project --------------------------------------------------- ii
Acknowledgements ------------------------------------------------------------------ iii
Abstract --------------------------------------------------------------------------------- iv
Table of contents ---------------------------------------------------------------------- v
List of tables -------------------------------------------------------------------------- vi

Chapter 01: INTRODUCTION

1.1. Background of the study
1.2. Reasons to choose this topic
1.3. Research limitations
1.3.1. Object
1.3.2. Project limitation
1.4. Research methodology
1.4.1. Case study
1.4.2. Data collection method
vii


Chapter 02: FOOTWEAR AND LEATHER PRODUCTS INDUSTRY
IN VIETNAM

2.1 Vietnam footwear and leather products overview
2.2 Vietnam footwear and leather products market problems

Chapter 03: INTERNATIONAL TRADE

3.1. How to select a country
3.2. Vietnam and Nigeria bilateral agreement
3.3. Exporting
3.4. Indirect Exporting
3.5. Direct Exporting

Chapter 04: SOME ISSUES NEEDED TO KNOW WHEN EXPORTING
TO NIGERIA
4.1. Nigeria
4.1.1. Lagos
4.1.2. Nigeria’s business behavior

4.2. Nigeria’s economic structure
viii


4.2.1. The economy of Nigeria
4.2.2. Incentives for investors in Nigeria

Chapter 05: ANALYSIS AND EVALUATION OF THE SITUATION
OF EXPORT OF FOOTWEAR AND LEATHER PRODUCTS
INTO LAGOS NIGERIA
5.1. New findings
5.2. Conclusion

Chapter 06: SOLUTION TO PROMOTE EXPORT OF FOOTWEAR
AND LEATHER PRODUCTS FROM HO CHI MINH CITY TO LAGOS

6.1 To Vietnam companies
6.2. To Nigerian’s companies
6.3. To Vietnam and Nigerian’s government

REFERENCE…………………………………………………………..
APPENDIX 1…………………………………………………………..
APPENDIX 2……………………………………………………………

ix


LIST OF FIGURES

Figure 2.1: VN Footwear and Leather Industry and location……………..

Figure 2.2: VN export of footwear by 11main export markets…..
Figure 3.1: Strategy to enter foreign market ...…………………...

x


LIST OF TABLES
Table 2.1: Export of Vietnam’s Footwear and Leather Industry (2002-2008)…….
Table 2.2: VN Footwear and Leather Products by sector………..
Table 2.3: VN export of footwear 2006-6/2010……………………

xi


LIST OF ABBREVIATION

BTA: Bilateral Trade Agreement
BCG: Boston Consulting Group
BCE: Before the Common Era
EU: European Union
GDP: Gross Domestic Product
GNP: Gross National Product
GNI: Gross National Income
GSO: General Statistical Office
GSP: General System of Preferences
HCMC: Ho Chi Minh city
IMF: International Monetary Fund
LEFASO: Vietnam Leather and Footwear Association
NAM: Non-Aligned Movement
PPP: Purchasing power parity

PTO/GSM: Telecommunication operators/subscribers
R&D: Research & Development
SLA: Footwear and Leather Association of Ho Chi Minh City

xii


US: The United State of America
US$: US dollar
UTC: Coordinated Universal Time
VCCI: Vietnam Chamber of Commerce and Industry

xiii


Chapter 1:

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

Nowadays, companies are no-longer planning only for the local market, but are
constantly meeting with challenges to open doors for international trade. Thanks to
benefits accruing to international trade and advanced technologies, trading across
borders has become a notable feature of both big and medium size establishments in
the twenty first century. In addition, internationalization can be seen as becoming
easier and faster than ever due to economic integration of countries and nations: trade
unions, unions, associations and other forms of collaborations between nations,
improved transportation systems and technology. As establishment differs in many
ways, so do their objectives and goals. They may decide to go international for many

reasons. Some may go international in order to protect themselves from future home
market decline, expansion of production and sales or when there is saturation in the
local market or as a way to reduce cost and high cost of labor even to acquire
international experience.
To any industry or enterprise be they in production or export of goods and
services, the need to expand, find and exploit new market, is always a crucial task.
Even when business is doing well, new market is considered as a life wire of business
because market limits production.

1.2. REASONS TO CHOOSE THIS TOPIC

I am a Nigerian studying Master in Business and Marketing Management at
Solvay Brussels School – Ho Chi Minh City Open University. This is one of the most
1


impressive progressive eras in Vietnam’s history. At the time when most
industrialized nations dwelled in fears of turbulence economic crisis, Vietnam is rising
like an eagle with its economy into industrialization. Suffice it to say that Vietnam has
many trading partners in the world for example, in the United States, the European
Union, Japan to mention, but they appeared to have no major market in Africa
especially in Nigeria. In the past, geographic location or distance was a major concern
to marketers. Nowadays, the reverse is the case. With modern technologies, improved
transportation, communication, internet and worldwide web, the world is just
considered like a global village. Business is no longer limited by distance. In
considering the huge effort the government of Vietnam and Nigeria are making to
enhance friendship and facilitate trade between the two countries. According to the
word of the president of Vietnam Chamber of Commerce and Industry (VCCI) in a
forum organized in Hanoi, he said, economic and commercial cooperation between
Vietnam and Nigeria remains limited because the business communities of the two

countries lacked information about each other. (www.vietnamembassy).This is crystal
clear from the evidence of total transactions that transpired between the two countries.
We are also aware of many problems encountered by marketing managers of
Vietnam’s footwear and leather products in foreign markets for example; high tax,
dumping accusation, etc. (www.ven.vn). We advice that they look around for new
market either as a back up or as an expansion to enable them confidently pursue their
strategic export target of US$13 to US$14billion dollars turn over in 2020. The world
cannot deny the fact that Vietnam has done notably well in the areas of agriculture and
production of goods for export to many parts of the world. However, we know that
this is a new topic, and that it has not been researched on in the past. In this writing,
we try to create awareness or a passage of information to Vietnamese footwear
industry about the size of Nigeria’s market as far as Africa market potentiality is
concern. On the other hand, we want to support and encourage Nigerian business
communities in general and most especially the representatives in Ho Chi Minh City.
We want to enlighten them more about the size of Vietnam’s footwear industry,
2


capabilities and value in the world export market. In addition, we try to view the
bilateral agreement between Vietnam and Nigeria government and other subsequent
moves to promote friendship, trade and investment.
We hope that this writing will encourage business-people in both countries,
especially representatives of Nigerian’s companies in Vietnam. Most importantly, we
would like Vietnamese producers in general to compliment government current efforts
and initiate entries to Nigeria market, especially, the footwear and leather industry.
Looking at history, and all the problems Vietnam’s footwear and leather products went
through to become one of the leaders in the world export market, we therefore humbly
choose this topic: Export of footwear and leather products from Ho Chi Minh City to
Lagos Nigeria.
Now that efforts are being geared towards supporting business people by Nigeria

and Vietnam’s government to increase business cooperation, it is expedient to
enlighten a large and fast developing industry like the Vietnam’s Footwear and leather
industry the opportunity of designing an entry to a new market particularly, to export
footwear and leather products from Ho Chi Minh city to Lagos city in Nigeria. The
main reason for choosing these two large commercial cities is to make it easy for a
good start. Both cities are prominent in their country for industries and commercial
activities with big sea ports, international air ports and modern communication
network. Presently, in line with both government objectives to expand their
relationship in trade and investment, company’s representative offices now exists in
these two commercial cities.

3


1.3. RESEARCH LIMITATIONS

Based on Vietnam and Nigeria bilateral agreement, we are interested in creating
awareness for the export of footwear and leather products from Ho Chi Minh City to
Lagos Nigeria and suggesting different methods of export. We have tried to show
different entry strategies and left it open as a choice because there are many companies
in the industry. Every company is special and unique in their vision, mission,
objectives and goals. Their main reason and how they propose to enter foreign market
also differs according to their needs. This is true, as no two companies are the same
and the reason for export varies according to the need of each company. We hope that
further studies in this subject will be able to use our project especially, when
researching for a particular firm in the industry.

1.3.1. Object

Export of Vietnamese footwear and leather products from Ho Chi Minh City

to Lagos city in Nigeria

1.3.2. Project limitation

All information used to build the basis for our project was obtained from the
Nigerian embassy in Hanoi, Vietnamese embassy’s site in Nigeria, Nigerian
companies’ representatives in Ho Chi Minh city, Vietnam Leather and Footwear
Association (LEFASO) publications, lecture books and the internet.
Due to local language difficulty, we were not able to meet with any particular
Vietnamese company for interaction or interview rather, we concentrated on secondary
data and other publications. Our questionnaire was designed only for Nigerian
company representatives in Ho Chi Minh City. Our aim is to have direct information
4


about their experience, difficulties and suggestions on how to improve export of
footwear and leather products from Ho Chi Minh City to Lagos City.

1.4. RESEARCH METHODOLOGY
3.
There are two major business research methods – Quantitative and Qualitative.
Quantitative research differs from qualitative research in several ways. According to
Bryman and Bell (2007), in wide – ranging terms, quantitative method is more about
collection of numerical data. Conversely, qualitative researchers are interested in
answering the questions “why” observing situations and understanding the reasons and
are not keen to merely accepting the results based on numerical interpretations
(Ghauri, G. and Kristianslund, 1995). Choice of the best method depends on the field
of study and type of the research being carried out. In country specific market research,
the first step to tackle an issue is to use qualitative data: this consists mainly in focus
groups where people from the studied target group are gathered under the leading of a

research specialist (Marianne Claes, 2011). For the purpose of this research on export
of footwear and leather products from Ho Chi Minh city to Lagos Nigeria, qualitative
approach is applicable. By using In-Depth method, we were able to gather data and
information not only from Vietnam’s footwear and leather industry,

but, true life

business experience and suggestions from Nigerian’s company representatives, who
are presently exporting/importing footwear products from Ho Chi Minh city to Lagos
city.

1.4.1. Case study

We choose case study approach because of the nature of the research problems.
Yin (1989:22) explained case study as “an empirical inquiry that investigates a
contemporary phenomenon within its real life context using sources of evidence”.
Noor (2008) also identified that in research where one needs to understand a specific
5


issue or situation, case study can become particularly useful as it allows detecting cases
rich in information. Export from Ho Chi Minh city to Lagos city, concern with the
questions ‘why and how’. Why Nigeria market? How to export directly by Vietnamese
companies? We try to work with real life Nigerian company representatives who are
already exporting/importing footwear and leather products from Ho Chi Minh city to
Lagos city.

1.4.2. Data collection method

Sources are generally categorized as being primary or secondary. According to

Boslaugh (2007), primary data is collected with specific aim, by the researcher, for
further analysis. Thus, if the data was collected by someone else for some other
purpose, it is a secondary data. In this project, we used primary and secondary data and
the results were further used to make inferences on the project. In addition, integration
of ideas into the finished work to synchronize with real company’s representatives’
suggestion.
Interview is one of the qualitative methods of collecting primary data and can be
executed using different approaches. According to Patton (1990), the qualitative
methods are possible to have structured – exactly same question for all interviewees,
prepared in advance with no room for deviation. Informal – open, conversational
interview with no particular structure or semi – structured – open-ended questions
prepared in advance, the interviewer “goes with the flow”. Gummesson (1988)
discussed in his book “Qualitative methods” that the interviews referred to two
methods of how to document it as: (1) Recording interview as to retain its original
form and to ensure that interviewees’ answers are kept in their terms. For example, an
interviewer may decide to use tape recorder, video camera, notepad, etc. (2) Another
way of documenting is to write down critical information like dates, amounts, times
and some notes for further analyses. In this project, we used semi-structured interview
method. As in-depth researches, we associate with persons involved in the primary
6


business of export of footwear from Ho Chi Minh city to Lagos Nigeria. We began the
interview with broad questions to get a feel of their experience in Vietnam and market
of footwear in Nigeria and then, resorted to open-ended questions prepared in advance.
Our choice of documenting the interview was to record for certainty consequences.
This will offer the advantage of being able to review it again.
Our interviews to 14 Nigerian companies’ representatives in Ho Chi Minh city
were based on the questionnaire designed with 14 questions, which were divided into
05 parts: (1) company identification (questions 1 - 2), (2) ways of doing business

transaction (questions 3 - 7), (3) difficulties in doing business in Vietnam (questions 8
-11), (4) Ideas about Lagos market (questions 12 - 13), (5) suggestions to improve
export of footwear and leather products from Ho Chi Minh City to Lagos City in
Nigeria (question 14).

7


CHAPTER 02: FOOTWEAR AND LEATHER PRODUCTS

INDUSTRY IN VIETNAM
2.1. VIETNAM’S FOOTWEAR AND LEATHER PRODUCTS OVERVIEW

The footwear and leather industry in Vietnam has been developing very fast
over the last decade. Prior to the opening of the Vietnamese economy in the ‘90s, the
footwear industry capitalized mainly in sewing the upper parts of products for export
to the Soviet Union. At that time the quality and differentiation of products were not
particularly high. The Vietnam’s footwear and leather industry later suffered a severe
crisis due to the disappearance of its established importers. As part of the “Doi Moi’
reform policy the Vietnamese Government encouraged the formulation of joint venture
with foreign partners. This initiative resulted in the relocation of many factories from
countries like Hong Kong and Taiwan to Vietnam. Therefore the sector started to
recover and found new markets and the Vietnam’s footwear and leather industry
registered a sharp growth bringing the export value to unprecedented heights (EUECC,
2004).

8


Figure. 2. 1

Vietnam’s footwear and leather industry structure and locations 2008

Industrial structure and location
2%

5%

5%

HCMC

7%

40%

5%

Binh Duong
Đong Nai
Other southern provinces

11%

Central province
Ha Noi city

25%

Hai Phong city
Other Nothern provinces


(LEFASO, 2008)

Since 1990, the number of enterprises in Vietnam’s footwear and leather
industry has increased enormously from 89 to about 507 in 2008, according to GSO
and LEFASO. Geographically, most of them (385 enterprises or 76%) are located in
the south, particularly in the southeast region (mainly in Ho Chi Minh city, Binh
Duong, Dong Nai Provinces).There are 112 enterprises in the north (mainly located in
Hai Phong, Hanoi and other provinces in the North) and 10 enterprises in the central
region of Thua Thien Hue, Da Nang, Khanh Hoa. Similarly, most of the production
capacity of the footwear and leather industry is concentrated in Ho Chi Minh city, Binh
Duong and Dong Nai.

9


Table. 2.1. Export of Vietnam footwear industry (2002-2008)
Type of shoes

Units in

2002

2003

2004

2005

2006


2007

2008

millions

Total footwear

333.2 393.0 420.2 472.7 579.3 614.7 620.7

Sport shoes

180.0 220.3 243.9 273.9 381.6 391.6 377.3

Canvas

28.0

25.8

20.9

42.0

35.5

38.3

Ladies shoes


66.7

78.7

89.0

90.0

87.1

110.5 121.6

Others

58.5

68.2

66.5

68.3

75.1

74.2

72.2

Hand bags


33.7

35.0

41.0

51.7

70.0

80.0

88.0

49.7

( LEFASO, 2008)
The main product of export in the industry is sport shoes, a total of 377.32
million worth about USD 3,282.68 million were exported in 2008. This account for
68.86% an increase of 21.49% compared with 2007. Ladies shoes followed with a total
of about 121.58 million pairs worth USD 857.27 million showing an increase of 6.82%
over 2007, then canvas shoes 49.65 million pairs worth USD 308.13 million, and the
last, various kinds of sandals and others a total of 72.17 million worth USD319.14
million. (www.unctad.org)
Today, the Vietnam’s footwear and leather industry is the third largest foreign
currency earner of the country after crude oil and textile, representing constantly more
than 10% of the total exports. Vietnam’s footwear and leather industry ranks fourth;
after China, Hong Kong and Italy in the world export. At the end of 2008, more than
900 completed production lines have been equipped for making different type of shoes

with a total capacity of 780 million pairs per year. More than 550 enterprises engaged
in tanning, footwear, leather products and shoe materials. In production, with over
650,000 employees excluding works in small shops, household businesses and
traditional villages. In spite of this huge progress, the footwear industry is still having
10


challenges in foreign markets. (LEFASO, 2008)

2.2.VIETNAM’S FOOTWEAR AND LEATHER PRODUCTS MARKETING
PROBLEMS

Table 2.2. Vietnamese footwear and leather products by sectors
Footwear/
Enterprises by sector

Hand bag

Tanneries

Total

enterprises

State owned enterprises

6

_


6

Non state-owned enterprises

224

32

256

Joint venture enterprises

17

_

17

Foreign-owned enterprises

218

10

228

Total

465


42

507

(LEFASO, 2008)
The footwear and leather industry has played significant role in Vietnam’s
economy. However, this industry is still facing some challenges that need to be
addressed. According to LEFASO, there has been fierce competition with Chinese’s
less expensive footwear products both in domestic and international market due to
Chinese higher techniques and modern equipments. Vietnam’s footwear industry has
11


been accused of dumping in the European union (EU) market thereby, levied with high
tax. There is fierce competition between domestic producers, lack of modern machines
and technology; persistent fears of import reduction from prominent customers and
raw material dependency, 80% of finished products depend on importation or foreign
partner’s supply. (www.ice.it).
Table. 2.3.

Vietnam’s export of footwear 2000 – 6 / 2010.

(LEFASO, 2008)
Vietnam’s leather and footwear industry has had a difficult year in 2009 as it
failed to achieve its export target and more so in 2010 as the EU threatened to end the
General System of Preferences (GSP) status for imports of footwear from Vietnam
coupled with other challenges like import reduction from prominent customers, like the
EU and the United State (US), due to public debt crisis in their countries.

12



Figure 2.2.
Vietnam’s exports of footwear by 11 main exports markets 2009.

(LEFASO,2008)
The main importers of Vietnam’s leather and footwear products are Japan, the
US and the EU. Today, the Vietnam’s footwear and leather industry is the third largest
foreign currency earner of the country after crude oil and textile, representing
constantly more than 10% of the total exports (LEFASO, 2008). Vietnam’s footwear
and leather industry ranks fourth in the world export value after China, Hong Kong and
Italy. This is one of the fastest growing industries in the face of different obstacles, like
high interest rates, inflation and rising cost of raw materials. The strategic goal of the
industry is to reach an export turnover of US$13-14 billion by 2020, and provide up to
80 percent of material inputs and conquer over 60 percent of the local market
(www.english.vov.vn). Going back to view the position of this industry between year
2000 and 2010, we are not doubting on their estimation for 2020. For example, in year
2000, according to Dr. Tran Thi Nhan, Vietnam Leather and Shoe Research Institute
(www.unctad.org), the industry total export

earnings rose from USD 1.468 billion

(2000) USD 1.560 billion (2001) USD 1.846 billion (2002) and over USD 4.0 billion
13