Iran exported $47 million worth of shoes in the first seven months of the current Iranian year (started March 21), according to a member of the Board of Directors of the Association of Managers and Experts of Iranian Shoe Industry.
"The figure shows a 7% decline compared with the corresponding period of last year,” Ali Lashkari was also quoted as saying by the news portal of Iran’s Chamber of Commerce, Industries, Mines and Agriculture, adding that the average price of exports declined by 11.5% during the period on a year-on-year basis.
He noted that Iraq, Afghanistan, Turkmenistan, Pakistan and Azerbaijan are the main destinations of shoes made in Iran.
The customs terminals in the city of Qom with 30%, Tehran with 13% and Mashhad with 11% had the highest share of shoe export during the period, he added.
Noting that exports in the corresponding period of the fiscal 2018-19 stood at $75 million, Lashkari blamed the decline on the Central Bank of Iran’s foreign currency directives as well as an increase in domestic overhead costs.
The CBI mandates all exporters to sell their export earnings at rates lower than market prices. Iran has a multiple foreign currency exchange rate system.
Small Share of Neighboring Markets
Iran's share of the $8 billion shoe market in the neighboring countries is about 1%, Lashkari said.
In 2021, Iran's 15 neighboring countries imported $8.2 billion worth of different kinds of shoes, of which Iran supplied about $82.8 million, indicating that Iran's share was about 1.01%.
Noting that the global shoe market is worth $125 billion, the official said, “From 2014 to 2021, the Iraqi shoe market grew by 45% from $357 million to $501 million. But Iran's shoe exports to Iraq decreased from $67 million to $60 million during the period. This means Iran’s share in the Iraqi market decreased from 19% in 2014 to 10% in 2021. During the same period, China increased its exports to Iraq from $141 million to $364 million and China’s 39% share in the Iraqi shoe market increased to 73%.”
A total of $100 million worth of shoes and synthetic leather were exported from Iran in the fiscal 2020-21, manager of Shoemakers Association said on the sidelines of the 10th International Exhibition of Footwear, Bags, Leather and Related Industries, also known as MPEX 10, 2022.
“More than $76 million of the total sum constituted footwear and the rest were synthetic leather,” Rasoul Shajari was also quoted as saying by IRNA.
The official noted that a total of 220 million pairs of shoes are made in Iran every year, adding that the industry has created direct jobs for around 500,000 people.
A Mostly Self-Reliant Industry
Mohammad Reza Davarpanah, a member of the Producers and Exporters of Synthetic Leather Association, says 85% of raw materials for the production of footwear are procured domestically and 95% of the required machinery are manufactured inside the country.
In the fiscal 2018-19, imports of 1,400 types of commodities were banned to support local producers of these goods. Footwear and bags were among this long list.
“When this regulation came into effect, foreign exchange rates experienced an upsurge, making prices of foreign shoes quite unaffordable for Iranians. Therefore, smuggling of these goods also decreased, making way for domestic producers to show their capabilities and at the same time work on increasing the quality of their products and updating their knowledge of contemporary global fashions,” Alireza Ajdarkosh, the head of Shoes and Related Industries Guild Union, told Fars News Agency.
The official noted that Iranian businesses active in footwear production need to do serious work in branding to be able to do better in domestic and international markets.
Cheap Imports Dealt Blow to Domestic Industry
Alireza Jabbarian, the head of Tabriz Cordwainers Union, referred to the presence of cheap shoes made in China in the Iranian market and said since the ban on shoe imports has been implemented, Iran’s shoe industry experienced significant growth.
“At present, domestic companies are producing footwear with qualities on par with international standards, which can also appeal to the Iranian consumers’ taste,” he added.
The import of cheap and low-quality footwear has seriously harmed the domestic shoe industry, Lashkari has confirmed.
According to the official, from 2013-14 to 2019-20, a total of $2.12 billion worth of shoes were imported to Iran, mostly from China, the UAE, Turkey, Italy, India and Thailand.
“Considering the role of the UAE in [the re-]export of Chinese products to Iran, it is estimated that about 88% of imported shoes come from China and the rest from Turkey, Italy, Thailand and India,” he was quoted as saying by ICCIMA’s news portal.
Italy has the highest average shoe export price of $57.72 per pair. The average for Chinese-made shoes is $4.68. For Turkey, it stands at $3.38 and India $9.5. The average price of a pair of imported shoes in the world increased from $ 9.7 to $11.2 from 2010 to 2018. Europe has the highest average import price ($14.94) and Africa has the lowest import price ($2.67). The average price of shoes imported to Iran from five countries in 2018 included China with $4.68, Italy with $57.11, Turkey with $3.29, India with $8.28 and Thailand with $10.99. The highest export price of Chinese shoes in the same period was related to the leather shoes group with $14, the figure was $73.61 for Italy and $14.10 for Turkey. Since the largest share of Chinese shoes exports to the world (about 42%) at a price of $3.72 belongs to the 6402 Harmonized System code (aka HS code), which belongs to the plastic shoes and the country's share in exports to Iran is about 88%, it can be concluded that the main imported shoes In Iran had the average price range of $3.7 and less than $4.
Lashkari noted that the import of shoes at prices much lower than the world’s average did not help develop the domestic production.
He identifies this as a major obstacle for the shoe industry’s employment and domestic production, which has led to the closure of some small- and medium-sized shoe factories, because most of the imported shoes could have been produced domestically.
The Producer Price Index for shoe industry has exceeded general inflation and Iranian shoes lost their comparative advantage in exports, he concluded.
