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Turkish Importers Remains Wary of Chinese Footwear Producers

History of substandard and toxic products dogs mainland footwear exporters looking to service the Turkish market, with Pakistan seen as chief rival to Chinese suppliers, according to many exhibitors at the recent Aymod shoe fair.

Photo: Sole traders: Traditional shoemaking tools on show.
Sole traders: Traditional shoemaking tools on show.
Photo: Sole traders: Traditional shoemaking tools on show.
Sole traders: Traditional shoemaking tools on show.

Turkey remains a tough market for Chinese shoe manufacturers, according to exhibitors at the recent Aymod shoe fair in Istanbul. Footwear professionals warned of rising prices in Chinese raw materials and complained of poor quality control and unreliable business practices, with some are turning to Pakistan as a more attractive alternative.

Much of the problem dates back to November 2014, when a huge shadow was cast over the trade of shoes between the two countries after consignments of Chinese footwear containing toxic materials were smuggled into Turkey. As a consequence, a number of purchasers were hospitalised with painful skin rashes, while others found the shoe colours would run whenever it rained.

Overall, investigating officials found that some 25,510 pairs of shoes containing harmful chemicals has reached the Turkish market. At the time, Nurettin Canikli, the then Trade Minister, announced that customs officials had detected carcinogenic chemicals in the polish on a further 33,000 pairs of Chinese-made shoes. The footwear then went missing while being taken to a disposal facility.

As a direct response to the scandal, the Turkish government imposed extra import taxes on Chinese shoes. This, inevitably, caused considerable problems for Chinese exporters.

Sayat Atanasyan has a unique perspective on the Turkey-China shoe business. Some 11 years ago, aged just 17, he was sent to China by Turkey's biggest shoe retailer, Ziylan, on quality control duties. His team bought four million pairs of shoes a year, spending millions of US dollars in the process.

Now working for a different footwear company – Istanbul-based Urgan – he still puts in to practice many of the lessons he learned while on his mainland tour of duty. He says: "It was an incredible experience. Some of the companies we supervised were so big you needed a golf cart to go from one side to the other. We had to watch them carefully, though. If we went for lunch, we would return to lots of mistakes."

His new company makes 10,000 pairs a day and works for a number of well-known brands, including LC Waikiki, Zara, Bershka and Wortman KG. The business has now been buying moulds for injection shoes and soles from China for five years.

Reflecting on his more recent experiences, he said: "The prices are good and some of the materials cannot be found in Turkey. If you are talking about workmanship, though, the standards are generally much higher in Turkey than in China.

"That said, mechanisation is improving on the mainland and some Turkish companies are now even buying specialist machines from China. The prices of finished shoes are also equalling out. A few years ago, a US$10 pair of shoes in Turkey would cost $4 in China. Nowadays, that $10 pair would be $8."

For Atta Coğhan, a Senior Manager with Akar, an Istanbul-based men's footwear manufacturer, it is Pakistan that poses a real threat to Chinese exports. Akar, which makes 600 pairs of shoes a day, buys thermoplastic rubber (TPR) soles from China, but the import duty now represents 50% of the cost.

Highlighting the problem with this, Coğhan said: "Wages in China are rising, but in Pakistan it is still easy to find workers for $100 a month. Pakistan also has some good quality specialist materials, like baby buffalo and cow calf leather, that China cannot match.

"In China communication is also always a problem. We hire interpreters but mistakes still occur."

Krystyna Mandrykina is an Export Executive with Akasya, whose leading brand is Darkwood boots. The company, which manufactures in Bartin on Turkey's Black Sea, now plans to sell its boots in China.

Photo: Turkish delight: Fashionable feminine footwear.
Turkish delight: Fashionable feminine footwear.
Photo: Turkish delight: Fashionable feminine footwear.
Turkish delight: Fashionable feminine footwear.

Mandrykina said: "We went to Guangzhou and noticed that very similar boots to ours – but of inferior quality – were selling at $24. If we are making big quantities, we can sell similar boots for $26."

Clearly believing it can now compete in the Chinese market, Akaysa has hired Salangene Luo, a leading Chinese designer, to produce a range of new styles. A number of these use special nubuck leather, which Chinese companies are now importing from Turkey.

Mandrykina said: "We are already selling Darkwood boots in Europe, Russia and in the Middle East. Boots are no longer just for hiking. We are producing more fashionable styles for everyday wear and our prices are around one third of Timberland's, for instance."

Ahmet Erdem is a Financial Controller with Istanbul-based Efe, a footwear business with a $33 million turnover. Its leading brand is Hammer Jack casual shoes and it buys its synthetic soles from China.

Erdem said: "Trading with China has thrown up a few surprises. Firms will often use individuals' bank accounts, for instance, rather than a company account. I don't know why. This can create huge problems at customs where officials suspect money laundering activity.

"Another problem came when we sent around $100,000 for a shipment, but realised we had overpaid. Although it took just two days for the money to arrive in China from Turkey, it took two months for the excess to be returned.

"We currently buy around $100,000 worth of materials a month from a company in Guangdong. There are often problems with specification changes when the goods arrive and also with poor or missing documentation."

Similar problems were reported by Fazilet Kale, a Senior Manager with Izmir-based Altis, a mid- to high-end footwear business, supplying such outlets as Elle, Beta and Greyder. The company has been buying accessories from China, including costume jewellery and decorative stones, for the last three years.

Kale said: "Everything was fine in the first year but, last year, the quality of some of the products seemed to fall. Stones dropped out of their strapping and we had a number of problems.

"Prices are being squeezed everywhere in shoe manufacturing, that is why people are looking to China. The cost of Chinese raw materials, though, is going up. We don't want to skimp on quality but, if we produce a pair of shoes as cheaply as possible and try to sell them for $15, customers will still try to find the same pair for $12.

Kale believes that tough trading conditions are not confined to the Turkish domestic consumer market. She said: "The market in Europe is very tough. I would say the shoe market is in crisis.

"There is also a black market in shoe production in China, with some companies operating covertly without paying tax. They are looking to find wholesalers in the West and that is adding to the difficulties we face."

One company looking to turn the tide and supply China is Istanbul-based Bueno, which makes 4,000 pairs of shoes a week. The father-and-son operation, started in 1960, now produces 200 different styles of women's shoes and sells to 35 countries. The company is now trying to break into the Chinese market via the services of an Australian distributor.

Ersan Ergul, the company's Sales Manager, said: "We already have some customers in Hong Kong, who we met at Milan's Micam shoe fair. Whenever we exhibit there, though, there are always Chinese people trying to take photographs of our creations so they can make copies."

Photo: Summer 2016 collection previewed in Istanbul.
Summer 2016 collection previewed in Istanbul.
Photo: Summer 2016 collection previewed in Istanbul.
Summer 2016 collection previewed in Istanbul.

Aymod 2015 was held from 7-10 October at the CNR Expo Centre, Istanbul. The event featured around 500 footwear exhibitors and attracted an estimated 50,000 visitors.

George Dearsley, Special Correspondent, Istanbul

Content provided by Picture: HKTDC Research
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