EU Punishes European Shoe Manufacturers In China

In 2006 the European Union imposed an anti-dumping tax in order to protect European shoe manufacturers from being blown out of their own home waters by Chinese and Vietnamese competitors. Asian footwear manufacturers were flooding the European market with shoes and boots significantly – even suspiciously – cheaper than what the domestic manufacturers could compete with, and European legislators smelled a price-war rat.  A 16.5% tax was introduced, and Europe's renowned shoe makers were once again able to compete for their local customers.

But it wasn't just the Chinese and Vietnamese suppliers that took a hit from this new anti-dumping tax. Danish footwear group Ecco had just put the last shingle in place on its brand new Chinese tannery and shoe manufacturing plant, when the tax took effect, leaving the Toender-based company scrambling to recoup its drop in estimated production and profits.

"Our factory in Xiamen was supposed to manufacture five million pairs of shoes per year, but now we're only turning out one million", says Gerd Rahbaek Clemmensen, deputy director at ECCO. "That's something we just have to live with, because of the 16.5% punishment tax that has to be added to the costs."

Along with other large foreign footwear brands with large-scale Asian operations  – Adidas and Puma to name but a few – ECCO has been looking forward to the promised expiry of the now three-year old tax in January 2010. But a recently released EU Commission recommendation to prolong the anti-dumping tax by a further 15 months has created uproar in the shoe industry.

"We're hostages in this. Three years ago the tax was introduced in order to allow European shoe manufacturers the time to restructure their production to improve competitiveness", says Mr. Rahbaek Clemmensen. "But since they're now trying to prolong the period that obviously hasn't happened."

The shoe fight has now reached governmental level, as the Commission recommendation has to be approved by a majority among the EU member states.

But not all is lost for shoes from Asia: In spite of the anti-dumping tax, it is estimated that every third shoe on European store shelves is made in either Vietnam or China.

Full story in Danish

News category: Denmark