Chinese shoemakers were overlooked as the government hiked export tax rebates on a number of goods last week. With export orders continuing to fall, they are again asking the government to intervene, China Business News reports

Chinese shoemakers have called on the government to introduce incentives to help them after the DGS Shoe Fair in September, the 104th Canton Fair and the eighth Dongguan International Shoe Exhibition, which concluded over the weekend, all saw plummeting shoe orders.

"The Chinese shoemaking industry is now undergoing a drizzle and is going to see a downpour soon,” Massimo Donda, chairman of Italy's Shoe Retailing Association, told reporters on the sidelines of the Dongguan exhibition in Guangdong province. “We don't know when the sunshine will come."

Wang Lianhong, president of Dongguan-based Betta Footware, said the company has been hit hard by the rising Chinese currency, labor costs and raw material prices. "Our exports have dropped 20% this year due to fewer orders and payment defaults by some clients.

"We did anticipate seeing footwear products on the list of exports in to receive more export rebates announced by the Ministry of Commerce last week,” he added. “Unfortunately we didn't. Even just one percentage point would have been good to boost confidence."

Li Ming, chairman-cum-general manager of another shoemaker, Zhejiang Zhenuoer Group, said that even orders for shoes priced at US$5-6 per pair, which his company mainly produces, were falling and that already thin gross margins were becoming frailer. "European and Japanese buyers frantically slashed quotes in US dollars as their currencies lost value against it in recent times," he said.

He raised concerns that the real hard-time for China's shoemaking industry will be from the fourth quarter of this year to the first quarter of next. "May I hope the export tax rebate on footware would be two to four percentage points better off to help us weather the chilly storm?" he asked.

In early October the European Union also said it had to delay its anti-dumping verdict on China-made shoes, meaning an existing 16.5% anti-dumping duty remained in place.

Industry experts argue a hike in export tax rebates may act as a double-edged sword since it may help exporters undercut each other, escalating trade tensions.

The number of shoemakers in the Pearl River Delta dropped 48.1% from a year earlier to 2,617 in the first half of the year.

"The shoemakers in the Pearl River Delta largely work for original equipment manufacturers (OEMs) so they are fairly susceptible to any changes in the global climate as a whole," Zhu Yulun, chairman of Hong Kong-based Adsale Group, said. "In the meantime, self-branded shoemakers should seize the opportunity of a chaotic market to expand their turf as more buyers emerge from Russia and Malaysia and from within China.”

This article originally appeared in China Business News on November 3, 2008. The China Perspective takes no responsibility for the accuracy of the original article.