Thailand’s footwear industry should rise to the challenge of the ASEAN Economic Community (AEC), so says the president of its leading association. Words by Mark Bibby Jackson

While some see the opening of the ASEAN region that will accompany the AEC as a threat, Kanchit Juntanapornchai relishes the opportunity it affords. The President of the Association of Thai Footwear Industrial Promotion (ATFIP) might be excused for feeling trepidatious towards the free trade agreement which could leave his 400 members defenceless from cheaper regional. He might, if it had not already occurred two decades ago.

The golden period for Thailand’s footwear industry was between 1985 and 1995, Juntanapornchai explains. Since then it has lost out to the cheaper labour costs in other regional countries, such as Vietnam, Indonesia and China. The fact that the industry still has an export value of US$1.8 billion, is something ATFIP’s president attributes to its good reputation overseas.

“Quality and delivery,” he says. “These are the two things that customers still believe in us and trust us.” The key markets for Thailand’s footwear exporters are the US and EU, with Denmark top of the list largely due to the ECCO brand that is made in Thailand. It is this which Juntanapornchai refers to as a “niche” market, rather than the mass market dominated by the aforementioned countries.

Following the downturn caused by the 2011 floods and subsequent Euro economic crisis, Juntanapornchai claims that business has stabilised. He is even predicting growth of some 5 to 10 percent for 2014.

With 2015 marking the advent of the AEC, Juntanapornchai is urging his members to look towards joint ventures and direct investment in neighbouring countries, such as Cambodia and Myanmar.

Supported by the DITP, he travelled to Cambodia in March to sign a Memorandum of Understanding on behalf of the ATFIP with the Garment Manufacturers’ Association of Cambodia (GMAC), pledging closer cooperation and knowledge sharing. He sees this as a vital first step for Thailand outsourcing some of its footwear production to its easterly neighbour.

For those members that do not share his open arm policy, Juntanapornchai recommends adopting a piecemeal approach to investment, which is perhaps more in keeping with the product to foot.

“Move the cutting and stitching part [of production] to Cambodia or Myanmar to reduce labour costs, but keep the assembly in Thailand,” he says. If the investment proves successful after a few years members can outsource the whole manufacturing process and export direct to the US or EU markets.

Whether his members follow his advice or not, Juntanapornchai is appreciative of the backing the AFIP has received from the DITP particularly in terms of mitigating the cost of booths at exhibitions and seminars. “It’s very good that we get the support of the DITP,” he says.

One specific exhibition he chooses to highlight is the Bangkok International Fashion Fair and Bangkok International Leather Fair (BIFF & BILL), which this year was held at the IMPACT Arena in March. “This fair,” he says, “is one of the best fairs in the world.”