Retailer’s Perspective – Shoe Manufacturing in China Vs. Australia

By Michael Fox | 29 Jul 2011

Shoes of Prey Co-Founder, Michael Fox offers a debate between the benefits of manufacturing offshore versus onshore. Is this a challenge your business faces?

We’re sometimes asked, ‘Why don’t you make your shoes in Australia rather than in China?’ It’s a reasonable question and there are three key reasons we don’t:

1. There are no support industries for shoe manufacturing in Australia.

In the city of Guangzhou there is a Westfield-sized leather shoe wholesale market where you can purchase literally everything needed to make high quality women’s shoes from the leather, decorations and heels, to packaging and factory equipment. Need shoe boxes? Visit one of the 20 shoe box wholesale stores which sit together on the ground level. There you can see samples, sit with a box designer and one hour later walk out having placed an order for a sample which you’ll receive three days later. Once that’s approved, one week later you can have 5000 shoe boxes delivered to you.

Can you imagine trying to do the same in Australia? If you could even find a company to make shoe boxes you’d need to make an appointment at least a week out to meet with them. Having a design made up would take another week and then the back and forward to get the design right would add lots more time. All of that would take less than an hour in Guangzhou as the industry is built for operating quickly. And for the pleasure of this slow experience you’d be charged triple the price per box and your boxes would likely be made in China anyway. It’s much more efficient to do business in a place with the appropriate support industries.

2. We couldn’t hire the people we’d need to make shoes in Australia.

Shoe making is a reasonably highly skilled task, it takes years to learn the entire process properly. The Australian shoe manufacturing industry is very small and there just aren’t many people with these skills in Australia. To make our shoes in Australia we’d need to open our own facility as there is no-one we could outsource the work to at the scale we’re doing it. Once we had the facility, who would make our shoes? We’d need to hire and train lots of people but given we’re at close to full employment in Australia it’s not going to be easy to hire people who are keen to learn to make shoes and even if we could hire them, it would take years to train them up properly, time we don’t have as a fast growing startup.

3. Wages are high.

All our shoes are handmade and labour is the most significant cost. The bulk of the world’s shoes are now made in China, including over one billion pairs a year in the Guangdong province where our shoes are made. We simply couldn’t compete if we were making our shoes in Australia when other companies are making their shoes in China. Even if it were possible to make our shoes in Australia, which points one and two above show that it isn’t, we’d need to be charging more than double our current retail prices to pay Australian wages for manufacturing shoes.

Is this a problem?

This begs the question, is this a problem? In my view it’s not.

The Australian economy is running at close to full employment. The mining industry in particular has created tens of thousands of new jobs as the demand for raw materials from the booming asian economies has seen this industry expand immensely over the last decade. Agriculture and education are also major export industries for our economy. Given our economy is running at close to full employment, where do we want to be creating jobs? My view is that we’re better off creating mining industry or university jobs that can pay $100,000 a year than to try to encourage a manufacturing sector competing with low cost manufacturing countries like China and India. We only have 22 million people in Australia, we’re doing the right thing building competitive advantages in high value industries like mining and education rather than manufacturing.

In Shoes of Prey‘s case our business is a great win for the Australian economy. Despite having our shoes made overseas we’re a net exporter. Over two thirds of our revenue comes from customers living outside Australia, which is more than our overseas expenses. By utilising the incredibly efficient Chinese manufacturing industry and coupling that with the high level of skills in the Australian workforce we can create create a product with demand all over the world, resulting in high paying customer service, software development and marketing jobs in Australia.

11 Comments

11 thoughts on “Retailer’s Perspective – Shoe Manufacturing in China Vs. Australia”

  1. For those who want to support the remaining Australian shoe manufacturers producing high quality shoes there are many featured on the http://www.BuyAustralianMade.com.au website and the BuyAusMade app. There are also lots of other Aussie made items featured as well, get on on have a look around and see the 100’s of businesses who are passionate about maintaining a manufacturing industry in Australia and not just rely on Australian resources that are dug up out of the ground to create wealth.

  2. Elise says:

    Hi, my business partner and I are planning a trip to Guangzhou very soon. Wondering what this ‘Westfield-sized leather shoe wholesale market’ you speak of is called so we may go there?
    Thanks!

    1. Ajay says:

      Hi Elise, I can supply good quality leather shoes, purse, Bags, Belts and Jackets from India. Particular company Mfg for world top brands.
      If needed further details contact me: javinenterprises24@gmail.com

  3. I am very interested in the shoe wholesale market in Guangzhou! I was going to attend the shoe show in May, but I would much rather get there now and get something going. I import 50% of my products now from China.
    Thank you
    Tamera

  4. Fred says:

    If your after a second rate shoe then buy mass produced shoes if after top qaulity buy Australian made. Raylon shoes made top quality shoes until the government went for cheaper overseas imports. What happened when the army boots qaullity from overseas let them down.
    My family comes from a long line of true shoemakers hand craftsman from. Northampton in England.
    Shoes that can last and be repaired in stead of falling a part that’s the differance,but like everything else the Goverment failed the industry in more ways than one.
    Everything is not about price but quality given a equal go Australian industry can compete.

  5. Lucas Pendant says:

    I also agree that in some cases quality is much more important than quantity. Especially when it comes to the comfort of the shoes that I wear. One of the stores that are still selling shoes made in Australia is Rosenberg Shoes. They have really good range of plus size shoes.

  6. emma says:

    Shoe making business for sale in australia,

  7. emma says:

    I am selling my industrial machines for production of footwear in australia. Full range of lasts, footwear moulds tools.

    1. Lucy says:

      Hi Emma
      Not sure how old this post is.. Do you still have machinery/equipment for sale?

      Thanks
      lucy

  8. Quoc h tu says:

    Hi there,
    I am currently looking to sell my parents shoe making machines. They where imported from america and they use to make ladies leather shoes. They are now retired and is looking for buyers. Please email me if anyone is interested. I am based in sydney

  9. jo cleland says:

    Hi Emma and Quoc

    If your machinery is still for sale please email me at
    jocleland@xtra.co.nz

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