2. Phil Zwibel
43 Years of experience
Retail Buyer of all categories.
VP and GM of BATA Canada.
Won product development awards and
management awards
Opened offices in Korea, Taiwan and China
Pioneer importer from Italy, Spain, France,
Greece, Korea and China.
Produced 1.2 million pairs of shoes in CANADA,
imported 3.5 million pairs
The Footwear “expert” for Our version of Pro-
Export.
Starting sales from 6 Colombian shoe factories to
Canada
2
4. Over 90% of
consumption is either
Chinese made or
subcontracted to one
of it’s satellite
countries: Viet-Nam,
Cambodia.
4
5. Winter for 5 months (BOOTS)
EAGER for Summer so SANDALS are a big
business!
Imports comprise over 95% of the market.
China and it’s satellites represent about 90%.
1985, 169 factories, 43 million pr.
Imports were 63 % of the market
Despite years of industry protection through
duties, import restrictions……..
There are just a few, mostly small scale
factories focused on BOOTS, Waterproof, and
Industrial. THEY ALL ARE BASED ON THE GLOBAL
MARKET AND EXPORT
They are SPECIALIZED and BRANDED.
5
7. This 1/3 of the market is approached by local
distributors.
(Larger enterprises can consider hiring direct
agents or setting up a local company.)
The main question is:
where do your shoes fit into our market?
Distributors have several lines they sell, have
local agents across a very big country, and
show at the regional shoe shows.
Our F/W show season starts in January and
runs to March. The S/S season starts in July
and runs to August.
7
8. What are the negatives associated with
Chinese production?
What characteristics of Chinese production
are NOT suited to CANADA?
What characteristics of our market are WELL
suited to Colombian products?
What are the positives associated with
Colombian production?
8
9. 18% duty
Even the biggest
buyers are 2 or 3
levels away from
the actual maker.
0% duty
Benefits to Canadians:
Additional margin opportunity
Cost savings
Lower Landed costs
True one to one
relationship.
Benefits to Canadian’s
Cost savings
Long term relationship with
the ACTUAL maker
CHINA and others COLOMBIA
9
10. Absence of
confidentiality and
exclusiveness
Large scale production
requirements, high
MOQ’s
TRULY EXCLUSIVE
Benefits to Canadian’s:
Differentiation, margin
opportunities for all parties
Small to medium scale
production, suited to
our market size.
Benefits to Canadians:
Reduced inventory ,
investment, and RISK.
CHINA and others COLOMBIA
10
11. LONG lead times
Long Transit Times
Ongoing problems of
on-time product
development
SHORT lead times
Benefits to Canadian’s
Buy and sell closer to the season
Financing cost savings
Short Transit times
Benefits to Canadaian’s
Buy and sell closer to the season
Financing cost savings
Opposite season timing
and local market sales
means collections are
ready EARLY and
market tested!!
China and others COLOMBIA
11
12. 12
oThe Latino consumer is fashion driven
and “plugged into” the global fashion
world.
oYou make your own collection to suit
this demanding consumer. Expanding
your consumer base will improve your
collections and business.
oSame day Reponses
oShip Through Pacific or Atlantic
oA little over one week transit times.
oSo, we can be smaller, faster, more
reactive and with NO DUTY.
oYou have PRO-EXPORT, and me.
13. Low minimums, direct
connection, exclusive
High minimums, multi layer
Non exclusive
Colombia Other (far east)
13
COST $40
Duty $0
Freight $0.40
Misc $0.40
Landed $40.80
Wholesale (33%) $61.20
Retail (58%) $145.00
Explosion 3.6
Lead time 30 -45 days
Transit time 9 days
Additional Sales 40-60%
Cost $40
Duty $7.12
Freight $1.00
Misc $0.50
Landed $48.62
Wholesale $72.93
Retail $175.00
Explosion 4.4
Lead time 90-120 days
Transit time 30-45 days
14. ASK FOR ADVICE ALWAYS ASK IF IN DOUBT
1. Respond daily
2. Respond even if it
means asking for
patience
3. COMMIT to
EXPORTS
4. Total Quality
Control
5. Modern Technology
6. Have all of your
“tool-kit”
7. Pro-active market
research
8. Pro-active product
development.
9.Shorten your lead
time.
10. RESPOND
14
15. Email, skype, English
Business cards with international codes
Line list, pictures, sizes, materials, colors
Swatches
Understand the INCOTERMS
Understanding the forms
website
15
16. 16
Canada: French is an official language,
bilingual packaging and labeling
Customs tariff (NIL)
Packaging and labeling
Import documentation for Canada
Measurement system: Canada = metric
Sizes can be EU.
17. 17
Pro forma invoice or order confirmation
to generate letter of credit or deposit
Local freight representative of the buyer.
Commercial invoice
Certificate of origin (Form A)
Packing list
Inspection certificates, if required
Export permits, if required
PRO-EXPORT CAN HELP !!!!
18. 18
China and the International brands will continue
to enter Colombia at an ever increasing pace.
You have a well developed shoe industry, NOW,
use it before it goes away like Canada’s did.
SPECILAIZE AND BUILD YOUR BRAND.
You can buy any shoe at any price.
You have some competitive advantages NOW and
you should make the effort NOW.
Use the opportunity to improve your business by
selling to CANADA, and ELSEWHERE…….
Hello,This is who I am and what I’ve done.I will try not to read these slides, but rather add my comments to them. If I am going too fast, or if you have questions, please let me know.At this point in my career, I am concentrating on working with NEW EXPORTERS to internationalize their businesses. In my experience, those who don’t do this face a very bleak future.
This is a side by side comparison of our 2 countries. I think it will be easier to relate to my country if I compare it with yours.So, Colombia has 35% more people, but Canada is 9 times bigger. That will give you an idea of the open spaces we have. NO CANADIAN city’s traffic is as bad as Bogota!Our growth is basically flat, around 1% per year whereas your economy is growing very well.Now on to the shoe industry.You produce 6X more shoes than we do. That’s because our industry died, or rather committed suicide.Our import shoe market is 2 trillion $. # 12 in the world, but we are 35th in populationI have highlighted the difference in per capita GDP and would like to compare that number with the average import shoe prices. As you can see while our GDP is substantially higher, your shoe prices are quite close to ours.And lastly, while we have a smaller population, we consume more shoes. In fact canada has one of the highest per capita shoe consumptions in the world.Canada is a very good shoe market.This is our shoe market!!!!!
And this is our footwear industry.And what has happened to Canada WILL HAPPEN to COLOMBIA .Imports already represent 55% of your consumption and the china portion has grown 164% over the last 5 years. YOU MUST build your exports and your expertise.So , how do we overcome China, both here and elsewhere.Let’s look a little deeper at Canada AS A market.
Boots. This category is complimentary to both our countries. Colombian Boots are already being exported to Canada.The evolution of the global economy is inevitable.I would say that what has happened to our industry is happening to yours, and the few surviving shoe companies in Canada leveraged their brand and expertise to stay alive and prosper.There are protections in place for your industry, extra duties etc., but that will not stop the flow of imports, nor will it help your business. We know, as we also had protections, but still most of our factories closed.Your only option is to own the consumer, by making a product they VALUE AND RECOGNIZE!It is not a case of maybe we should export, it’s EXPORT OR DIE at the hands of the Chinese, or the international brands. The fact that you are here, and your competitors are not, shows that you understand what might happen if you don’t expand beyond your borders.YOU MUST SPECIALIZE and you must build an export business.So let’s look at THE SEGEMENATION OF our market in Canada.
This is the breakdown of the Canadian shoe market, first by gender and second by distribution channel. I have highlighted in red what is in my opinion, the best chance opportunities for Colombian shoe products. The others are dominated by brands and low priced product.To reach these segments you need a local wholesaler, or you need to be local!This need for a local distributor is universal. When Hush Puppies part of one the worlds largest shoe companies, came to Colombia, they came with the support of Forus, a local player with local connections. You will have to do the same when you come to Canada, that is find the right connectionYou CAN ULTIMATELY reach any other segment. Through either price competitiveness or BRAND recognition. Either way, your product must be GREAT.
Bogota and Toronto are 4400 km apart. We speak different languages. In Canada we have 4 real seasons. Canada has a very complex marketplace, with different segments or niches due to cultural, language, geographic and communication differences. This gives specialty shoe makers such as we have in Colombia a very real opportunity.The main question is to be answered is: where do your shoes fit into our marketAs one of my mentors said to me: you can buy any shoe at any price. And this is very true.The cheapest stores have copies of the most expensive shoes, and this will continue.And, as complex as our market is, that’s’ how numerous and various are the ways to enter it.Our national shoe shows are in Toronto.
In any business decision there are strengths and weaknesses as well as opportunity and threats.What are the weaknesses inherent in China’s shoe exports and what threats does it pose?Our goal is to recognize our OWN strengths and our opportunities and improve on those things.And AVOID or eliminate the weaknesses inherent in our competition.So this is my comparison.
There is an obvious cost saving of 18%. Not so obvious is that this cost saving offers the Canadian retailer/wholesaler extra margin/profit potential as well as lowering unit costs.But, let’s never think that Colombian prices are comparable to Chinese. They are not. Our competitors are the EU, Brazil, Mexico and other developed countries. And one of my key selling points is the second point here. Having direct connections with shoe makers is almost impossible in China, as most producers are owned in HK or Taiwan, and work through various trading entities. This means hidden commissions, costs, and additional chances for mis-communication or misunderstanding.
There is a sameness to the footwear in our market. Our industry is famous for copying or “knocking-off” the industry leaders.When you visit a Chinese factory or sales office, they show you what they are selling to others, some of whom may be in your own market. We here in Colombia can and should avoid this.ALL OF CHINA IS LARGE SCALE.CANADA is LARGE SIZED but otherwise small.Colombian scale is much better suited to the Canadian market.
China requires long lead times due to poor infrastructure, the fact that they make different collections, items for different markets. This is usually 90 days ahead of production.-120I am sure we can make shoes within 30-45 days of receiving an order….Once shoes are ready in China. It will take 30- 45 days to get to the customer in Canada.Colombia is 9 days away from Canada by sea/truck.They say a train is as fast as the slowest car. This is also true with Chinese product development. The best time to see these collections is when everyone else has finished…or very late!For us In Colombia, we develop our own collections, for our market and this means we can be ready long before the Chinese.
On the topic of product development we have a huge asset here, which is the Latino fashion requirement.Our consumers are up to date and demanding, and we have to develop collections to meet these requirements. This synergy between your Colombian customers and the potential Canadian customers will improve your overall collection.We are on the same time zone and have the same working hours, so we can respond the same day rather than a day later as the Chinese have to.We have options as to which port/ocean and coast we can ship from and to. The Chinese don’t.WE ARE CLOSE. 5 hours by plane, not 18!And you have pro-export and me working to make your efforts successful. Let’s look at a chart that summarizes your strengths and opportunities.
So this is the actual comparison of most of the factors discussed already.I’ll explain a few items.Misc is to cover insurance, brokerage etc and is usually calculated as a % of the landed cost.Wholesale mark up will start at this figure, if the wholesaler believes the consumer will pay more, he will adjust his mark up accordingly.Retail mark up also starts here and goes up. Most retailers now want more than 60%, and in some cases get 70-80%. (remember, you can buy any shoe at any price).The “explosion” is the jump from factory cost to retail. The lower the explosion the better.I’ve also listed the “intangibles” that should be a big factor in your efforts: shorter lead times, and transit times, lower minimums, direct connections and exclusivity.China cannot compete against these factors.so are there rules for becoming a successful exporter? Yes, and here they are.
The export shoe business has the same key components as the other portions of your business;Product, People and Communication.The difference is that to communicate you have to use email or skype or phone.For this slide, I will read these items.# 1 and #2 Respond, the same day .#3. Stay committed and make it work#4. Export quality is the # 1 success or failure factor in exports. India is still stigmatized with poor quality that it exported 20 years ago.#5. for your success internally as well as in exports you have to STAY in tune with technology both in terms of production and communication. Fax is DEAD.#6. I’ll go into this next.#7and 8 you are in the consumer goods market. Give them what they want and they will buy from you. Your goal is to learn what they want. That’s the hard part.#9 try to save time in everything you do, including making shoes. Time is the most expensive part of your business.#10 did I mention; COMMUNICATE.
So from here on I think I’ll read through the slides to make sure all is understood.
So, to summarize:(read)
Read, I look forward to meeting with any of you that would like.thank you.