Leather Products

Through marked improvements over the past 20 years, Thailand's leather industry is establishing itself as a major player on the world stage. Despite fierce competition from high-end manufacturers based in Europe and low-cost manufacturers in China, Indonesia and Vietnam, leather exports have been increasing steadily and appear poised for future success in the global market.

The leather industry in Thailand receives extensive support and assistance from both government organizations and trade association in the country. The Department of Export Promotion (DEP) organizes a yearly industry trade show in Bangkok, which attracts interested buyers from around the world. In addition, the DEP champions the export of leather exports abroad and assists exporters to participate in important overseas tradeshows. Also supporting the interests of the leather industry are the Thai Leather Goods Association, the Thai Footwear Association, the Tanning Industry Association, the Leather-based Industry Club, the Federation of Thai Industries and the Footwear Industry Club.

The export of leather goods from Thailand can be broken down into three main categories. Leather footwear shipments make up 50% of the total export of leather goods, consisting primarily of name-brand sports shoes produced for leading international companies sourcing production in Thailand. General leather goods consisting of handbags, folders, wallets, and premium leather gifts contribute 27% of total leather exports, while tanned leather used in the production of furniture, office equipment and in automotive interiors make up the remaining portion of the category.

Analysts believe that Thailand's export of leather goods will continue to increase in the near future. At present, most importers of leather elect to order goods through trading companies based in Hong Kong, Taiwan, Singapore and South Korea. In turn, these trading companies frequently order products from countries that have lower production and labor costs, including Thailand, China, Indonesia and Vietnam among others.

Due to significantly higher labor costs, the Thai leather industry is no longer able to compete on price alone, and is being pressured to adjust its production and marketing strategies to ensure export competitiveness over the long-term. More emphasis is being placed on the development of production technology and product designs to match industry leaders in the global market place.

Thailand's leather industry has gone through three distinct stages of development. Initial efforts by leather product manufacturers resulted in lower quality products for the domestic market and limited exports, which were mostly competitive on price. The second phase resulted from the continued efforts to increase the quality of products and found Thailand becoming a key destination for international brands to base their production. The final stage of development finds Thai manufacturers developing and marketing high quality products internationally under their own brand name.

While individual companies within Thailand's leather industry operate at varying stages of development, the DEP and the Thai Leather Goods Association have been promoting Thailand as a competitive place for foreign companies to base their production and helping Thai exporters to develop their own brand names. Over the past four years, Thailand's leather exporters and designers have been collaborating with Linea Pelle, a renowned Italian design house, focusing on upcoming fashion trends as well as materials and accessories needed to transform products into finished collections. Through these efforts, a select group of Thai leather good producers is beginning to make progress on the international scene and are competing directly with Europe's leading manufacturers.

Despite strong competition from regional countries, Thailand's leather industry should remain on course for further gains in the future. Liberalized trade within the Association of Southeast Asian Nations (ASEAN) region slated for 2003 along with gains in product design, fashion trend awareness and upgrades in technology will likely allow further increases in the volume of Thai leather products shipped to destinations around the world.

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