South China Sea Dispute Poses Grave Danger… To Shoe Sales

The coast of the South China Sea near Vietnam. (Shutterstock) While rising tensions over sovereignty in the South China Sea have global leaders fearful of diplomatic disputes, military threats, and even the possibility of war, another group is also worried about its impacts—on the shoe industry. According to a new geopolitical report by the Footwear Distributors and Retailers of America (FDRA), the ongoing sovereignty dispute between China and several Southeast Asian countries including Vietnam, Indonesia, and the Philippines could have huge repercussions on shoe sales. According to the report, 95 percent of all footwear shipped to the United States flows out of the area, and increased cost and slower delivery times may result from ongoing territorial arguments. This report is obviously pretty limited in scope considering the FDRA’s industry focus, but the situation is worrying many sectors doing business in China. The South China Sea contains some of the world’s most important shipping lanes—hence one of the reasons China is so adamant about its sovereignty claims in the area. China, which claims almost the entire South China Sea, has become increasingly assertive in the region. Although China hasn’t declared an air defense identification zone in the South China Sea as it did in the East China Sea, the country has been “apprehending boats weekly” to enforce a newly declared set of fishing rules for the area. The publication of the report also serves as a reminder of the strong effects that geopolitical concerns can have on a wide variety of industries in China. The ongoing sovereignty dispute between China and Japan over the Senkaku/Diaoyu Islands spilled over into anti-Japan riots in 2012, causing Japanese brands’ China sales to tumble. A look at the FDRA’s member list features not only U.S. brands that range from Nike to Elizabeth & James, but also several Chinese companies from Xiamen, Wenzhou, Zhejiang, and more. The study is sponsored by Tata International, a leather exporter from India—which isn’t surprising, as India relies heavily on the route.

Sectors

Insights

Company

South China Sea Dispute Poses Grave Danger… To Shoe Sales