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Can Footwear Really Find a Future Outside China? These Brands Say Yes

Footwear brands have come to a crossroads in 2020.

As the impacts of the coronavirus continue to reverberate globally, along with a seemingly unending trade war and concerns about human rights violations, brands are being faced with a stark choice: remain in China, where manufacturing is unrivaled, or move on to potentially greener pastures.

Many had already begun to diversify their sourcing before the pandemic struck—and others have pioneered new ways of doing business altogether.

A special subset, largely composed of direct-to-consumer brands, has struck out on its own, forging new supply chains based around sustainable inputs and ethical manufacturing in countries far from the world’s dominant sourcing hub.

They have developed or sourced eco-friendly components from locally available raw materials, and have forged strong ties to communities and artisans, playing into their strengths when designing products.

The road less traveled is often bumpy. And while it may not be a perfect, vertical fix for footwear production, making the choice to manufacture outside of China does allow age-old concerns to be replaced with new, potentially solvable challenges.

“’Complex’ is an apt word to describe the situation of trying to vertically integrate within a single country,” said Ricky Lupp, senior product manager for Nashville-based footwear brand Nisolo. The nine-year-old brand, while designed in the U.S., is chiefly manufactured in Peru.

“When you think about products that are a bit more technical, like footwear, there are challenges,” Lupp said. “I’m not always the optimist, but in this case, I am optimistic that brands can commit to vertical integration outside of China, and be successful at creating amazing products.”

Nisolo has made it work, Lupp added, by committing to working through issues that brands that source in China may never have to face.

The company’s Peru-based shoemakers are classically trained in leather goods, he said, making them very knowledgeable about the production of certain types of footwear. But when it comes to branching out into other product categories or working with different materials, Nisolo must look at its entire supply chain through a wider lens, examining not only the capabilities of its factories—but their suppliers, too.

Nisolo's leather goods factory in Trujillo, Peru.

Nisolo’s leather goods factory in Trujillo, Peru.

“If we want to branch out from those products to use organic cotton or canvas, historically you would have to source from different countries,” he said. Vertically integrating Nisolo’s supply chain means that the company must work to bolster the local manufacturers that make the inputs it desires. “You have to be willing to support them in a way that historically brands haven’t.”

A typical factory-brand relationship is just that, Lupp said. Many brands don’t look downstream to the suppliers providing materials like fabrics, foams, eyelets and laces, as there’s little need to cultivate those relationships.

“Many brands don’t necessarily know who their suppliers are for certain materials, beyond the factory that’s making the finished good,” he said.

Nisolo is continuing to grow in this regard, he admitted. The brand still sources Vibram soles from China, though it is actively looking to help develop local suppliers’ capabilities to suit its product needs. And while it sources leather locally, the company also supplements with skins from Mexico’s world-class tanneries.

“We’re excited to continue to look into sole suppliers that want to grow, and get better, and learn new techniques in Peru,” he said, along with small, mom-and-pop-style tanneries that have been focused on artisanal methods. “We want to support the growth of the region as we continue to explore new products.”

Much of the investment “is not so much about capital, but about sharing knowledge,” Lupp said, about what Nisolo has learned from its different supply partners across the globe and the most sustainable and effective techniques.

Nisolo's footwear is made primarily with local inputs.

The Alejandro woven slip on by Nisolo.

“We might have a sole supplier in Peru that makes EVA rubber soles, and they’ve never had an interest in doing it in a more sustainable fashion,” he said by way of example. While the category may not have represented a real opportunity for the supplier in the past, Nisolo aims to provide both the expertise to help them level up and the order quantities the business needs to scale.

“A rising tide raises all ships,” Lupp said.

Verticalizing the supply chain, or at least centralizing around a defined nucleus, also helps limit environmental impact. Nisolo is committed to going carbon neutral, Lupp said, and less shipping and transit throughout the supply chain helps immensely in cutting down on emissions.

Proximity to the brand’s target market—namely, the U.S.—is also a boon to the brand, both from a carbon and cost perspective. “The more brands can get things tighter and closer together and more in sync, it’s a huge benefit,” he said.

Lupp said cross-brand collaboration will play an important role in popularizing markets outside of China for footwear production.

“As you get a cohort of smaller brands together, it gives you the power and momentum and the attention that a larger brand might get,” he said. And as brands begin to focus in on certain regions, bringing more business to those areas, new sourcing hubs can be formed.

Lupp named Brazil as a country that has become well-know for its expertise in sustainable footwear, and he believes that knowledge should be shared.

Paris-based brand Veja, for example, manufactures its cult-favorite sneakers in Brazil, using local, vegetable-tanned leathers, rubber tapped from trees in the Amazonian rainforest, organic cotton from the Northeast region of the country, and recycled PET extruded from plastic waste gathered from the streets of Sao Paulo and Rio de Janeiro.

Companies can act as conduits, Lupp said, pulling best practices from different regions and implementing them across their own supply chains across the globe.

Spain-based Camper has collaborated with international brands and industry groups to do just that. From the Ethical Fashion Initiative, which empowers micro-producers in developing regions like Ethiopia, to eco-friendly footwear brand Ecoalf, which is committed to developing technologies to turn post-consumer and post-industrial waste into usable materials, the brand combines its own industry expertise with that of other footwear innovators, bringing attention to issues from upcycling to international trade.

Despite growing interest, a collective move away from China remains far off, Lupp said, in large part due to the country’s unmatched capacity and skill set. “Different countries are historically good at certain things, and China’s kind of good at everything.”

“Cutting ties with China is so difficult because you have so much access there—it doesn’t matter what type of product you want to create,” from basketball shoes to fashion products, he said.

“Production is set up and ready at the drop of a hat with any type of hardware or variation of inputs you would ever need,” Lupp added.

According to Philipp Mayer, co-founder of German footwear brand Cano, China’s incredible capacity is hard to abandon. “I actually think the major problem for the big footwear brands is finding suppliers that have the same output as the factories in China,” he said, which can produce millions of pairs for a single brand each year.

The cost of turning to countries like Spain and Portugal, highly skilled footwear production hubs in their own right, can be a deterrent for companies that want to scale. Processes that are done by hand in countries like these are largely automated in China, which has had two decades of experience building up the infrastructure to handle mass quantities.

Cano’s three-year-old huarache sandal-focused business is based in Mexico. After studying abroad in the country and falling in love with the culture—and the shoes—Mayer brought an idea home to Germany, and his would-be co-founder, Lukas Punder.

“For men in the summer, there are very few alternatives,” Mayer said. The low-profile, woven leather huarache was a product he’d never seen before in Europe. Eager to avoid being “culture vultures,” the partners decided to bring the style to new markets, but produce it in Mexico where it originated. “We didn’t want to take a product that’s deeply rooted in a certain culture and just copy it and make it somewhere else,” he said.

One of Cano's artisans works on a huarache style in Leon, Mexico.

One of Cano’s artisans works on a huarache style in Leon, Mexico.

Mayer and Punder instead decided to make inroads with the local artisans who had been producing huaraches in the region for generations. “We wanted to redefine the huarache and make it a bit more modern, more Westernized,” he said. The line began with men’s shoes, but quickly expanded to include women’s options as the founders came to realize that female shoppers generally buy more footwear. Now, the sales split shakes out to 65 percent women’s, and 35 percent men’s product.

“We work with small workshops and individual artisans because our mission is to preserve traditional craftsmanship in this modern, digitized, fast-fashion world,” he said. The brand’s shoes are produced in Leon and Michoacán, and it sources materials around Leon and Guadalajara—all within a 200-mile radius.

The company works with local tanneries that adhere to Leather Working Group standards that are audited annually, while rubber soles come from a Leon-based company that sources from trees in the country’s southern region. Recycled airplane tires become soles for some of Cano’s boots, Mayer said.

Cano's Mara huarache sandal.

Cano’s Mara huarache sandal.

When asked whether he believes an industry-wide shift away from China to more diverse sourcing hubs is possible, Mayer said he believes the answer rests in whether brands can commit to becoming more involved and invested in their supply chains.

“It’s not just about going to a sourcing agent and telling them to find a way to make your products,” he added. In order to become more sustainable, ethical and self-reliant, brands must know their manufacturers and suppliers the same way they know their own teams.

“It’s always possible to be more engaged,” he said, “and I think this is the first step that most brands need to take.”

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