China‘s shoemakers are under pressure — and the challenges aren’t going to let up anytime soon.
While a greater variety of footwear is sourced from China, it is no longer the low-cost provider it once was. Geopolitical concerns and overall higher costs continue to impact Chinese footwear producers.
“Looking ahead, I expect footwear production in China to remain under pressure, particularly for labor-intensive, price-sensitive products where Southeast Asia continues to enjoy a cost advantage” said Sheng Lu, a professor in the department of fashion and apparel studies and director of graduate studies at the University of Delaware. “At the same time, China’s comprehensive supplier network, manufacturing capabilities, and ability to produce a wide variety of products efficiently mean it is likely to remain a critical sourcing hub for many U.S. footwear companies.”
According to data points Lu keeps track of from Jan. 1, 2026, through July 31, 2026, footwear labeled “Made in China” on average was priced between 30 percent to 40 percent higher than similar products from Vietnam Indonesia and Cambodia. But in terms of stock-keeping units, China-made products far exceeded those from Indonesia and Cambodia.
“While U.S. imports from Vietnam, Indonesia and Cambodia primarily included sneakers and training shoes, imports from China included a more balanced portfolio, covering sneakers, sandals, boots and slippers,” the professor said. “Overall, the patterns suggest that US companies no longer treat China simply as a ‘low-cost’ sourcing destination but instead leverage the country’s strengths to offer a wide range of products with greater production flexibility and agility.”
He doesn’t expect China to regain its position as the lowest-cost producer because wages and other manufacturing costs remain higher than in many other Southeast Asian countries. And unlike last year, when footwear imported from China faced tariffs exceeding 50 percent compared with roughly 20 percent for products from most other sourcing destinations, the tariff rates on Chinese footwear as of May 2026 were broadly comparable to those applied to imports from major competitors such as Vietnam, Indonesia, and Cambodia at around 20 percent. That means that sourcing from China — for now — is no longer as price-prohibitive as it was a year ago, concluded Lu.
Because U.S. fashion firms use a sourcing diversification strategy to mitigate sourcing risks and tariff policy uncertainties, and given that Vietnam already accounts for 40 percent of U.S. footwear imports where no meaningful alternatives exist, Lu said that some U.S. companies “are likely” to shift a portion of their sourcing orders back to China to rebalance regional exposure.
Meanwhile, China’s not sitting back waiting for those orders to come back in.
China remained the dominant shoe supplier to the U.S. in 2025, followed by Vietnam, Indonesia, Cambodia and India, according to data from the U.S. International Trade Commission earlier this year. The Footwear Distributors and Retailers Association (FDRA) said the Commission’s data points showed China imported 964 million pairs to the U.S. in 2025. Dollar and volume import shares fell to 35-year lows, while the average landed cost relative to the world cost slid to a 34-year low.
FDRA chief executive officer Matt Priest has noted that shoe firms are worried that tariffs could climb back up again. And to curtail the continued shedding of market share, China has become “hyper-price competitive” to get production back into China.
But even if any production shifts occur, those changes will happen later, not sooner.
A profit warning from Yue Yuen Industrial Ltd. indicated weak demand for the first half of 2026. The Hong Kong-based Taiwanese shoe manufacturer said last month that for the six months ended June 30, it expects a profit decline of 55 percent to 60 percent from $171.2 million in the same year-ago period. Weak demand, resulting in a contraction of sales, was just one headwind in the six-month period. The lower order demand resulted in a 4.7 percent year-over-year decline in revenue from the manufacturing business.
Yue Yuen said other headwinds include rising labor and overhead costs, which pressured production efficiency and impacted gross profit margin in the manufacturing operations. It said that the ramp up of newly established facilities as scheduled led to an increase in headcount in the manufacturing business, which also saw rising wages across various regions, as well as lower than targeted reduction of overtime and other non-value-added costs. Those factors together drove up overall labor and overhead costs, the company said in a regulatory filing.
Moreover, the shoe manufacturer said it also had challenges to production scheduling in the first quarter of 2026 ended March 31 due to the overlap of long holidays across the Group’s three main production locations. In the company’s first quarter report, it cited the overlap of the Lunar New Year and Ramadan holidays that resulted in production scheduling challenges. The quarter’s shoe shipment volume was down 8.1 percent to 56.9 million pairs.
“Monthly order volatility across various factories intensified in the second quarter, making order allocation more difficult, while geopolitical and supply chain uncertainties further added to the disruption,” Yue Yuen said, noting that these production inefficiencies “drove up the unit cost of .”
Yue Yuen also said it will continue to closely monitor the “developments in the global economic and political environment.” The company’s primary shoe manufacturing facilities are in Vietnam, Indonesia and Mainland China. It also has smaller facilities in Bangladesh, Cambodia and Myanmar.
Chinese shoe manufacturer Stella International Holdings Ltd. last month said its second quarter earnings results were in line with expectations despite “heightened geopolitical and economic uncertainties.” But revenue from its footwear manufacturing business in the quarter rose just 1.4 percent to $439.2 million from $433.0 million in the year-ago period. Footwear shipment volume rose 1.3 percent to 15.6 million pairs, up from 15.4 million pairs.
The company also saw a decline in shoe shipment volume in the first quarter, or down 1.7 percent to 11.9 million pairs from 12.1 million year a year ago, due to fewer working days because of the Ramadan celebrations in Indonesia and Bangladesh.
Stella said that 2026 is its investment year as it focuses on ramping up three new factories in Indonesia, Bangladesh and Vietnam. Together with its existing factory in Solo, Indonesia, the combined capacity will add about 20 million pairs of additional production in the coming years. But even with the ramp up later this year, Stella said the majority of the profit growth is expected to materialize in the latter part of the 2026 to 2028 period.