By 2018, Geox plans to source at least 25 percent of its production in Europe, up sharply from only about 5 percent in 2013, largely because of the development of its new Serbian plant. In the meantime, China's share would drop to 10 percent from 40 percent five years earlier.
Reconstructing various data supplied by the company, Shoe Intelligence estimates that Geox intends to source 23 percent of its production from duty-free areas in the Far East by 2018, and a further 42 percent in other Far East countries including Vietnam, where it is already getting 30 percent of its whole production.
Imports of leather shoes from Vietnam are currently subject to duties imposed by the European Union, but the country could become a larger supplier for Geox when the duty is cancelled, possibly in 2018. The company deems its presence in Vietnam as strategic. It describes the country as a “Chinese colony” where Chinese investors have opened plants, bringing know-how and benefiting from lower local manufacturing costs.
Geox' new 21,000-square-meter factory in Serbia is expected to produce 4 percent of the group requirements this year. In February, the site had eight production lines running, out of the 11 programmed, and a staff of 850. The facility is due to reach full production by the end of this year, when 1,250 people will be employed and the annual output is scheduled to reach 1.6 million pairs. The plant will mainly produce formal men's and women's shoes and the Amphibiox collection.
Geox says that the site will have short lead times, only needing a few weeks to complete manufacturing and deliveries. It will also be a gateway for the Italian brand to the big Russian market. Goods produced in Serbia can be sold free of duty in Russia.
Geox pointed out that the factory could rapidly, if needed, manufacture 30 percent of the shoes sold by the group by introducing a double shift and becoming a hub to manage footwear production in Albania, Macedonia and Bulgaria. The company also said that it was ready to build a second factory near the existing Serbian site. Geox noted manufacturing costs in Serbia are now similar to those in China. Furthermore, building up production capabilities in Europe will favor the rapid replenishment of the stores' inventories.