www.ChinaSourcingReports.com

KatmanduBhaktapur

IndiaBangladesh

China

NEPAL

Nepal supplier profi lesDetailed profi les of 28 suppliers with verifi ed manufacturing and export credentials

Product gallerySpecifi cations and full-color images of 180 top-selling export products ranging from women’s sandals to children’s boots

Industry trendsCoverage of current issues, plus insights into supply centers, products and pricing

September 2013US$150

Essential sourcing intelligence

Global Sources is off ering this series of Developing Country Sourcing Reports as part of its corporate social responsibility undertakings in partnership with the Hinrich Foundation, a philanthropic development organization whose mission is promoting sustainable global trade.

The aim is to give international buyers new sourcing opportunities from experienced exporters, generating orders and creating lasting jobs in developing economies.

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FOOTWEARSupplier capability in Nepal

Growing demand for models made of sustainable and environment-friendly materials is driving the growth of the footwear industry in Nepal. The sector is able to capture a niche market as it emphasizes items that adopt wool, hemp and other natural components, in addition to conventional inputs such as leather.

Export revenue has been progressively rising every year since 2010. Because of the increasing popularity of products constructed using eco-friendly inputs, many suppliers are planning to broaden their market reach in alternative destinations such as Australia.

A number of challenges confront the footwear industry, ranging from labor shortage to inadequate infrastructure. Nonetheless, it is considered one of Nepal’s brightest in terms of potential, and is expected to keep its status as a key export earner over the next few years.

Objective, methodology & scope

Key findings

Executive Summary

In this report• 18 in-depth company profi les• 10 short company profi les• 180 top-selling export products• Supplier demographics• Supplier survey• Industry statistics and charts

This Nepal Sourcing Report is part of a series designed to provide buyers with information on new products from export manufacturers in supply markets that specialize in handmade merchandise.

The Developing Country Sourcing Report series is part of Global Sources’ corporate social responsibility initiatives. It is offered in conjunction with the Hinrich Foundation, whose mission is promoting sustainable global trade. One of its objectives is to help create jobs in developing Asia through export promotion.

To produce this report, large, midsize and emerging manufacturers, all with substantial export experience, were surveyed. The selection of suppliers is designed to reflect the composition of the industry in Nepal in terms of geographic location, materials used and range of products offered.

1. Suppliers generally expect to keep footwear quotes level over the next six months to maintain competitiveness. In addition, most manufacturers implement price adjustments only when raw material expenditure changes. Within that period, the makers forecast the cost of inputs to stay the same.

2. The majority of companies featured in this report are optimistic of generating more revenue in the coming 12 months. Besides experiencing healthier demand from traditional markets such as the US and the EU, most enterprises are expanding into emerging destinations elsewhere.

3. The most critical problem facing the industry is the diminishing pool of skilled manpower in Nepal. Workers who were previously hired

by domestic footwear manufacturers are increasingly migrating to other countries in Asia in pursuit of higher salaries. As a result, local enterprises are compelled to either raise wages or accept employees with limited skills and experience.

4. Although wool is largely imported, footwear utilizing this material is the sector’s most dominant segment. Woolen models have a long history of production in Nepal mainly due to the country’s climate and culture.

5. The majority of suppliers are located in Katmandu. The capital provides easy access to raw components, and has a reliable transportation system and relatively developed infrastructure compared with rural hubs. Other manufacturing centers include Lalitpur and Bhaktapur cities, and Birgunj municipality in Narayani zone.

For in-depth profiles, our researchers visited the facilities of each company and interviewed senior executives who discussed their recent performance and provided forecasts for the next 12 months. All other makers in this report were either visited or contacted by phone.

In each case, companies were required to answer specific questions designed to verify their manufacturing and export credentials, including a breakdown of exports by product type and market. Suppliers also participated in a survey designed to provide insight into the industry.

This report covers different types of footwear available in Nepal, including woolen, leather and natural material models. Each product category shows a diagram of key parts and has its own price guide that describes features of the low end, midrange and high end.

The Industry Overview section discusses key issues affecting export manufacturers. It provides insight on the composition of the industry and general supplier capability, and elaborates on the important sourcing centers within Nepal.

The Products & Prices section details the features and price ranges of garments. It also examines the design and manufacturing processes, main materials used, and sourcing centers where components are procured.

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4 Nepal Sourcing Reports

CONTENTS

Disclaimer: Any recommendation contained in this report may not be suitable for all investors or businesses. Moreover, although the information contained in this report is obtained from sources believed to be reasonably reliable, the accuracy or completeness of such information cannot be guaranteed. The author and the publisher of this report (and the publisher’s affi liates, agents, sales representatives and service contractors) do not make any representation or warranty whatsoever (whether express or implied) in relation to any of the contents of this report (including any information, opinion, recommendation or conclusion contained in this report) (collectively, “Contents”), whether as to the accuracy, completeness, quality, fi tness, suitability or reliability of such Contents (or any portion thereof ) or otherwise, and shall not be liable under any circumstances whatsoever for any error, omission, defect or defi ciency in, or for any use of or reliance on, such Contents (or any portion thereof ).

All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. Products that are not the specifi c topics of editorial articles are shown for illustrative and/or demonstrative purposes only. We, our affi liates, and our affi liates’ respective directors, offi cers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof ) which infringe on any intellectual property or other rights of a third party.

Copyright 2013 Trade Media Limited. All rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Trade Media Holdings Limited and Trade Media Limited is prohibited.

Published by Publishers Representatives Limited (on behalf of Trade Media Limited)4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box 32322 SMB, George Town, Grand Cayman, Cayman Islandsc/o 22/F Vita Tower, 29 Wong Chuk Hang Road, Aberdeen, Hong Kong

ISBN 978-988-15981-6-5

Contents

EXECUTIVE SUMMARY 3 Key fi ndings Objective, methodology & scope

INDUSTRY OVERVIEW 11 Supplier summary Export value

Products & prices 13 Production & export statistics Typical parts & components Price guides

Supplier survey 18 Export prices Export sales Export markets Major challenges R&D focus

SUPPLIER PROFILES 21 Supplier matrix: Comparison of supplier location, sales revenue & export capability Profi les of 28 verifi ed suppliers

PRODUCT GALLERY 71 Leather footwear Woolen footwear Natural fi ber footwear

CONTACT DETAILS 103

Sample page onlyoo 18 8

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PRODUCT GALLERY DUCT GALLERYLeather footweareather footwearWoolen footwearWoolen footwNatural fi ber footNatural fi be

CONTACCONTA

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Industry Overview

Industry Overview

Export valueFabric footwearLeather footwear Other material footwear

The footwear industry in Nepal has been steadily improving over the past three years because of global buyers’ increasing interest in sustainable products.

The sector is generally classified by suppliers according to components used, namely, leather, fabric and other materials. The last two categories are made mostly from merino wool, and natural fibers allo and hemp. These plant-based inputs are found in various hill regions across the country, and have been gathered and woven by ethnic groups for many generations. Along with felt and knitted textiles, they are usually adopted for indoor shoes designed to provide insulation during cold climate. These models are popular among buyers from India, the US and the EU.

Combined overseas sales of woolen and natural fiber items contributed 99 percent to total footwear revenue last year. Exports jumped 25 percent to $17.6 million compared with 2011 levels. India was the main destination, accounting for $15 million of shipments. The EU was the second-largest at $345,000, with Denmark, Germany and France as the three key markets. Japan accounted for $47,000 in turnover. The US and Australia rounded out the top five.

The leather shoes category is a minor line but it is exhibiting continuous growth locally, where it currently has a 40 percent market share. With improved durability and styles, Nepal-made shoes are competing well with models from China and India. Suppliers are optimistic that in a few years, with more training in effective shipping and product design, they will be able to expand their global clientele.

The sector as a whole is looking into alternative markets this year, including Australia, Switzerland, Russia, Poland, the Czech Republic, Slovenia, Chile, Argentina, Brazil and Bolivia.

ChallengesThe industry has several concerns that hinder its continued progress. The most crucial of these is the heavy reliance on raw materials sourced abroad, particularly wool and leather. The former is mostly procured from New Zealand, and about 90 percent of leather is bought from India. Because of fluctuations in demand and supply, the costs of these components are likewise volatile. There have been instances when a handful of large importers in Nepal would create an artificial shortage to drive prices upward.

Another challenge faced by the sector is lack of manpower. Most footwear

suppliers could not provide enough incentive to keep craftsmen in their factories. Every year, an estimated 400,000 workers seek employment in other countries. About 75 percent migrate to the Middle East and Malaysia for construction labor.

Aside from manpower shortage, the insufficient supply of electricity is driving expenditure upward. During the dry season, blackouts can reach 18 hours a day despite the government’s effort to limit it to 12 hours. Industry losses due to these power interruptions stand at $880 million. Local economists say that even with diesel-run generators, manufacturers’ efficiency is only about 60 percent. These temporary energy sources are also more expensive to operate at $0.25 per unit compared with regular electricity from power plants at $0.07 per unit. In addition, petroleum is becoming scarce due to payment-related issues between the Nepal Oil Corporation, which is the sole domestic distributor

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Supplier summary

Data: All surveyed suppliers

Suppliers surveyed 28Export sales $621,000Export ratio 49%Capacity utilized 40%Full-time employees 1,016

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22 Nepal Sourcing Reports

Supplier Profiles

SUPPLIER MATRIX

Company Year established

Head office location

Factory location(s)

Ownership Full-time employees

Part-time employees

ISO certified

In-depth profiles

Bandana Dhaka 2011 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

18 20 ✗

Base 2000 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

25 75 ✓

Blue Himalayan 2010 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

30 100 ✗

Clothline 1985 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

45 250 ✗

Dynamic 2003 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

17 45 ✗

Felt and Crochet Dot Com

1991 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

15 15 ✗

Friends 1997 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

10 70 ✗

Gorkhali Creation 2005 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

60 ✗

Green Village 2011 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

4 10 ✗

Kriti 2008 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

15 40 ✗

Lalita 1992 Katmandu (Bagmati)

Bhaktapur (Bagmati)

Locally owned

40 150 ✗

Mamata 2009 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

36 ✗

New Dahal 2000 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

10 150 ✗

Paragon 1997 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

15 ✗

Pure Nepal 2005 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

6 40 ✗

Purnima Collection 2007 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

4 25 ✗

Sky 2006 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

40 ✗

Vimco 2010 Katmandu (Bagmati)

Katmandu (Bagmati)

Locally owned

26 20 ✗

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28 Nepal Sourcing Reports

Supplier ProfileSupplier Profiles

Capability

Contact details

Bandana Dhaka Kapada Tatha Handicraft Udhyog

Annual sales $15,000 Share of total sales 30% Annual export sales $4,000 Total monthly capacity 1,000 pairs Average monthly output 800 pairs Capacity utilized 80% Average monthly exports 240 pairs Export ratio 30%

Company facts

Year established 2011 Head offi ce location Katmandu (Bagmati) Factory location(s) Katmandu (Bagmati) Ownership Locally owned Full-time employees 18 Part-time employees 20 Total annual sales (all products) $50,000

Sales & output: Footwear

Bandana Dhaka was founded and started exporting in 2011. It specializes in products made of natural fiber such as hemp.

Japan is the primary overseas market, accounting for 70 percent of shipments. The rest goes to Germany.

The majority of orders are under ODM basis.

The company offers casual shoes, including slippers and loafers. Aside from footwear, the supplier manufactures caps, bags, purses, laptop cases and shawls.

The enterprise targets the low end. Quotes depend on the materials used. Hemp slippers are offered for $3 to $10.

The components utilized are cotton, allo and banana fiber, bamboo yarn, and hemp. All are locally sourced except for cotton, which is procured

from India. Buttons and thread are also obtained there.

The owner is the main designer and can create up to 50 new models every year.Samples are finished within a week.

Bandana Dhaka operates a 250sqm factory in Katmandu. The plant is equipped with sewing machines from India. All production processes are performed in-house.

The enterprise has 18 permanent workers. An additional 20 employees are hired when bulk orders are placed. An inspector checks all finished items.

Polybags and cartons are normally used as packaging. The minimum order requirement is 50 pairs per model. Delivery time is four weeks.

The company is a member of the Federation of Handicraft Associations of Nepal.

Processes performed Cutting ✓

Scribing ✗

Molding ✗

Assembly ✓

Stitching ✓

Finishing ✓

Exports by product Leather footwear –Woolen footwear –Natural fiber footwear 100%

Exports by market North America –EU 30%Europe (non-EU) –Asia-Pacific 70%Middle East –Other –

Business contact NEPAL Ram

Phone (977-98) 4923-7358

E-mail bandanadhaka@hotmail.com

URL www.globalsources.com/ bandanaudhyog.co

Address Futung, Nepaltar, Katmandu, Bagmati, Nepal

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Supplier Profile Executive Sum-Supplier Profiles

Popular export models

Model: BHU002MOQ: 50 pairsPackaging: Polybag, cartonDelivery: 30 daysPrice: $3Description: Women’s slip-on shoes; hemp uppers and insoles, and rubber outsoles; in various sizes

Model: BHU004MOQ: 50 pairsPackaging: Polybag, cartonDelivery: 30 daysPrice: $3.50Description: Men’s slippers; cotton and gheri uppers and insoles, and rubber outsoles; in various colors and sizes

Model: BHU003MOQ: 50 pairsPackaging: Polybag, cartonDelivery: 30 daysPrice: $7Description: Men’s loafers; hemp uppers and insoles, and rubber outsoles; in various sizes

Model: BHU001 MOQ: 50 pairsPackaging: Polybag, cartonDelivery: 30 daysPrice: $3.50Description: Women’s slippers; hemp uppers and insoles, and rubber outsoles; in various sizes

Model: BHU006MOQ: 50 pairsPackaging: Polybag, cartonDelivery: 30 daysPrice: $3.50Description: Men’s slippers; cotton and gheri uppers and insolesand rubber outsoles; in various sizes

Model: BHU005MOQ: 50 pairsPackaging: Polybag, cartonDelivery: 30 daysPrice: $3.50Description: Men’s slippers; hemp uppers and insoles, and rubber outsoles; in various sizes

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Model:del BHU003BHU0MOQ:Q: 50 pairs Packaging:ging: PolyDelivery:D Price:P Desc

For other inquiries E-mail: service@globalsources.comTelephone Hotline: (65) 6547-2800

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