Firstly, it is undoubtedly the high cost of production. Domestic enterprises are forced to compete with Asian manufacturers, which use modern equipment and cheaper labor.
Secondly, there is a shortage of natural domestic raw materials, mainly leather.
Thirdly, the principle of formation of pricing for raw materials is puzzling in our market.
Fourthly, the shadow import of goods and raw materials nullifies all efforts of domestic entrepreneurs. Counterfeit is naturally always cheaper due to low quality due to the absence of taxes and duties. We import 17 times more light industry products than we export.
Fifthly, the enterprises of the leather and footwear industry today are not ready to fulfill large orders and are not able to change product lines several times a year depending on the season. The share of light industry in the structure of industrial production is now only 0.4 percent, and naturally if tomorrow this sphere disappears, then ordinary consumers will not notice it.
Sixthly, there is a problem with the products sale. Domestic footwear is sold in small shops that do not form a retail network. Retail prices for footwear produced in Kazakhstan, as a rule, are formed with a margin of three to four times higher than the purchase price, which makes it uncompetitive. The cost of shoes is greatly influenced by the consumption of materials. Since there are no qualified cutters, the percentage of leather used is no more than 60%, which is a lot, there is a lot of waste that affects the cost of products. To solve this problem, it is necessary to use new cutting technologies and purchase innovative equipment. There is no demand for Kazakhstani footwear, not so much because of its quality, but because of the lack of advertising.
Seventhly, the lack of qualified personnel. There is a high turnover of personnel and a shortage of not only workers, seamstresses, but also technical workers at the top and middle levels. Although there are enough educational institutions in the country that train specialists for this field, many graduates do not want to associate their careers with production, given the difficult working conditions and low wages. Therefore, solving the personnel issue requires the introduction of new approaches to personnel management. There are no secondary educational institutions in Kazakhstan that would train specialists in light industry.
The discussion allowed us to formulate our common point of view for the withdrawal of the leather and footwear industry from the protracted crisis, for this it is necessary to solve several problems: to accelerate the technical re-equipment of enterprises, to protect the domestic market of the country from the expansion of imports by introducing special duties and quotas on cheap imports, to carry out financial rehabilitation of enterprises, as well as organize training centers for specialists in light industry.
The meeting was very fruitful and both sides were interested in further cooperation, we hope that some of the problems outlined will be solved by joint efforts, but tangible assistance is needed at the government level because all this affects the economic security of Kazakhstan.