The status of China's textile and garment industry is indestructible
In recent years, with the rising cost of raw materials and labor in China, some textile and garment companies have begun to look for cheaper destinations in other markets outside China and try to find the "next China". From Africa to the americas, from myanmar to Bangladesh, the discussion of the next hot spot in the industry never seems to stop.
Recently, the report that 16 countries want to be the successors of China's manufacturing industry has aroused a heated discussion and debate about the general trend of China's textile and apparel manufacturing industry. When it comes to choosing the best manufacturing destination, the cost obviously includes not only raw materials, but also all of them. China is irreplaceable because it has unmatched superior resources.
-- talk about the us security think tank's report on 16 countries' intention to use this opportunity to achieve greater development of manufacturing industry.
Recently, from the United States security think-tank StratforGlobalIntelligence about the 16 countries that the desire to achieve greater development, manufacturing of report a (see "China textile news" on August 15, 2013, 2), and prompted a tide of China's textile and garment manufacturing debate and argue, part is responsible for global sourcing professionals should mischievous approach has called "guess who is the next China" this incredibly funny annual collection and quizzes. Some even delineated the scope of activities in Asia, Africa and Latin America, especially Tanzania, Kenya, Uganda and Ethiopia in Africa and Sri Lanka, Indonesia, myanmar and Bangladesh in the Indian Ocean. What is the competitive advantage of China's textile and apparel manufacturing industry? Can the boss be shaken? Can manufacturing really be shaken up? Can the theory of manufacturing replacing China hold?
Place of purchase is not equal to low salary
David birnbaum, founder of ThirdHorizon, a global apparel industry research and consulting firm, told reporters last week: "clothing manufacturing destinations are much more than just finding the lowest Labour costs." When it comes to choosing the best manufacturing destination, the cost obviously includes not only raw materials, but also all of them. Companies also need to consider factory costs, utilities, financing, transportation, import duties and warehousing. Reliability; Local infrastructure (including political stability, ports, road traffic and power supply); Availability of yarn, fabrics, dyes and accessories locally; Ethical and environmental compliance. China not only has all these advantages, but also has other incomparable advantages. For example, by improving productivity, China's garment production has doubled since 2005, and China's production capacity in spinning, knitting and weaving accounts for 60% to 75% of the world's total. From procurement to raw materials, it has an efficient infrastructure for garment production. Facilitate efficient transportation of product logistics and convenient customs administration.
David birnbaum agrees us security think-tank StratforGlobalIntelligence President George friedman's view: "the current will not be a country can take the place of China. The size and scale of China is staggering. This means that its successor will not be a country, it will probably be some countries, a region like nafta, china-asean fta, South Asia or asean, but it will take time to see if these regions are fit to be the leaders. Birnbaum explains.
The comprehensive advantages are impeccable.
Judging from the current wage level of the garment industry, the wage cost in Bangladesh is about $60 / month, while that in China is nearly $450 ~ $600 / month. For the manufacturing industry, in the crucial cost control link, why did the manufacturing industry in China not go bankrupt in the high price competition? Can you still be the boss? ThirdHorizon investigation and consulting company, focus on the global garment industry in the near future to mobilize a large number of industry's most senior sourcing specialist, visited the seven countries around the world (including Bangladesh, Cambodia, China, India, Indonesia, Turkey and Vietnam) of more than 150 factories, success has collected the most detailed survey data of global garment industry. If one compares China with Bangladesh, one can see the real reason why China's manufacturing position is so difficult to shake.
From the chart below (a survey of bangladeshi companies in the benchmark study), China's garment exports are much higher than Bangladesh's in every aspect except fob. While fob prices remain important, they have a much smaller impact on corporate profit margins than fob values. ThirdHorizon said that when we looked at a series of data on Chinese competitiveness, we came to two direct conclusions: "one is that the choice of manufacturing destinations is an extremely complex issue, and the other is that it is foolish to try to quickly find the concept of 'the next China'."
In 2012, for example, Vietnam's share of the us market appeared to be close to 9.2 per cent. But that is the American view. From the eu's point of view, Vietnam is at best a secondary supplier with a 2.7 per cent market share. Apparently, the clamour for "the next China" is also dominated by people loyal to us views or with pro-us bias. The United States currently imports 21.5 percent of the world's clothing, compared with 45.8 percent for the European Union. The U.S. already has almost no domestic apparel industry, and 46.6% of eu imports come from other eu countries, making the U.S. market rapidly becoming a secondary market for U.S. brands and retailers. So David birnbaum warns: "given the state of the global apparel industry, it would be foolish to blindly choose 'the next China' and try to be the next China."
Industry support is optimistic
Esquel, the world's leading maker of premium pure cotton shirts, told a conference last week: "while China's manufacturing position has been mentioned time and time again, no country can replace it as the world's largest clothing manufacturer and with a 38 per cent market share in garment exports." "A lot of people talk about the end of China's manufacturing position," Bruce rockowitz, chairman of li & fung, told reporters two weeks ago. In addition, China is a hub for textile and apparel companies in any country, an importer or retailer. He said the purchasing giants were trying to shift pressure from rising Labour costs and grow by using more efficient factories and Labour.
"Commodity prices tend to be more stable than they have been in the past three years, at least this year and next. But in the long run, with economic recovery and development, price rises are inevitable. As for the rise in Labour costs, if you read China's five-year plan (where wages are expected to rise by 13 per cent a year) and the analysis of future wages in other countries, you understand the inevitability of higher Labour prices. Yue yue min President said.
Of course, due to the weak economy, rising raw material and labor costs, and in line with the national goal of achieving sustainable development of China's textile industry, China's textile and apparel industry still needs to work hard.