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Zengcheng jeans producers struggle to make profit
18 Aug '11
2 min read
Jeans producers in Zengcheng city, also known as China's 'denim capital' are struggling to make profit as margins have dwindled to as low as 1 Yuan on every pair of jeans.
Zengcheng, a suburb of Guangdong's provincial capital Guangzhou, earned 29.7 billion Yuan through jeans production in 2010. It has over 3,000 major jeans producers, with most of them located in the township of Xintang.
Last year, minimum wages were hiked by around 20 percent in many provinces and municipalities in China and the minimum wage in Guangzhou is currently 1,300 Yuan a month. This has led to an increase in the standard of living of people in the area, which also means a decrease in the number of people willing to work at lower pay levels.
Besides the rising cost of labour, Zengcheng's jeans producers are facing problems like inadequate regulations, and problems related to marketing and standardization of their products. They are also required to follow regulations related to environment safety and welfare of workers.
In addition, there is a change in the market from being export-oriented to more domestic oriented. During the boom times between 2003 and 2005, a few million pairs of jeans were exported to the US alone, but the exports have dwindled after the economic meltdown and the producers have shifted their focus to the domestic market.
Lately, however, to attract more orders and to increase the visibility of 'Xintang' brand worldwide, jeans producers have sponsored 'brand ambassadors'.
Zengcheng, a suburb of Guangdong's provincial capital Guangzhou, earned 29.7 billion Yuan through jeans production in 2010. It has over 3,000 major jeans producers, with most of them located in the township of Xintang.
Last year, minimum wages were hiked by around 20 percent in many provinces and municipalities in China and the minimum wage in Guangzhou is currently 1,300 Yuan a month. This has led to an increase in the standard of living of people in the area, which also means a decrease in the number of people willing to work at lower pay levels.
Besides the rising cost of labour, Zengcheng's jeans producers are facing problems like inadequate regulations, and problems related to marketing and standardization of their products. They are also required to follow regulations related to environment safety and welfare of workers.
In addition, there is a change in the market from being export-oriented to more domestic oriented. During the boom times between 2003 and 2005, a few million pairs of jeans were exported to the US alone, but the exports have dwindled after the economic meltdown and the producers have shifted their focus to the domestic market.
Lately, however, to attract more orders and to increase the visibility of 'Xintang' brand worldwide, jeans producers have sponsored 'brand ambassadors'.
Fibre2fashion News Desk - China
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