Interviews
US apparel companies optimistic about investing in China – Study
08 Oct '11
2 min read
On account of rising labour costs in China, experts foresee the US apparel companies modifying their overall investment pattern in the entire Asia-Pacific region. They list Bangladesh, Indonesia, India and Vietnam among the countries that will likely benefit from this change in investment strategy.
But, a recent study issued by international accounting firm KPMG, says the US imports of apparels will eventually get balanced among price, production rate and product quality. As of now, manufacturing units in China are at an advantage compared to countries like India, Indonesia, Vietnam and Bangladesh.
Nick Debnam, President of KPMG Asia-Pacific, says the cost of labour is not the only criterion to measure national competitiveness in the textile and apparel industry, but stresses that the challenge of rising wage cannot be completely overlooked.
He cites that minimum wage in Bangladesh doubled in 2010, and annual wage has to be increased by 10 percent in India. So, not only wage, but also the quality of labour, infrastructure facilities and other factors will determine the ultimate potential of an industry, he adds.
The KPMG study says, China's labour quality is increasing due to relatively stable population in the age group of 18 to 30 years and also due to the country investing in training.
Although wage increase has become inevitable due to China's rapid economic development, productivity levels and the quality of labour force are far better in China compared to Indonesia, India and other countries in the Asia-Pacific region, the study adds. It mentions that the present production capacities in other countries are far lower than in China.
The research indicates that the US investors are still optimistic about investment prospects in China, as the country is further improving its infrastructure by constructing rail network and highways. Also, because China is increasing its productivity and it possess nine of the world's top 50 container ports. All these make China an attractive destination for investment.
But, a recent study issued by international accounting firm KPMG, says the US imports of apparels will eventually get balanced among price, production rate and product quality. As of now, manufacturing units in China are at an advantage compared to countries like India, Indonesia, Vietnam and Bangladesh.
Nick Debnam, President of KPMG Asia-Pacific, says the cost of labour is not the only criterion to measure national competitiveness in the textile and apparel industry, but stresses that the challenge of rising wage cannot be completely overlooked.
He cites that minimum wage in Bangladesh doubled in 2010, and annual wage has to be increased by 10 percent in India. So, not only wage, but also the quality of labour, infrastructure facilities and other factors will determine the ultimate potential of an industry, he adds.
The KPMG study says, China's labour quality is increasing due to relatively stable population in the age group of 18 to 30 years and also due to the country investing in training.
Although wage increase has become inevitable due to China's rapid economic development, productivity levels and the quality of labour force are far better in China compared to Indonesia, India and other countries in the Asia-Pacific region, the study adds. It mentions that the present production capacities in other countries are far lower than in China.
The research indicates that the US investors are still optimistic about investment prospects in China, as the country is further improving its infrastructure by constructing rail network and highways. Also, because China is increasing its productivity and it possess nine of the world's top 50 container ports. All these make China an attractive destination for investment.
Fibre2fashion News Desk - China
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