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Japanese apparel firms reduce dependence on China
May '12
Japanese textile and apparel companies are busy increasing their presence either by way of sourcing or setting up garment manufacturing units Southeast Asia.

Mitsui & Co has recently finalized its partner factories in Myanmar and other Southeast Asian countries.

Mitsui plans to increase its share of overseas production ratio from 2 percent to 4 percent in Southeast Asia.

Similarly, Sumitomo also plans to set up a garment company in Vietnam this month.

The Japanese garment industry which imports over 80 percent of its needs from China is worried about the cost implications of sourcing or manufacturing from China.

So in order to minimize risks, Japanese are partnering with companies in various Southeast Asian destinations and also reduce dependence on China.

Japan's apparel and clothing retailer's do not have factories in Japan; they mainly produce or source from overseas countries through trading companies.

In the past, they focused on China, due to low labor costs. But over the past few years, Chinese production costs have nearly doubled.

So in order to meet the demand for low-cost textile and apparel products in Japan and also maintain their profitability, they are scouting other low-cost manufacturing bases.

Mitsui & Co. has signed agreements with factories in Vietnam and Myanmar to produce one million garment pieces per year.

The Mitsui factory in Cambodia with an annual output of 500,000 pieces will also start operation this year.

The apparel subsidiary of Sumitomo Corporation has engaged about 50 staff for technical guidance including Japanese staff for its factories in Vietnam, and improve product quality in plants in Cambodia and Laos.

Marubeni plans to increase its production ratio in Southeast Asia from about 15 percent at percent to more than 30 percent by the end of March 2014.

Itochu will send Japanese technicians to permanently stay in its factory in Myanmar, aiming to expand shirt production.

Mitsubishi is also preparing to set up bases in Indonesia and Cambodia, in order to increase its procurement channels.

Fibre2fashion News Desk

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