Chinese garment enterprises prefer Southeast Asian region over other places for relocation of their manufacturing, as the ‘going out’ pace accelerates, according to industry analysts.
China’s cost advantage in garment production has gradually disappeared and more and more clothing orders are moving to Asean region due to low production costs and improved industrial capacity enhancement there. This, along with high production costs and low operating margins in domestic production, is forcing China’s garment enterprises to accelerate the ‘going out’ pace.
Industry analysts point out that China currently has complete textile and apparel industrial production chain and if the whole industry transfers to other places, then it will affect the domestic industry.
The top most factor that makes the Asean region a preferred destination for the Chinese garment enterprises considering relocation is the difference in labour costs. For example, a garment worker in Cambodia draws less than 1,000 yuan per month compared to a salary of 3,000 yuan in China.
The second factor is the rising enthusiasm of governments of Southeast Asian nations for attracting foreign investment. The industrial supporting capacity has gradually increased in Cambodia, Vietnam, Indonesia and other Southeast Asian nations.
Another advantage, especially for those who are investing in new manufacturing units, is they have latest advanced equipment which offers production efficiency. The cost of land for setting up new units is also lower in Southeast Asian countries compared to China.
Most importantly, the local garment processing capacity has gradually improved in Southeast Asia, which makes the region a preferred destination for relocation of Chinese garment manufacturing.