Footwear and garment brands, with a view to keep low costs of their products, are relocating their production plants to Indonesia, as it has a large labour group, stable wages and comparatively less regulations.
The production volume of sports footwear, meant to be exported, is likely to go up approximately to 25 percent in the next few years, according to the Indonesian Footwear Association.
Indonesia seems to have a good growth potential, owing to a ready supply of workers with steady wage structure, unlike China, where the wages amplify faster. Hence, people are slowly opting for this island nation to set up their production units.
China, at one point in time, had attracted American companies to set up plants at low costs, in its economic zones, near large coastal cities, due to availability of large number of workers. But, some industries faced challenges to do business in these economic zones.
The reason being, people in China are becoming more skilled and are gaining opportunities locally. So, very few local people are willing to work in zones.
China enjoys the number one position in the world among athletic footwear producers; while, Indonesia is on the third position.
The sports garment producers look for reasonable labour overseas, in a bid to increase profits and tag their products with reasonable prices. With a view to meet the expectations and requirements of the customers, as well as the company investors, industries are seeking ways to cut down costs along the entire supply chain.
Due to vast competition in the market, traders want to sustain their precincts, but are unable to quote a higher price for their products. This helps the consumers to avail benefit of getting low-priced products.
Indonesia, which stands fourth in the world in terms of population, is becoming the next choice of garment and footwear manufacturers to set up production plants, after Vietnam and India. The country provides loads of skilled labourers.
Garment manufacturers for brands such as, Victoria's Secret and Japanese sportswear company, Mizuno, are also expanding their businesses in to the country.
Fibre2Fashion News Desk - India
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