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China losing sheen, global brands pull out

03
May '12
The Chinese textile and clothing sector is losing its sheen as a low-cost destination, as a number of global brands and even Chinese apparel producers look beyond Chinese shores.

China emerged a global apparel manufacturing hub 30 years ago, due to its low-cost raw materials and labour.

However, today, not only foreign brands have gradually begun to pull out of China, even Chinese local brands have begun production facilities outside China.

The driving force behind this change is that raw materials are no longer available at low prices, while labor cost is rising.

In Dongguan City, labour costs have risen by 30 percent and raw materials prices have increased by more than 20 percent in the last one year.

These factors have created pressures on garment exporting companies, to provide their foreign principals goods at cost-competitive prices.

A French newspaper recently reported that, French textile and garment imports from China grew 7 percent in the first 11 months of 2011. However, this increase came on back of hike in prices and not volumes.

In the same period, French imports from Bangladesh and Pakistan grew 26 percent and 29 percent, respectively.

It has also been reported that Italian lingerie brand La Perla moved its production line from China to Turkey and Tunisia last year.

Not only the production bases of foreign brands are evacuating from China, but even local Chinese brands are contemplating shifting operations to low labor cost countries.

Youngor Group which is a major Chinese textile and apparel producer bought over a shirt production unit in Hanoi – Vietnam last year.

Experts forecast that, more foreign or locally owned production units will move to foreign shores in 2012, in quest of low-cost production.

Fibre2fashion News Desk - China


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