Japanese garment firms shifting production base to Asean

26 Dec '13

2 min read

Large Japanese clothing manufacturers are increasingly shifting their production base from China to Southeast Asian (Asean) countries. This can be gauzed by the fact that Sanyo Shokai has started production in Myanmar since August this year, while some other firms are planning to increase their production in Vietnam and other Asean countries.

Mitsubishi is also planning to invest 6 billion yen by 2016 in seven new joint venture apparel factories in Indonesia due to lower labour costs and tariffs in Asean countries compared to China.

Nisshinbo Holdings is planning to introduce latest textile and garment processing equipment in Indonesia and increase its annual shirt production capacity by 10 to 20 percent by 2015. Thus, Asean is fast replacing China as production bases for large Japanese apparel manufacturers.

In 2012, Indonesia’s share in total textile imports made by Japan was only 3 percent, compared to the 74 percent share of China. However, Indonesia’s labour cost is only about one-quarter of China’s, and its infrastructure like roads, ports and power supply is much better compared to countries like Myanmar and Bangladesh, which makes it an attractive destination for Japanese companies seeking steady supply of goods.

No wonder then that Aoyama Shoji, Japan’s largest menswear chain, is planning to open its garment factory in Indonesia in the spring of next year.

Sanyo Shaokai currently produces 55 percent of its goods in China, 15 percent in Vietnam and the remaining 30 percent in Japan. But, over the next three years, the company’s production in China will fall to 45 percent with Myanmar bagging the 10 percent share, mainly because of Myanmar's labour cost being one-fifths of the cost in China.

These days, consumer price requirement is becoming increasingly critical due to the impact of the rise of low-cost clothing offered by Uniqlo and other foreign fast-fashion brands.

From January to June 2013, Japan’s clothing imports from Asean increased by 22 percent year-on-year, while its apparel imports from China dropped by 4 percent year-on-year. The signing of the Japan-Asean Economic Cooperation Agreement (EPA) resulted in cancellation of tariffs on textiles, giving advantage to Asean countries.

After the relaxation of tariff restrictions by Japan in April last year, Japan’s imports of knitwear, especially polo shirt and sweaters, from Cambodia and Myanmar increased by 50 percent year-on-year.

Fibre2fashion News Desk - India

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