Cost Pressure Forcing Garment Factories To Move To China'S Manufacturing Industry And Pform To High Value

Garment factory relocation: China is no longer a cheap world factory.

US media said that when Tal Apparel Ltd (TAL Group) opened trousers factories in southern China's Dongguan city in 2007, executives said they expected the factory to operate there for at least 20 years.

However, the garment manufacturer in Hongkong will close the factory with 2400 employees next year because it can not keep up with the increasing wages.

Rising wages are pushing away low-cost manufacturers of consumer goods.

According to the Wall Street journal website reported on December 2nd, Tal Apparel Ltd chief executive Li Guoquan said that because of the increasing labor costs, "we have always known China will become a challenge."

Tal Apparel Ltd is one of the largest manufacturers in Asia, producing trousers for Banana Republic and J.Crew brand.

He said that the trousers manufacturer "in the last two or three years, we have been losing money".

Reported that Tal Apparel Ltd has begun to pfer trousers orders from China to Malaysia, the company has another factory in Malaysia, and is expanding operations in Vietnam.

The manufacturer plans to maintain another factory in China, which has 4000 employees.

Sewing shirts may be more complicated than sewing pants - and therefore more profitable, because cloth is thinner and easier to crinkle.

Tal Apparel Ltd says that one in six shirts in the United States is produced by the company.

This family

The experience of manufacturers reflects the tough decisions made by Chinese manufacturers, because the world's second largest economy, once a global factory of cheap goods such as clothing and toys, is working hard to pform the higher value manufacturing industry such as automobiles, airplanes and electronic products.

The Chinese government has supported automation and has released a ten year plan aimed at keeping the country at the forefront of technology such as 3D printing and high-end machinery and tools.

Local governments have also raised the two lowest percentage of minimum incomes in many cities in China, forcing the trapped manufacturers to close their factories in more expensive coastal cities and move inland or overseas, the report said.

The company has moved from China to Southeast Asia.

Some manufacturers have warned that China's slowdown, the first time that economic growth has dropped to below 7% in the third quarter since 2009, may push thousands of more factories to the periphery if domestic and foreign demand for manufactured goods is declining.

Liu Zhanhao, former chairman of the Hongkong Federation of industry, said that things will not get better.

He expects that between 2014 and 2017, 10% of the mainland factories owned by Hongkong manufacturers will be closed.

The Hongkong Federation of industry comprises about 3000 manufacturers, most of which have factories in the mainland.

According to an analysis provided by a scholar of Hong Kong Polytech University for Hongkong Federation of industry, compared with the peak in 2006, the number of factories owned by Hongkong enterprises in Guangdong decreased by 1/3 to 3.2 in 2013, partly due to the increasing wages and the difficulty of recruiting workers.

According to the economist information department, wages and profits in China are expected to grow by 8.6% this year, down from 10.3% a year earlier.

However, the agency's data show that China's

The average labor cost in the field is US $3.27 per hour, two higher than Vietnam and 1/4 higher than Malaysia.

The closure of factories is beginning to change the Pearl River Delta region of China.

This area became an economic generator in the 90s of last century, because manufacturers moved factories from Hongkong to here, and global enterprises set up factories here.

Now, "rental" slogans are posted in factories and staff dormitories in an industrial park.

In Zhongshan, an industrial city 90 kilometers away from Dongguan, Gong Guomou, 45, was closing a small system.

After the factory, a restaurant opened in September.

Mr. Gong, sitting in his restaurant, said that small factories could not survive, they were not producing fast enough, and the production cost was not cheap enough to compete with large factories.

Tal Apparel Ltd currently has nearly a dozen factories in five countries and Hongkong.

According to the Information Department of the economist, wages and profits in China's manufacturing sector jumped by 31% during the year when Tal Apparel Ltd opened factories in Dongguan.

In 2008, the cost increased by 28%, but since then, it has been reduced to low double-digit annual growth.

At the same time, countries in Southeast Asia have become more attractive manufacturing destinations because their infrastructure has improved and workers become more proficient.

It is much easier to find workers in Southeast Asia than in China.

According to Li Guoquan of Tal Apparel Ltd, young people in China usually do not want to work night shifts.

Reported that in the past few years, Tal Apparel Ltd realized that even if its

The factory will substantially increase productivity and the cost of production in China will be higher than that produced in Southeast Asia.