Vancl,
one of China’s best-known fashion brands, has started shifting
production overseas in an effort to cut labour rates and beat the
country’s rapidly rising production costs.
The
company, China’s largest independent online clothing retailer by sales,
has started sourcing a small part of its production from Bangladesh on a
trial basis, and plans to increase the proportion made outside China.
A
Vancl official said the company is contacting manufacturers in
Indonesia, Cambodia and other southeast Asian countries as part of the
outsourcing effort.
Vancl
said the main incentive for the move was cheaper labour costs. “One
Bangladesh worker’s monthly salary would be Rmb500 to Rmb600 ($80 to
$95), while one Chinese worker now costs at least Rmb2,000 per month,”
it said, noting that even after paying higher transport and other costs Vancl could save five to 10 per cent of total costs by outsourcing.
According
to a report released Tuesday by the National Population and Family
Planning Commission, China’s average monthly pay for migrant workers
under the age of 35 was Rmb2,513 last year, up almost 30 per cent since
2009.
Difficulty
recruiting workers was another reason, Vancl said, noting that the “new
generation” of Chinese workers did not like factory jobs. Manufacturers
across China in labour-intensive industries say younger migrants – many
of whom have grown up in cities – aspire to service or white-collar
jobs rather than assembly-line labour.
Vancl
has not yet decided how significant a proportion of its production it
will source overseas. “The production cycle can be as long as four to
six months [in Bangladesh],” a company official said, while domestic
suppliers are required to deliver in 30 to 45 days. Vancl said it also
felt “proud of its traditional ‘made in China’ label.”
“Vancl
only sells to the China market,” said Shaun Rein of China Market
Research in Shanghai. “One of the reasons they win is they can introduce
new products, tailored specifically for China, very quickly.” Sourcing
from Bangladesh could jeopardize that, he said.
Still,
more and more Chinese brands will outsource in this way, as domestic
labour costs continue to soar, said Shao Ligang, of Beijing-based Jiupai
Yixian apparel consultancy.
Torsten
Stocker, head of the Asian consumer goods practice at Monitor Group,
said: “But this is far from the end of textile manufacturing in China.
“A
host of other factors influence sourcing decisions: labour productivity …
training-skill level, degree of automation, degree of worker loyalty …
and speed-to-market,” he said. “China will still have a significant role
to play.”
Source: http://english.ctei.gov.cn/innews/domestic/201208/t20120809_1369609.html
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