Does Adidas Want To "Run Away"?

Sooner or later this day will come.

Adidas is no longer willing to endure the high cost of China's footwear industry. Recently, it has proposed to gradually shift its production base in China to more competitive Vietnam, Kampuchea and India.

At the same time, Nike, Puma and other international footwear giants also increased procurement in Southeast Asia.

Adidas's pursuit of global sourcing is cost advantage, and the low cost era of China's footwear industry has been fading away.

　　成本上漲超過阿迪預期

"The company is discussing the issue of phasing out the production base from China in phases, and has sent people to Southeast Asia to investigate, mainly because of the rising cost of manufacturing in China and the tightening of policies."

A Adidas Chinese confirmed to reporters.

At present, nearly 50% of Adidas products are made in China, and there are 264 factories throughout the country.

But in recent years, the cost of China's footwear industry has been rising, exceeding Adidas's expectations, so they are considering shifting.

Li Peng, secretary-general of the Asian Footwear Association, told reporters that the overall cost of China's footwear industry has risen by 25% to 30% in recent years, while the average profit margin of the footwear industry is 5% to 8%.

In particular, the instability of the RMB exchange rate may engulf the order profit or even make the company lose money.

According to the press, Adidas is very concerned about the RMB appreciation, the new policy of government processing trade and the influence of the labor contract law on the investment environment in the mainland, and has discussed with its large scale foundry enterprise Guangdong Wan Bang shoe company.

Adidas has made a compromise on the cost raising requirements of the next generation factory.

Guo Weiwen, spokesman of Wan Bang shoe industry, said that Adidas will adjust its price this year according to the rising cost of the factory.

But Adidas is not going to accept the factory's continued increase in price requirements.

"If factories repeatedly raise prices, customers may find more competitive factories or pfer orders to Southeast Asia.

Compared with other Asian countries and regions, Chinese factories are not competitive in terms of cost. "

Guo Weiwen told reporters that in order to reduce production costs, the WAN Bang shoe industry has pferred all of Guangzhou's production lines to Qingyuan, North Guangdong.

In addition, the shuffling of China's shoe industry has also made Adidas difficult for orders on hand.

"Now is the game between factories and buyers."

An original WAL-MART shoe buyer analyzed that at present, nearly half of the enterprises in the Pearl River Delta and the subsidiary enterprises have been closed down or shrinking. The bargaining power of large factories has increased. Many buyers in the hands have many orders because they do not want to increase their prices, so buyers and factories are in a stalemate.

"In this game process, Chinese enterprises lost 10% to 15% of their orders, mainly to Southeast Asia."

　　全球采購策略

Supporting Adidas's pfer is its global sourcing strategy.

For cost reasons, Adidas outsourced more than 95% of its production to independent third party factories.

Like Nike and other international shoe giants, it mostly adopts brand operation mode, focusing on the design field itself, without its own factory, looking for foundry and selling globally.

Its factories are mainly in Asia.

Besides China, it already has a foundry in India, Vietnam and Indonesia.

So when placing orders, Adidas will consider the cost of factories around the country.

Adidas said that a major reason for the pfer of production bases was the continuous increase in labor costs in China.

According to Wu Zhenchang, chairman of Guangzhou Chuangxin footwear industry, which has recently visited many Southeast Asian countries, the labor costs of Southeast Asian countries are rising under inflation, but the Pearl River Delta is rising faster than these places.

"Plus RMB appreciation, in dollar terms, the average monthly salary of workers in the PRD (plus social security) is 230~250 dollars, while Indonesia is 100~120 dollars and Vietnam is 70~90 dollars."