Pearl River Delta Shoes And Clothing Enterprises To Carry Out Capacity Migration

Zhang is considering building a new factory in Hunan.

Through such a way of trade, the Pearl River Delta entrenched in the past 20 years, he has clutched Nike, Adidas such high-quality buyers.

As early as 2006, domestic and foreign trade policies were tightened, export tax rebate rate was lowered and RMB appreciation was appreciated. Most importantly, the voice of gradually shrinking and adjusting the mode of processing trade was rising.

At that time, the Pearl River Delta was also eager to move out factories such as shoemaking and garment making, leaving room for capital intensive and technology intensive industries.

In response to this shift in policy guidance, Zhang set up his first inland factory in Jiangxi in 2007, setting 700 thousand pairs of shoes per month and attracting about 2000 workers.

At present, this wait-and-see and exploratory arrangement has not seen much success yet.

Today, most of the capacity of the company is still concentrated in Guangzhou, Qingyuan and other regions. "The production capacity of factories in Guangdong is close to 3 million pairs per month. The most important thing is that the products with a little complicated technology can only be processed in Guangdong."

Zhang said.

In fact, such capacity migration and adjustment date back to 2004.

At that time, although buyers such as Nike had taken China as the main sourcing country, their share of the global procurement map was rising rapidly in Vietnam, Indonesia and other places where labor force was cheaper.

In the development of Xinjiang soil, purchasers found that factories, such as Southeast Asia and other places, are still inferior to factories in the Pearl River Delta, no matter in terms of production efficiency or technological level.

The idea of factory owners in the PRD to manage and manage factories in Vietnam and other places began to ferment.

After years of accumulation and deep analysis of procurement experience, these large multinational purchasers are starting to push their voices to Southeast Asian investment plants.

The original consideration of Nike was to help local suppliers improve their technology and efficiency. The changes in the trade environment before and after 2006, especially the gradual increase in labor costs, enabled more capacity to move out of the PRD.

Take Zhang's factory as an example, although he still has nearly 3 million pairs of monthly capacity in Guangdong, but after five or six years of development, his capacity in Southeast Asia has been basically close to this figure.

As a matter of fact, it is hard to say where there is more advantage than the comprehensive cost of the two places.

Zhang said, the total cost of a pair of shoes is the largest material cost, and the purchasing price of each area is basically the same. The price and efficiency of labor and the comprehensive management and operation cost have become the competitive points of various regions.

The price of labor in Southeast Asia is generally lower than that in the PRD. The average monthly cost of employing an ordinary worker in Guangdong is around 1600 yuan (covering social security, provident fund and other costs), while the cost of employment in Indonesia is less than 1000 yuan.

But Guangdong's factories still have an advantage over efficiency and high-end products.

"Buyers are not at ease to produce complex products in inland or Southeast Asia."

Zhang said that the factory's migration route depends on the degree of mastery of complex processes and the next change in labor costs in these areas.

However, what we can see is that the annual share purchase plan of Nike and other companies in China has been shrinking year by year.