Orders Shift Westward, European Garment Companies Face Pformation

Following the pfer of orders to Southeast Asia in 2008, some European fashion brands are now beginning to "West withdraw" and find suitable manufacturers around their borders. Many countries and regions around them are becoming new fashion manufacturing centers. This undoubtedly throws cold water on clothing orders companies in China.

Targeting Europe

Zhao Yumin, director of the international marketing department of the Ministry of Commerce, pointed out that "as China's labor costs continue to increase, competition with Southeast Asian countries has no advantage, and now the gap with the European and American countries is becoming smaller and smaller, and China's industrial chain continues to move upstream. Orders are shifting to the rest of the world."

Zhang Xian, Secretary General of the China Textiles Import and Export Chamber of Commerce, also believes that the westward shift of orders is the result of the joint action of the domestic and international environment. If Chinese enterprises want to realize the sustainable development of the characteristic economy, it is no longer feasible to win by simply relying on cheap products, and we must rely on industrial pformation and upgrading.

"The volume of orders has been declining during the past two years, down 20% last year, and this year is even less optimistic, which has dropped by about 60%."

As a 80% order business from European clothing enterprises, talking about the order volume this year, Mr. Lin, director of Shanghai Shunkang clothing business, kept sighing.

He said that over the past two years, the days of Chinese small and medium-sized garment enterprises have become increasingly difficult, and they can be described as "very hurt".

Compared with Shun Kang dress, Fujian Shishi enterprise is in a more dismal situation.

Two years ago, I was still doing the garment processing industry. Now the telephone has been informed that the person in charge has changed to the electronics industry.

The original person in charge of the company said: "at the beginning, there was no way, the profit was too thin. In 2006, making a set of European outdoor clothing can earn two hundred or three hundred yuan RMB. By 2009, the worst time was only a few cents. Sometimes, in order to win customers, some orders did not make money, even if it did not agree with customers, the price could not be done at last."

"The cost performance made in China is no longer satisfying."

France

Let shill moved overseas production to Hungary recently, Lopez, chief of its production, said in an interview with CelineLopes.

In this regard, the reporter visited H&M, ZARA and other European international brand stores located in Dongzhimen, Beijing, and found that there are many different places of clothing. Besides Vietnam, Kampuchea and Indonesia, European countries such as Spain, Turkey, Morocco and Bulgaria are also listed. Once the "MadeinChina (made in China)" one country's unique vision has disappeared.

"Foreign origin products account for about 90%."

ZARA, a staff member in the store said.

As a labor-intensive textile industry, cheap labor costs were once the "trump card" of competition between Chinese garment manufacturers and other countries. This "ace" began to be unstable in 2005, and it was even insignificant after the rise of manufacturing in Southeast Asia in 2008. Now, cheap manufacturing seems to be getting farther and farther away from China.

According to relevant statistics, over the past five years, China's national payroll index has been growing at an annual rate of 15%.

According to the French Fashion Institute, Institutfrancaisdelamode (IFM), the monthly salary level in China's coastal areas in 2011 has surged from 240 euros in 2005 to 400 euros.

According to a garment processing enterprise in Fujian, an ordinary garment mechanic now has a salary of 1800 yuan, which was 1500 yuan last year, and only 1200 yuan in 2010. The wage increase of the workers in these two years is basically around 25%.

"Now we have to compete with foreign countries for price competition. We really have no advantage."

Yin Guo Xin, chairman of CHENFENG group, known as the world's largest OEM factory, said: "in terms of labor costs, we are not the same as Southeast Asia. The labor cost of Vietnam is only about half that of China. In terms of pportation costs, we are less than the European countries. It takes only 3 days to travel to Turkey, and we take at least 45 days for shipping."

Yin Guoxin also admitted to our reporter that 90% of the company's customers came from the United States and Japan, and even Europe was not even 10%, so its impact on its own enterprises was not large. Orders for this year and February increased steadily, but the increasing labor cost and the cost of raw materials still made the enterprises feel a lot of pressure.

"Rising cost is an influential factor in the pfer of orders, but it is not the only factor. In the past two years, the unemployment rate of European and American countries has remained high. The EU countries urgently need the return of manufacturing industry to solve the domestic employment problem, which is also an important reason."

Zhang Xian further analyzed.

Some industry insiders pointed out that European order pfer also has its own market demand.

As fashion trends are changing rapidly, some European fashion brands "West withdrawal" are mainly designed to cope with the increasingly rapid changes in the fashion industry in the local market.

Italy

Bianchi, designer of LaPerla, told Reuters in an interview: "the cost of producing garments in Turkey and Tunisia is higher than that in China, of course. But considering the increase in salary, the cost is not much higher, and Turkey and Tunisia are much closer to Italy, which is more convenient for us and better quality control." (GiovanniBianchi)

The severe industrial situation has made many enterprises realize that the old road has not been able to work. Transformation and upgrading is an inevitable choice for enterprises to survive in the fierce international competition.

However, pformation and upgrading require a lot of capital, and enterprises with no pformation can be eliminated. Most enterprises are in a dilemma.

"The pformation and upgrading must be done at the high end and brand, but in fact, the order of high-end products does not meet the needs of all Chinese garment manufacturers, which will inevitably lead to a lack of food and clothing for some enterprises.

No order, no funds, pformation is impossible, this is the plight faced by many small and medium enterprises, especially micro enterprises, and is also a difficult problem faced by our country in the process of industrial upgrading.

Zhang Xian said.

In this regard, Zhao Yumin also pointed out that in foreign countries, textile exports have introduced protective policies and preferential policies, so the pformation and upgrading of enterprises is necessary. It is also necessary for the state to give some support.

For example, the government can reduce some intervention in the industry, actively provide trade facilitation, help enterprises improve productivity, eliminate some policy barriers from the aspects of export tax rebate, logistics, raw materials and so on, and reduce the increase of paction costs caused by human factors.

After two consecutive months of decline, the textile and apparel export data released in the first quarter of March showed that textile and clothing exports finally rebounded in March, and exports were US $18 billion 790 million in the same month, an increase of 13.4% over the same period last year.

Many people in the industry and experts believe that although the current foreign trade situation is grim, enterprises can go out of their own way in developing new products, developing new markets and building their own brands, so that they can still turn the corner and usher in another spring of textile manufacturing industry.