Adidas Relocates Textile And Clothing Enterprises To Reduce Labor Costs, Showing A Trend Of Moving South

The continuous downturn in international and domestic market demand and the rising cost of comprehensive factors represented by labor costs are making textile clothing Enterprises are facing unprecedented survival pressure. Some well-known clothing brands and listed textile enterprises are in business difficulties, and many small and medium-sized enterprises are facing the risk of bankruptcy. For the entire textile and clothing industry, a major reshuffle may have been inevitable.

Recently, according to the latest news, Adidas has confirmed that the company will close its last factory in China. Does this mean that it has sounded an alarm bell for China's textile mills?

"China is no longer a country where labor costs were low a few years ago," said an industry insider.

It is worth mentioning that Adidas was once accused by the London Olympic Organizing Committee of its "sweatshop" in Cambodia. At that time, the company responded that the monthly salary of its factory workers in Myanmar was 130 dollars (about 828 yuan). In contrast, the average monthly wage of the company's Suzhou factory is no less than 3000 yuan, 3.6 times the monthly wage of Myanmar workers.

　　 Relocation to reduce labor costs

"As early as a few years ago, especially after the 2008 financial crisis, international brand companies began to move their factories in China to Southeast Asia and other places." The above industry insiders said, "For these international brand companies, where the labor is cheap, they will move there."

In August 2008, the French media reported that, in view of the rising wage level in China, Adidas is preparing to transfer the production of some products from China in order to reduce production costs. The report also pointed out that Adidas President Haina had said publicly that more than 50% of Adidas sports shoes were produced in China, but because of the rising wage requirements of Chinese employees and the increase in production costs, the company plans to reduce the proportion of production in China in the future.

Haina said that it would reduce the proportion of production in China, but then responded that "the number of OEM products produced in China will never decline, nor will it close any market in China".

The above industry insiders said that adidas closed its production plants directly under the company this time, and the OEM plants will continue. Because, Adidas just needs to place an order with the OEM factory, without considering the labor cost. In other words, Adidas passed on the risk of rising labor costs to the OEM factory. For the sake of orders, only the OEM factory can reduce its profits.

In addition to the factory relocation of Adidas, in March 2009, Nike, the world's No. 1 sports brand, also closed Taicang Factory, the only shoe production facility owned by the company, and transferred the shoe production business managed by Fengtai Group to Fengtai's factories in other regions of Asia.

Ma Gang, an independent commentator on the sports industry, said that this is a signal of "great transfer and transformation". Adidas announced its withdrawal at this node, which is due to the laws of the market and the cycle of the industry. "The end of the demographic dividend era has made garment processing enterprises face the choice of transformation. ODM (original design and manufacturing) is the most basic and practical choice in China."

"Given that the textile and clothing industry is a labor-intensive industry, Adidas, Nike and other companies pay more attention to labor costs in terms of cost reduction, and of course, there are transportation costs after moving to Southeast Asia." The above industry insiders analyzed to reporters, "With the increase of labor costs, I believe that there will be Chinese factories moving to the central and western regions or Southeast Asia to set up factories in the future."

Data shows that China's labor cost is twice that of Southeast Asia. At the same time, the research data released by the French Textile Association shows that the average wage of employees in Chinese textile enterprises is 188-300 euros, much higher than that of Bangladesh, the country with the lowest wage in the global textile industry, which is about 80 euros.

　　 Clothing and textile enterprises moved south

It is precisely because brand companies pursue the maximization of benefits that the low labor force has made the history of "sweatshop". According to foreign reports, in order to produce products related to the London Olympic Games, Adidas factories in Cambodia let workers work up to 10 hours a day, six days a week. These workers said that their working environment was poor. If they worked eight hours a day, six days a week, their monthly salary would be $61, and the medical insurance fee would be $5.

It is reported that Adidas has invested 100 million pounds in the Olympic Games. The London Olympic Organizing Committee has signed an agreement with the Olympic commodity manufacturers, which requires the Olympic sponsors to provide workers with adequate basic living security wages. The "Labor Union behind the Trademark" said that Adidas' wage treatment to Cambodian workers violated this agreement.

The above industry insiders said that the reason why Adidas set up factories in Myanmar is that local labor costs are cheap and low wages are normal.

In response, Adidas said publicly on the 13th that the average wage of workers in this factory is 130 dollars, and they will get a raise at the end of the year. However, some people believe that this Cambodian factory has violated the regulations of the London Olympic Organizing Committee, that is, the sponsor must pay sustainable and guaranteed wages to workers.

In an interview with foreign media, a spokesman for the London Olympic Organizing Committee said that the Olympic Organizing Committee attached great importance to the allegations and would investigate the matter.

It can be seen from this that, whether moving out of China due to rising labor costs or employing workers at low prices in Cambodia, Adidas' various behaviors show that in order to save labor costs, the marketing concept of low cost and high profit of international brands is exposed.

It is worth noting that, in addition to Adidas and Nike moving their factories to Southeast Asia, Clarks, K-Swiss, Bakers and other international shoe giants have added production lines in Vietnam and Indonesia.

In June this year, 13 Chinese textile companies, including the famous Tianhong Textile Group Co., Ltd., sent representatives to Indonesia to find suitable locations for the establishment of factories. From this point of view, Southeast Asia has set off a wave of textile factory building.

It is understood that China's textile export enterprises have been impacted by the price advantage of Southeast Asian products. Faced with the price shock in Southeast Asia, the boss of a textile enterprise proposed to build factories in Southeast Asia to make up for the price disadvantage.

A person in charge of a textile company said that the orders of domestic low-end export products have been reduced by 1/3 this year, and many orders have been taken away by companies in Southeast Asia.