Whether The Garment OEM Can Continue To Leave China In Succession

Not long ago, sports clothing Adidas, a giant, has decided to close its only factory directly under its control in China, and its internal staff disclosed the destination or moved to Southeast Asia. This factory is located in Suzhou Industrial Park and is a 100% wholly-owned subsidiary of Adidas Group. The news that the factory will be closed was first reported by workers facing dismissal. On July 17, the company's China headquarters confirmed that "the only self owned factory in China will be closed later this year".

Although the company level did not specify the reason for the factory closure, analysts said that in the context of the sharp increase in sales in China, Adidas' move to close the factory made people speculate. The only explanation was clearly that the multinational company was ready to move its production line to Southeast Asia, where production costs were lower.

Adidas' sales in China have been rising sharply in recent years. China is now the second largest market in the world and may surpass the United States to become the largest market. Many years ago, Herbert Hainer, the global CEO of Adidas, said in an interview with the German media that because the wage standard set by the Chinese government has gradually become too high, Adidas hopes to partially withdraw from China and move to areas where labor is cheaper.

This statement was immediately interpreted as that Adidas would close its production line and leave China. In the end, the company had to issue a special statement saying, "Adidas does not intend to withdraw any production line in China, but will increase production in China." However, rumors about Adidas closing its production line are still circulating, and the rumors were confirmed when Adidas closed its only direct factory in China in 2012.

Is the closure of Suzhou factory also based on labor cost and other considerations? Adidas' official statement is "out of the strategy of re integrating global resources". The factory workers said that the factory was ready to move to Myanmar.

While China has gradually become an important market for sales of various brands, we see that Made in China is gradually withdrawing from manufacturers of various brands.

The position of Made in China in the industrial chain

In many developed countries, although "Made in China" has penetrated into all aspects of life of all classes in major cities, it has always been at the bottom of the "smile curve" of the industrial chain.

Although made in China is famous all over the world, consumers all over the world actually don't care where the products are made. Which standard is the most important because the brand output, quality acceptance Marketing Channel and other links determine the "blood" and "identity" of the product on the shelf. It is precisely because of the low irreplaceability of manufacturing that continuous "migration" occurs. Clothing processing is considered to be at the lowest end of the global clothing value chain.

Now, Yiwu, the famous small commodity distribution center in China, is quietly changing. Yiwu is gradually changing from a global small commodity distribution center to a semi-finished product distribution center. It is understood that overseas merchants gathered in China Commodity City to purchase semi-finished products, especially from Southeast Asian countries, "BRICS" and other developing countries. {page_break}

The relevant person in charge of Yiwu Toys Association believes that Yiwu has become a global distribution center for the export of small commodities and semi-finished products. This shows that the cheap advantage of "Made in China" has gradually disappeared, just as China became an export power 20 years ago; Now, terminal factories are moving to cheaper areas.

Since 2011, the textile and clothing industry has faced more challenges due to a series of factors such as the obvious increasing trend of costs, macro policy adjustment, weak international demand, and domestic demand constrained by inflation. Enterprises generally recognize that many factors are affecting the order turnover and profitability of enterprises at present, and transformation and upgrading have become the main theme for enterprises to seek a future outlet.

And Chinese clothing brand Due to the lack of sense of value and overall advantages compared with international brands, it is easy to be affected when the environment changes. China's garment manufacturing enterprises should strive to improve their production level, design level and management level.

If we can say that in the past, the manufacturing characteristics of China's clothing industry impressed people with "cheapness", but today, with the maturity of China's manufacturing industry, "Made in China" has developed to create a "Made in China brand". As a large garment manufacturing country, one third of the world's garment products are produced in China, including some world famous brands.

Today, when the world's consumption tends to be brand oriented, garment enterprises should start to firmly follow the path from OEM to ODM and then to OBM, that is, the path from manufacturing to creation, so that Chinese manufacturing can upgrade, and Chinese manufacturing can gradually get rid of the low-end situation in the industrial chain, becoming a link with higher added value in the industrial chain.

The fierce competition in the clothing market is leading to the redistribution and combination of clothing in the world. New global clothing manufacturing models will continue to emerge, which emphasize the realization of high-quality, efficient, low consumption, clean, flexible and customized production. With the market internationalization of clothing products, the establishment of global communication network, and the formation of international competition and cooperation atmosphere, the internationalization of clothing manufacturing in the 21st century is an inevitable trend of development.

It includes the worldwide reorganization and integration of garment enterprises, such as virtual companies; Coordination, cooperation and sharing of manufacturing technology information and knowledge; Global manufacturing architecture; Market distribution and coordination of clothing products.

Advanced garment manufacturing technology also plays an increasingly important role in enterprise competition. Today's advanced garment manufacturing technology should be understood as the integration of traditional manufacturing technology, information technology, computer technology, automation technology and management science, and a complete system formed by applying it to garment manufacturing engineering.

The general trend of its development is towards precision, flexibility, networking, virtualization, intelligence, cleanness, integration and information globalization. In the new economic system based on knowledge and driven by innovation, China's garment manufacturing industry is facing severe challenges, as well as opportunities to rise again.

The manufacturing industry is facing differentiation towards high-end and low-end

Since entering the new century, China's labor cost has increased year by year, and its comparative advantage of lower labor cost in China has begun to change. However, the complementary relationship between China's labor-intensive industries and developed countries has not yet undergone a turning point.

The average wage of China is still 1/10 to 1/12 of the average wage of developed countries. In addition, in terms of infrastructure conditions, industrial supporting capacity, integrity of industrial chain, quality of manufacturing workers, production and operation scale, and domestic market capacity, China is also a developing country with lower labor costs, such as Vietnam, Pakistan, India Bangladesh and other countries do not have. {page_break}

Therefore, the comparative advantage of China's labor-intensive industries still exists at this stage, and China's manufacturing industry still has room for survival. However, we cannot rely on the comparative advantage of low labor costs for a long time, because the actual wage level of employees will continue to rise, and labor-intensive industries will gradually weaken. Therefore, promoting the upgrading of industrial structure is the future trend of China.

While many manufacturing industries are moving to low-cost areas in Southeast Asia, another trend of manufacturing is to develop towards high-tech. The first is robotics. Taiwan Foxconn, one of China's largest manufacturers, announced last August that it planned to install 1 million robots in three years to replace the work workers are currently engaged in. According to Foxconn's plan, the number of robots on the production line will gradually increase in the next three years to complete simple and repetitive work. In addition to the transformation of the enterprise itself, in Gou's view, Foxconn's move to build robots has profound implications for the growth of China and even the global manufacturing industry. "If China wants to become a manufacturing kingdom, its success or failure depends on turning the demographic dividend into the brain dividend," he said.

The other aspect of manufacturing upgrading to science and technology is artificial intelligence. Even if computers become less intelligent than humans, at least there is software that can imitate human brain. AI technology will find a place in the manufacturing industry and make it "personalized": that is, with the help of AI design assistants, people will be able to design their own products at home. Other technological advances in the next decade are likely to affect manufacturing.

The challenge facing China's manufacturing industry is not just the manufacturing transfer caused by various cost increases. In the longer term, scientific and technological innovation will bring greater challenges to China's manufacturing industry. There is no doubt that the transformation from low-end manufacturing to high-tech manufacturing is the only way to upgrade China's economy.

In addition, it is normal for low-end labor-intensive industries to move to areas with more labor and resource advantages, which is inevitable for industrial development. Made in China needs to face up to this phenomenon. However, in the context of declining economic growth, we should also see the impact of the contraction of traditional manufacturing on employment and other aspects.

Industrial transformation and manufacturing also need to expand to technology and cultural addition, although there are many difficulties in the process of transformation, especially in the context of insufficient innovation ability and low industrial efficiency as a whole. However, it is certain that the upgrading and transformation of Made in China is undoubtedly the trend of the times.

Although China's demographic dividend has gradually disappeared, China's manufacturing industry still has strong advantages. China's manufacturing advantages and labor quality accumulated in the 30 years of reform and opening up process are still in the leading position in the world.

In the context of the global economic downturn, the world may enter a new round of industrialization. In the future, developed countries will promote the development of high-end manufacturing, and Southeast Asia, Africa and other countries will step into the early stage of industrialization. In this pattern, China's manufacturing industry is facing a double attack. In the short term, it suffers from economic downturn, weak exports, rising labor costs and other near worries; In the long run, the developed countries will occupy the high-end of the industrial chain, control advanced technology, and the emerging Southeast Asian and African countries will have more obvious advantages in low-cost production.

The transformation and upgrading of Made in China still has a long way to go. On the one hand, China's manufacturing industry should return to its own industry, improve labor productivity and use it to make a better and better industry, increase profits, seek specialization and deepening, and enhance the core competitiveness of the manufacturing industry; On the other hand, the application of emerging technologies and high technologies has also become an important direction for the transformation and upgrading of Chinese manufacturing.