Opportunities And Challenges Faced By Swedish Fashion Giants In Africa's Manufacturing Industry

In recent years, as the wages of Chinese workers have increased substantially and the cost of manufacturing in China has increased, more and more enterprises have moved their factories to Vietnam. Now, many Swedish fashion companies, such as H&M, are looking at sub Saharan Africa, thinking that it will become the next factory in the world, while Chinese enterprises will turn their roles into investors.

In the past six years, China Spin The average hourly wage of the workers increased by two times. More and more enterprises have moved their factories from China to Bangladesh, Pakistan and Vietnam. However, with the sharp increase of world population and the increasing demand for textile industry, the productivity of Asia as a whole can not meet this demand. Textile giants began to look for new production bases.

Now they are looking at sub Saharan Africa, that is, Kenya, Ethiopia, Tanzania and South Africa.

Cheap labor is not the only reason to attract these textile giants. The region's rapid economic growth in the past few years (GDP growth of 5% to 10% a year) and preferential tariff policies are also attracting not only Sweden but also the world. shoes Industry and textile manufacturing are important reasons.

Africa has become an important textile exporter in the world in the past few years, and the economic growth of many African countries has also shocked the world. Orjan Sjoberg, a professor at Stockholm business school, said.

Africa, the next world factory?

Among the sub Saharan African countries, the most notable country is Ethiopia. From 2006 to 2011, the income of textile products in Ethiopia increased by four times in five years. It was also during this time that Ethiopia's exports to Europe grew by 500%.

Behind this impressive growth is the investment of many fashion and consumer goods giants, such as Tesco and Primark.. In the long run, as a world factory, Chinese enterprises turned into investors and came to Africa. The most famous among them is Huajian group, the biggest shoe making company in China.

Huajian group, as China's largest footwear group, supplies many world shoe brands, such as Tommy Hilfiger, Guess, Clarks and so on. Recently, Huajian Group invested about 12 billion 300 million yuan to set up shoe industrial zone in Ethiopia. This investment is a joint venture between Huajian group and a state-owned development fund in China. It is expected to create 100000 new jobs for Ethiopia in the next ten years.

With the development of Ethiopia's investment environment, especially the development of textile industry and shoemaking industry, many Swedish fashion Brand Company also focus on the sub Saharan countries such as H&M. And more and more Swedish big companies are planning to move their factories to Ethiopia and sub Saharan Africa. Madeleine Rosberg, President of corporate Responsify, who is concerned about corporate social responsibility, is confident of the development of the region. The company has successfully helped many companies build their own branches in Africa.

She also said that sub Saharan Africa would become the next world factory, the main consumer product area in the world. And Ethiopia will be their NO.1..

Opportunities and challenges facing African Manufacturing

Of course, although Africa has made great progress in sub Saharan Africa in recent years, there are still many problems in this area. Professor orjan Sjoberg believes that many textile manufacturers must ask themselves if they want to move factories to African countries before they want to move. clothes ?

Although the investment environment here is becoming more and more mature, compared with China or other Asian countries, the investment environment, especially infrastructure, is not very perfect, so it is necessary to spend a lot of money to build a local industrial chain. At the same time, the relationship between local industry and industry is not strong. In addition, the business environment and business atmosphere are not very strong, and the overall quality and technical level of workers still need to be improved.

With the development of the next generation of Middle East Africa, the growth of consumption level and consumption ability, the knowledge level of workers and the growth of people's level in the whole region, Professor orjan Sjoberg believes that this region will develop in the long run, not just a sewing factory. Moreover, with the government's attention, capital input and labor force level rising, the productivity of the factory will inevitably increase.

Another worry brought about by the development of textile manufacturing in the region is a more international issue. With the development of manufacturing industry in East Africa and South Africa, the investment in this area will show a geometric explosive growth, especially from China. Many people worry that the investment from China will make future investment in this area change from being used to being squeezed.

Orjan Sjoberg believes that there is no doubt that investment can promote development, and is conducive to the improvement of productivity and the quality of labor. But if such investments develop into imperialism, it is not welfare but disaster for these areas.