Adidas Withdraws From China With OEM

According to French media reports recently, Adidas president Heiner said that in view of the rising wage level in China, in order to reduce production costs, Adidas is ready to transfer the production and procurement of some products from China. Meanwhile, it is reported that Nike, Puma and other international footwear giants are also preparing to transfer some of their products' production and purchase from China. We are not very clear about the news Recently, Adidas (Suzhou) Co., Ltd. responded cautiously to the news that Adidas will reduce its production proportion in China due to the high labor cost in China. "the company is discussing the issue of transferring the production base out of China in stages, and has sent people to Southeast Asia to investigate, mainly due to the rising manufacturing costs in China and the tightening of policies." An Adidas Chinese confirmed to the reporter. At present, nearly 50% of Adidas products are made in China, and there are 264 OEM factories in China. But in recent years, the cost of China's footwear industry has been rising, exceeding adidas' expectations, so they are considering transferring. In recent years, the average profit rate of the shoe industry in China has increased by 25% ～ 25%, especially in China. It is reported that Adidas is very concerned about the impact of the continuous appreciation of the RMB, the government's new policy on processing trade and the labor contract law on the investment environment in the mainland, and has had intensive discussions with Guangdong Wanbang Shoes Co., Ltd., a large OEM enterprise. Adidas has made some compromises to the cost driven price increase requirements of the next generation factory. the reshuffle of China's shoe industry also makes Adidas difficult for orders on hand. "It's a game between the factory and the buyer." According to an analysis of a shoe-making company, nearly half of the shoe-making enterprises and their affiliated enterprises in mainland China have closed down or shrunk. The bargaining power of large factories has been enhanced. There are a lot of orders in the hands of purchasers who are unwilling to increase the price and cannot place them. Therefore, the buyers and factories are in a stalemate. "In the process of this game, Chinese enterprises lost 10% - 15% of their orders, mainly to Southeast Asia." Some experts who have long studied the management mode of clothing and footwear enterprises have told reporters that in recent years, the proportion of production in China of ADI and other multinational brands has been reduced, mainly due to the rise of production cost pressure. While ADI was "running away", some OEM factories were also "hijacked" and went to "overseas" together. according to reports, Taiwan Yuyuan group has set up many factories in the mainland, which are specially engaged in OEM work for ADI and others. In recent years, Taiwan Yuyuan group has begun to transfer to Southeast Asia, and the factories remaining in mainland China have also transferred from the coastal areas to the mainland. As far as we know, Indonesia has more than 10 million employees in China's shoe industry. "Adidas has acquired more than 100 million pairs of shoes in Vietnam." Adidas R & D center director Jiang Hong said that this is a process of ebb and flow. The increase of shoe-making orders in Vietnam and Indonesia naturally means that orders in mainland China are decreasing. industry insiders analysis: "if ADI and other enterprises reduce production lines on a large scale, it will have a great impact on OEM and supporting facilities, because many of these enterprises are difficult to survive independently and are only a part of the process flow. Relying on the orders of these enterprises such as ADI, the pressure of these enterprises increases sharply after the orders are transferred out." It is understood that Nike has also asked some Chinese shoe-making enterprises to move their production bases to India. It is reported that the enterprises that do OEM for these brands have certain scale and qualification requirements. The general manager of a certain factory can only survive by transferring the raw materials to a certain area He said that ADI's direct supply of their final orders has been reduced, and the price of the general agent has also increased. "the situation of OEM enterprises is very delicate, the key is to see the bargaining power between OEM brands." A person in charge of a well-known international sports brand OEM enterprise, who did not want to be named, told the reporter that his company was also in Jiangsu, and the partner had asked them to invest in India to build a factory together. However, after examining India's resources, he found that the production capacity could not meet the requirements due to the lack of supporting facilities and the working hours of workers, which led to the increase of its cost. Therefore, he is only holding a wait-and-see attitude. according to the 2007-2008 survey report on the competitiveness of China's manufacturing industry released by Shanghai American Chamber of Commerce and Bose Allen consulting company, more than half of the companies interviewed agreed that "China is losing its competitive advantage in manufacturing compared with other low-cost countries". not only agree, in fact, many enterprises have begun to "transfer manufacturing out of China". At least when developing global market increment, they will not take China as the first consideration.