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    Analysis Of The Future Direction Of China'S Shoe Factories

    2014/1/21 17:07:00 42

    ChinaShoe FactoriesSoutheast Asia

    Kampuchea opposition President Sanglanxi appealed to Kampuchea workers to strike for raising basic wages. Kampuchea's clothing and shoe factories shut down completely, resulting in bloody clashes between police and strike demonstrators in the industrial area near Phnom Penh in January 3, 2014.


    Kampuchea Labor Department spokesman Hensol (Heng Sour) 6, said that the situation has returned to normal, the 909 Cambodian garment factory has 849 workers on the same day, 80% of workers have returned to work. Wen Shuyang, President of Kampuchea garment factory Association (Van Sou Ieng), said that the illegal strike of workers in the whole Cambodia garment factory for more than 10 consecutive days has caused about 275 million dollars loss to the whole industry. According to estimates, factory sales revenue during the strike period is expected to decrease by 200 million US dollars, while the direct economic losses to factories caused by lawbreakers attacking factories and destroying equipment during the strike period are about $75 million.


    "After consultation, many shoe factories and garment factories have promised to raise the monthly salary of workers from 80 dollars to 100 dollars since February 1st. In the past two days, workers on strike in Kampuchea have returned to work in factories, but this is still a lingering fear for Dongguan's shoe companies investing in Kampuchea. Frequent strikes in Southeast Asian countries have increased the risk of Chinese shoe companies going out. " Yesterday, the Asian footwear industry association secretary general Li Peng told reporters.


    According to media reports, Quanzhou Fengyi group's factory in Kampuchea chose to suspend production for several days due to a strike.


    Agence France-Presse also pointed out that last year, Kampuchea textile workers launched hundreds of strikes, making 2013 a record breaking year in the country.


    Labor shortage, on the surface, the cost of manufacturing and operation in Kampuchea is much lower than that in mainland China, but in fact, the profits of the shoe making enterprises in Kampuchea are almost the same as those in Dongguan. On the one hand, the production efficiency of Kampuchea is relatively low, and there is no local raw material production enterprise, and the materials needed by the industry need to be transported by sea and land in the past. There are many unforeseen expenses. On the other hand, the purchasers will clearly calculate the cost of each link. Tariff preferential policies of countries such as Europe, Canada and so on can not be enjoyed by the factory, only buyers are enjoying it, buyers are pressing the price of orders tightly, and once the strike strikes the time of delivery, the factory will lose money, and the life of the Kampuchea shoe making enterprises is also very difficult. The head of a Taiwanese shoe factory in Dongguan said that the local land price in Kampuchea was cheap, the labor cost was much lower than that in Dongguan. The monthly wage of Dongguan shoemaker was around 500 dollars, and it often appeared.


    In the past few years, the European Union has produced products for mainland China and Vietnam. footwear Levying anti-dumping duties, which prompted the EU footwear importers to turn more orders to Kampuchea, and some Taiwan funded factories on the mainland also moved along with the customer's order production lines. In recent years, due to rising manufacturing costs and appreciation of the renminbi and other reasons, shoe manufacturers in Dongguan and other places have gradually moved to Kampuchea and other Southeast Asian countries.


    At present, there are more than 40 Chinese shoe factories invested in Kampuchea, many of which are transferred from mainland China to Taiwan funded shoe factories. And Nike, Adidas, H&M, ZARA, UNIQLO and other international cards completed the layout in Southeast Asia a few years ago. Now the domestic clothing and textile listed companies have begun to transfer orders.


    Recently, Lu Tai A (000726.SZ) announced that it plans to invest $8 million to build a new annual production of 3 million shirts processing plants in Kampuchea. Previously, 601339.SH and 002042.SZ have invested and set up factories in Vietnam. In addition, 000982.SZ has set up a factory in Kampuchea by accepting 91% of Kampuchea Xin Wang Knitting Co., Ltd.


    People close to the world's largest shoemaker, Baocheng industrial Limited by Share Ltd (9904.TW, hereinafter referred to as "Baocheng") told our reporter that Baocheng, a shoemaker of famous sports brands such as Nike and Adidas, had cut off production lines from Dongguan, Zhongshan and other PRD production lines, and gradually shifted the production line to the mainland and Southeast Asia. In the past few months, it has built factories in Kampuchea, mainly for the Adidas Solomon company. The strike in Kampuchea has brought some influence to Baocheng's local factories.


    With the rising manufacturing costs in mainland China, Baocheng reduced 51 mainland production lines in 2012, and gradually transferred some of its capacity to Southeast Asian countries such as Indonesia and Vietnam. Since 2013, although Baocheng's revenue has remained generally stable, the transfer and adjustment of production capacity, which is accompanied by the continuous increase in labor costs and the allocation of orders with brand customers, is a challenge to operational performance.


    In addition, China Sporting goods market Discounts on consumption and discounted promotional activities are still unscheduled, resulting in the combined gross profit margins and consolidated net operating rates in the first three quarters of 2013, 21.9% and 4%, respectively, representing a decrease of 24.6% and 7% over the same period last year.


    Li Peng talked about the Pearl River Delta Shoemaking industry Transfer is the general trend. Personally, he believes that the risk of transferring shoes to Southeast Asia is greater than that of the mainland. Currently, labor costs in Southeast Asia are rising frequently in the strike, and Southeast enterprises may not have better opportunities.


    Last week, under the pressure of workers' strike, the Ministry of labour of Kampuchea announced that the monthly minimum wage of the garment industry increased by 25% to 100 dollars, but the workers in the industry were still not satisfied, asking for the minimum wage to rise to 160 dollars per month.


    Insiders say that the transfer of Chinese brands to Southeast Asia is no longer significant because the time lag of rising labor costs has gradually shortened, and Southeast Asia may lose this advantage in a few years.


    Wu Zhenchang, chairman of Guangdong Chuangxin footwear industry, told reporters yesterday that there is still a big gap between the wages of workers in Southeast Asia and the Pearl River Delta, and some shoe companies are still moving to Southeast Asia. The shoe industry that moved to the mainland may not have developed well. During this time, some shoe factories that moved to Jiangxi and Hunan have been closed down one after another. Simply reducing labor costs through transfer is not a long-term solution after all. This year is still a very difficult year for the shoemaking industry. The way out is to improve the competitiveness of enterprises by improving their internal strength.

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