Cost Increases, Restrictions On Footwear Exports And Foreign Companies Moving To Factories

Although the export volume of footwear products in China has maintained rapid growth in 2014, the export of footwear products is going downhill since the beginning of this year. The rise in labor costs has compacted the profit margins of enterprises.

According to statistics of the General Administration of Customs of China, in January 2015, China

The volume and the amount of both fell sharply. Footwear exports amounted to $5 billion 699 million in the same month, exports fell by 10.9% compared to the same period last year, and exports fell by 13.5% over the same period.

Labor costs continue to rise

"In recent years, the cost of labor in China has risen rapidly, rising from 1000 yuan per month to 3000~4000 yuan in several years, and the cost of social security paid by enterprises has also risen, and has continuously eroded profits."

Wu Zhenchang, chairman of Guangzhou Taiwan Business Association and chairman of Chuangxin Shoes Co., Ltd.

Wang Renguo, deputy general manager of Baoding, said in a media interview that the shoe industry in Dongguan has been on the decline since the beginning of 2008.

In 2014, the wages of workers increased by 200 yuan, with an average wage of 3200 yuan per month. With the increase in labor and social security costs, the cost of a factory increased by 23 million yuan a year.

Reporters learned that, at present, the monthly salary of skilled workers in the PRD is generally 3000~4000 yuan per month. For this reason, enterprises should pay 759~1012 yuan to pay social security for their employees, plus provident fund, far exceeding the wages of workers in Kampuchea and even Vietnamese workers.

"The cost of employment in Guangzhou is now approaching the Taiwan area.

However, the footwear industry in Taiwan has basically shifted away. Once the industry is pferred, it is very difficult to move back to Taiwan.

At present, the cost of labour in the PRD is 600~650 dollars, and Indonesia is about 300 dollars, while Vietnam has only about 250 dollars, while Kampuchea is cheaper and about 100 dollars.

Wu Zhenchang said.

Shoe factory moved to Southeast Asia

It is understood that even if the recent devaluation of RMB is favorable for export, it will still be unable to retain Taiwan capital.

The pace of relocation.

A number of shoe business executives said that since the exchange rate system reform in 2005, the appreciation rate of RMB has exceeded 20%. Although the recent devaluation of the RMB has been beneficial to reducing export costs, due to the excessive appreciation of the previous years, the callback has limited benefits to the footwear industry. The cost of the footwear industry in mainland China is basically exhausted. The rising cost of labor and the shortage of labor force have become the biggest obstacle to the development of the traditional shoe enterprises, and the increasing number of overseas buyers demanding the relocation of factories to Southeast Asia is increasing.

The reporter learned that since this year, many foreign shoe factories in the Pearl River Delta have reduced or even closed the original shoe factories.

"A pair of leather shoes requires us $20 for orders in the PRD, while in Vietnam only US $18, customers will definitely request to place orders in Vietnam.

Southeast Asian countries have an advantage over labor costs, tariffs, and even some Southeast Asian shoes and clothing products in Guangzhou wholesale market prices, lower than the price in the PRD factory.

An unnamed shoe manufacturer official said.

Wu Zhenchang said that the cost of labor in the PRD was only 50~100 dollars higher than that in Vietnam and Indonesia. However, since the implementation of the new labor law in 2008, the cost gap has gradually widened.

It is estimated that by the end of 2015, the mainland will probably be half.

Transfer factories from mainland to Southeast Asia.

"The shoe industry has always put manufacturing links in low-cost places, often not with the main consumer market" coexistence room ".

Because of the rapid loss of cost advantage, even China's potentially large domestic market can not change the trend of shoemaking industry relocation. "

Wu Zhenchang said.