China'S Manufacturing Industry Still Has An Advantage In The Spanfer Of Manufacturing Industry And The Complicated And Uncertain Trade Situation.

Sui Lipei has worked as a senior executive in the apparel industry for many years. He has worked as a senior executive in C&A and BESTSELLER, one of the largest apparel and apparel retail groups in Europe. He has worked in more than 20 years as an international buyer, making her familiar with the European and North American markets, and has rich experience in international brand purchase. She is good at supply chain management, and has a very deep qualification in purchasing team management. She is familiar with the production base in China and Southeast Asia, and has great experience in the procurement process, social responsibility, environmental protection requirements and quality system management of international buyers.

Since 2007, Sui Lipei and French partners have started the European brand market. Since 2013, they have worked with the first tier suppliers to manage the North American market and cooperate with the large fashion chain fashion brands in the United States.

The implementation of effective quality control system and supplier evaluation standard, social responsibility assessment system, improve the overall quality level and stabilize the supplier system; strive to cooperate with buyers and suppliers to make efforts in environmental protection production of knitted and leather products, take the lead in applying for the European OEKOTEX production labeling; Southeast Asian production procurement business in 2005 has been the first batch of international buyers for Southeast Asian production, and has been continuously monitoring and improving local factory social responsibility assessment and quality supervision; she has served as an international fabric design competition judge, and has been participating in international and domestic apparel and textile exhibitions in the fashion and textile industry forum. She specializes in studying the trend of the North American and European market, helping domestic suppliers to track the trend and understand the market and customer needs. Sui Lipei served as the chief representative of a multinational company.

Recently, Sui Lipei expressed his views on hot issues such as the spanfer of China's manufacturing industry to Southeast Asia.

In the face of increasingly fierce international trade wars and the spanfer of industrial chains, will China's domestic textile and garment manufacturers still have sustainable competitiveness?

After joining the World Trade Organization (WTO), China's exports from 2003 to 2007 continue to grow at an annual rate of more than 25%. In 1990, China's manufacturing industry accounted for only 3% of the world's total, but now accounts for half of the global market. In 1990, China's exports accounted for only 2% of the world's total, 2017 jumped to 14%, and the global export share increased by 6 times, becoming a veritable world factory. With the rise of labor costs, China's "world factory" is losing its overall strength in the past two years. According to the economist, the average daily wage of Chinese workers in 2015 was 27.5 dollars, far higher than that of Indonesia's 8.6 dollars and Vietnam's 6.7 dollars. According to the August 2015 Boston consultation report, China's manufacturing cost advantage has shrunk to less than 5% compared to the US. Based on the United States, the report analyzes and compares four key dimensions of the world's top 25 export economies, namely, workers' wages, labor productivity, energy costs and exchange rate. The rise of labor costs directly leads to the reduction of the advantages of China's foundries.

Before the Sino US trade war broke out, China's manufacturing industry showed signs of diversion, because China's labor costs, land and energy prices rose rapidly, while the exchange rate remained high. Labor-intensive factories such as garments and home textile products moved to Southeast Asia on large scale. Some multinational companies chain clothing brands in order to pursue the lowest purchasing cost, forcing the suppliers of garment enterprises to be forced to shift to cheaper Southeast Asian regions with labor costs, and even find out the negative news of illegal production in some remote factories. In fact, as early as 2005, the multinational company I was working for was trying to buy in Southeast Asia. At that time, the monthly wages of the workers in Kampuchea were only 70 dollars, and their working efficiency was more than half of that of the Chinese workers in the same period, and they could only produce the most basic styles.

In addition, the raw materials and accessories of the entire production chain come from China, and the efficiency of customs clearance and spanportation is much lower than that of China. So after the initial two seasons of production, when the EU quota restrictions on China were lifted, we shifted the production back. Today, the wages of Southeast Asian workers have increased several times. Although the technology level that can be produced is not the same as that of Chinese clothing enterprises, it has also improved a lot. Therefore, a large number of garment manufacturing industry has been spanferred to Southeast Asia. For example, a number of fast fashion brands such as Swedish fashion retail giant H&M/, Danish fashion chain store BESTSELLER/, ZARA brand of Spain's Inditex group and many other suppliers have moved garment factories from China to Burma, Kampuchea and other regions. These multinational companies even require new suppliers to have production bases in Burma, otherwise they can not be included in the list of licensed suppliers.

The choice of production of international buyers is more and more inclined to the Southeast Asian region with low cost labor force. European and American countries' preferential tax preferences for imports in these regions make the international buyers' CIF more advantageous. In the face of increasingly fierce international trade wars and the spanfer of industrial chains, will China's domestic textile and garment manufacturers still have sustainable competitiveness?

First, analyze the situation of production procurement in Southeast Asia and China.

In the early 80s of reform and opening up in the last century, most of China's investment came from Hong Kong, Macao and Taiwan. Fabric accessories from Taiwan, Korea accounted for a large proportion. In the next twenty years, China invested a lot of money in building infrastructure. By 2000, China's industrial chain has been relatively complete, and all kinds of high and low grade fabrics and accessories are available. The upstream and downstream supply chains are very mature, and the overall process level production capacity also has international standards. In addition, China's political situation is stable, the government's macroeconomic regulation and control capability is strong, the enterprise system is generally more standardized, there will be no uncontrollable strikes and other unexpected situations, and the supply of various supporting facilities is relatively perfect. In addition, Chinese enterprises have good control over product or management risk, and the quality system is perfect. If the product is out of order, there will be a solution and the company's reputation will be better. In terms of workers' quality, if the efficiency of workers in European and American countries is 1.5-3 times that of China, the ratio of efficiency between Chinese workers and Southeast Asian workers is almost the same ratio, and China's vigorous implementation of industrial automation will dwarf Southeast Asia. All of the above, after 2000, made Chinese garment manufacturing popular with European and American buyers, plus nearly ten years of awareness of the design and development of supplier factories in China, and began designing studios in Europe and America, and invited European and American designers to cooperate with domestic designers to become the mainstream of design and development.

Although the cost of labor in Southeast Asia is low, most Southeast Asian countries such as Burma and Kampuchea are not well matched and their infrastructure is poor. The main raw materials and accessories are all from China. Customs clearance efficiency is low and the cycle is long. The overall management and technical team of the factory is mainly from China, and the management cost is high. Take Kampuchea as an example, the cost of wages for local workers has increased 3 times than ten years ago, and the government has promised to continue to rise to 5 times over the next five years. The cost of industrial land around Phnom Penh has increased 7 times. Although the cost of hydroelectric fuel has not risen substantially, the cost has always been 1.5~2 times that of China. Invisible invisible costs, such as political instability and some factors of strikes, are also the craters of crisis. Vietnam, which is separated by a wall, has nearly 17 times the wage increase in nearly 20 years, and the overall cost is close to that of China.

? enterprises that consider spanferring to emerging markets should not only consider explicit costs, but also take into account the risks and uncertainties associated with new factories.

According to McKinsey Global Research, the import and export costs of the association of Southeast Asian Nations (tariffs, port miscellaneous fees, inland spanportation fees, etc.) are 24% higher than that of China, and the total import and export process is 66% higher than the OECD average and the efficiency is very low. In addition, the social and political environment in Southeast Asia is not stable, and the potential risks are high. Vietnam is one of the first countries to develop early production in Southeast Asia, which is much better than the others. However, in 2014, at least 15 foreign factories were burned in Vietnam's Anti China protests, which resulted in the delay in the supply and the huge losses to the enterprises. Sales of European and American brand buyers also have a negative impact. Moreover, the enthusiasm of workers in Southeast Asia is relatively low. Professor Li Yining wrote an article at the end of 2015, "Southeast Asian workers do not have good Chinese workers". In 2005, as the first batch of international brand buyers in Bangladesh, we encountered the workers' strike and riot. Although there were no casualties, it caused a lot of personal threats to the quality managers stationed at the time, and resulted in a delay in the delivery period. So after that, we were also cautious about the production procurement in Bangladesh.

In the process of exploring new markets, the Development Department of international purchasers only saw Southeast Asia's cheap labor and convenient facilities such as ports, and did not take into account the negative factors such as production efficiency and politics, and decided to spanfer production to Southeast Asia. Chinese companies investing in factories in Southeast Asia have also benefited from the cost advantage and order stability for a certain period of time. However, they bear huge risks of politics and economy. Recently, the European Union announced that it would start the process of revoking trade preferences for Kampuchea and Burma. The preferential tariff policy will end in a few years. This is a devastating blow to the manufacturing industry of nearly 100 million workers in local clothing and footwear industry.

Those who consider spanferring to emerging markets should not blindly follow suit. When trying to change the global purchasing strategy of enterprises, they should not only consider the explicit cost factor, but also take into account the risks and uncertainties existing in the cooperation with new factories, especially in terms of information efficiency.

It is not easy to shift the industrial chain from China. China is the only country in the world that possesses all the industrial categories in the United Nations Industrial category. China is also a large country with large population. It has huge consumer market, develops local manufacturing industry, promotes the development of Chinese manufacturing to the middle and high end, loses part of the low-end manufacturing industry, conducts thorough industrial reshuffle, and leaves a good brand that is truly a brand product. In this way, the future of China's garment manufacturing industry is not necessarily a new gesture of made in China going to the world.

Li Pu Su

EMBA, master of business administration, CEIBS, and E management course after Fudan University.

Chairman and founder of Shanghai mod Garments Co., Ltd.

A strategic partner with several well-known garment enterprise groups in China; responsible for Europe and North American market.

In 1994-2001, he worked as a senior executive in C&A, one of Europe's largest clothing and apparel retail groups, responsible for purchasing in China.

In the past 2001-2006 years, he has worked in the Scandinavian fashion giant BESTSELLER group, which is responsible for the procurement and development of ONLY/VEROMODA/JACK&JONES/SELECTED and other brands in China.

Since June 2006, the French partner has set up the MD Garments Co., Ltd. in Shanghai, focusing on the sourcing and development of the high-end brand market in Europe.

After joining the Longsheng fashion group's new business in 2013, he joined in the management of the North American market development, and cooperated with FOREVER 21/PERRY ELLIS, a major clothing chain in the United States.

Main achievements:

During the period of purchasing the chief representative of a multinational company, he established and led the team to implement the quality system and supplier factory evaluation standard and social responsibility assessment system. By improving the overall quality level, the brand image has been upgraded and the supplier system has been stabilized.

Together with buyers and suppliers, efforts have been made for the environmentally friendly production of knitted and leather products, leading the first batch of China's suppliers to apply for European OEKO-TEX logo.

The earliest development and development of multinational brand fashion Southeast Asian production procurement business, and help international buyers to establish system continuous supervision and improve the factory social responsibility assessment and quality supervision.

The trend of the market in North America and Europe is very well researched. Based on maintaining the industry's leading information, domestic suppliers continue to understand the needs of customers.