It wasn’t very long ago that China was synonymous with outsourced labor and manufacturing practices for a variety of industries. You couldn’t pick up a product in the store without seeing a “made in China” label somewhere on the packaging. More relaxed labor laws and cheaper employee wages made China the premier location to manufacture overseas and avoid high costs stateside. Now, companies are leaving China to move their manufacturing elsewhere in Asia.
Nike and Adidas have been gradually shifting their manufacturing over the last eight years from China to Vietnam and other Southeast Asian countries in a cost-cutting measure. Now, both shoe companies are moving even more of their production to Vietnam, with eventual plans to cease all operations in China. Other companies are following suit, such as Japan-based clothing giant, Uniqlo, which upped their Vietnam production by nearly 40% last year. There are various reasons why companies are shying away from Chinese production, including:
- Cheaper labor costs
- Goods are not subject to potential U.S. tariffs on Chinese exports
- More bargaining power for floor space in manufacturing facilities
So what has caused the shift away from “made in China” in the first place? China is quickly refocusing its manufacturing practices towards high-end products, such as electronics and luxury goods. This has naturally increased worker wages and demand for more complex skill sets, which has given the Chinese government more negotiating power regarding with which companies they sign agreements. This isn’t to say China is showing apparel manufacturers the door, however. Decades of manufacturing experience give China an advantage in infrastructure, logistics and worker training that other countries are still developing, and major apparel companies (Nike included) continue to have investments in China. Nevertheless, China’s move towards more advanced technology manufacturing is opening the door for other countries to take up the apparel business and potentially develop their own infrastructure for advanced manufacturing in the future.
What do you think of the apparel manufacturing shift away from China towards other Asian countries? Is it good for the globalization of manufacturing or do you think it’s just a money-saving move? Let us know in the comments below.