Some companies still under indecision for relocation destination (China)
The results of a spring survey conducted by China Federation of Textile Industry showed that employment costs of the textile industry has increased by 12.6 percent since 2011, overall costs have increased by 10.8 percent, while profit margin has declined 2.5 percentage points.
The difficulties currently encountered by the textile industry are more serious than the difficulties they encountered in 2008 international financial crisis, some enterprises have even stopped production in some areas due to business difficulties, especially processing enterprises are under more difficult circumstances. Enterprises could not digest the increased costs, mainly due to shrinking demand from overseas markets. In addition, a large number of orders are transferring to Cambodia and other countries.
To reduce labor costs, China's textile enterprises have two options for their relocation of factories. One is the Midwest of China, the other is Cambodia. However, some companies say labor costs of the Midwest is indeed less than two-thirds of that in Zhejiang, but the labor costs in Midwest are still more than doubled in Cambodia. In addition, transport costs of their exports would become higher, if they move to the Midwest.
Cambodia, Bangladesh and other countries are the least developed countries listed by the United Nations, their textile exports to the European Union, Canada, Japan enjoy duty-free measures and obtain 11-14 percent duty benefits. Cambodia maintains good relations with China, so investment risk there is relatively small. Vietnam is also good place for relocation, but more enterprises have transferred to Vietnam in recent two years, so labor force is relatively scarce in Vietnam.
Some companies still under indecision, despite temptation of low-cost. They say labor productivity is low in Cambodia and Vietnam, workers will organize strikes, if they are not satisfied, which will bring losses to business. They have to take these risks into account.
The difficulties currently encountered by the textile industry are more serious than the difficulties they encountered in 2008 international financial crisis, some enterprises have even stopped production in some areas due to business difficulties, especially processing enterprises are under more difficult circumstances. Enterprises could not digest the increased costs, mainly due to shrinking demand from overseas markets. In addition, a large number of orders are transferring to Cambodia and other countries.
To reduce labor costs, China's textile enterprises have two options for their relocation of factories. One is the Midwest of China, the other is Cambodia. However, some companies say labor costs of the Midwest is indeed less than two-thirds of that in Zhejiang, but the labor costs in Midwest are still more than doubled in Cambodia. In addition, transport costs of their exports would become higher, if they move to the Midwest.
Cambodia, Bangladesh and other countries are the least developed countries listed by the United Nations, their textile exports to the European Union, Canada, Japan enjoy duty-free measures and obtain 11-14 percent duty benefits. Cambodia maintains good relations with China, so investment risk there is relatively small. Vietnam is also good place for relocation, but more enterprises have transferred to Vietnam in recent two years, so labor force is relatively scarce in Vietnam.
Some companies still under indecision, despite temptation of low-cost. They say labor productivity is low in Cambodia and Vietnam, workers will organize strikes, if they are not satisfied, which will bring losses to business. They have to take these risks into account.
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