Labor-intensive garment enterprises: eliminated in migration

release time:2010-08-31

According to Vietnam's "Investment News" report, the Vietnam Textile and Apparel Association said that the current operating conditions of Vietnam's textile and apparel export enterprises are good. Although it is only the third quarter, many companies have obtained export orders for the whole year, and export prices have increased by 15% year-on-year, and some companies have even signed export orders for next year. For example: Vietnam TNG Trade and Investment Company signed an order worth 45 million US dollars with an American company; companies such as Nha Pi and Viet Jin are negotiating export contracts with their partners for next year.

Linking this news with the rising prices of processing plants, raw materials, and labor for domestic and foreign trade orders, I can't help feeling: what should come is always coming, especially challenges.

The textile and garment industry migrated from the original European and American regions to Japan, South Korea, Taiwan and other countries and regions, and later came to China's Pearl River Delta and Yangtze River Delta regions, and then began to transfer to China's inland regions. In the 1980s and 1990s, the industrial relocation of my country's Hong Kong, Macao and Taiwan regions once promoted the rapid development of processing trade in the Pearl River Delta region.

Now, the migration wave is on again. Many governments and businesses are prepared for this, but after the migration, will we still rely on cheap labor to maintain our competitive advantage?

It took only 25 years for China's clothing industry to surpass Japan's 50-year development achievements, and the migration trajectory of the clothing industry is also quite complicated. In the case of children's clothing, the earliest production and processing base for children's clothing was in Foshan, Guangdong, but in the late 1990s, it began to move to Quanzhou, Fujian. In less than 10 years, the children's clothing industry base moved to Huzhou again. One reason is the comprehensive cost of Huzhou. lower. The trousers industry is also somewhat similar. The earliest trousers production base was in Guangzhou, then it was transferred to Jinjiang, Fujian, and now it was transferred to Henan, Hunan, and Liaoning, and gradually migrated to the inland where labor and land were cheaper.

Obviously, China's manufacturing industry and OEM factories are now faced with a dilemma. Too high wages will weaken the cost advantage of enterprises, and too low wages will go against the direction of decent work and a dignified life. Moreover, the cost gap brought about by internal relocation is actually narrowing in inland China. After the company relocates, the basic salary of local employees is also 1,200-2,000 yuan, which does not save much labor costs. However, purchasing real estate and rebuilding factories is a huge expense.

In this way, relocation can indeed make the industry continue its lifeline, but if an industry does not have a brand, how can it survive only by relying on labor and migration? No brand means no competitiveness and no added value. Then, these industries can only slowly decline in the wave of migration. Industrial transformation will not happen overnight, and the era of cheap labor may continue. However, labor-intensive enterprises that make profits by lowering the remuneration of laborers will face great pressure to be eliminated and replaced in this migration.