Blog: The next China is China – except when it's not-China
Leonie Barrie | 3 April 2012
Back in the UK after a week in Hong Kong, what is there to report on the issues sitting at the top of the apparel and footwear industry's agenda?
Among executives at this year's Prime Source Forum it seems that everyone's still talking about China...but while it's a conversation we've been having for the past six years or so there is, as always, a slight shift in focus.
The next China, it seems, is still China, but higher wages, a dwindling workforce, and rising inflation continue to throw up concerns over its competitiveness. For footwear and more complicated, value-added styles, flexibility and speed to market, China is still the place to be. But when it comes to high volumes and entry price points, leading options in Asia include Cambodia, Vietnam and Bangladesh. Also on the sourcing radar for the first time is Burma, with palpable excitement about the country's apparel possibilities - and $1 a day wages - tempered by the realities of its complete lack of infrastructure.
That said, efforts to expand beyond China and find cheaper labour elsewhere are throwing up new challenges of their own. Where else has the capacity to absorb production shifts? What about the option of importing labour into or across China? And instead of chasing the cheapest needle across the globe, why not draw costs out of the supply chain through greater collaboration between brands and retailers and their suppliers and service providers.
The only certainty, perhaps, is that change is inevitable across the sourcing model, regulations and markets. Apparel and footwear are global industries with global reach, but competitiveness will ultimately be determined by individual consumers in individual markets. And when it comes to social media, not only is this capable of providing a big boost for business but also has the potential to put a company out of business through poor product and process allegations.
A couple more takeaways from the past two days:
"In 2013, China's working population will hit the point where it starts to decline."
"If the 300m people in China consume in the way the Americans do today, there won't be enough yarn in the world to satisfy this demand - and it will be here in 2020."
"If everyone in China bought one garment a month, then monthly production would be 1bn."
"The fashion industry must work together now to close the talent gap, if it wants to avoid a very real problem 20 years from now."
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- China - ISA Country Report