By  on April 2, 2012

BEIJING — The numbers are grim, but China’s apparel and textile manufacturers are adamant that continuing tough times for their industry do not spell the end of production.

Those still in business following several years of massive factory closures say they’ve weathered the toughest of times and expect to stay alive through creativity and new clients. They said lower labor costs inland, away from China’s traditional manufacturing bases in the Pearl River Delta and Eastern Seaboard, could revive the flagging industry. Yet many seem to be hanging on by a thread.

RELATED STORY: Sourcing Experts Looking for 'The Next China' >>

New data from HSBC indicate that manufacturing had fallen for the fifth straight month, heightening concerns that China’s overall economic health might be in more trouble than many had thought. But in the textile and apparel sectors, no other country has the infrastructure or labor force to take the place of China. Manufacturers are banking on that, and to stay competitive, they’re looking at new production bases and potential new customers.

“Overall, I would say it has improved in the past few months,” said Li Linjing, a manager at a clothing manufacturer in Hangzhou, Zhejiang province. “I have a positive outlook for the coming season and the rest of the year.”

Part of the reason for that optimism from Li and others is that thousands of factories have already closed since the economic crisis and slow recovery that began in 2008. Those that have managed to stay in business predict things can only get better.

“A huge portion of the industry shut down, while the new companies that opened are not big or strong enough,” said Li. “For those companies who survived, it’s good news of having fewer competitors in the coming summer season.”

Li and others also said factories are moving to stay competitive. Many have opened smaller workshops closer in the provinces that traditionally sent workers out as migrants to Guangdong and elsewhere.

“Some of them have already moved to other parts of China, where they have a lower cost for labor,” said Li. “Some companies that have the strength can still maintain stability without moving.”

Several shoe manufacturers that produced in Dongguan have packed up and moved to Chengdu, in Sichuan province, which for two decades has been China’s largest exporter of domestic migrant labor. Chinese media also reports a resurgence in manufacturing in economically troubled Wenzhou, which suffered recently from a spate of bad loans that buried many small production companies. One Wenzhou shoe factory owner said he plans to upgrade the types of shoes he makes at home, while outsourcing the lower-end production to new workshops in Sichuan province.

Another major factor in survival has been the enormous surge in China’s domestic demand. When Chinese manufacturers began to look inward for buyers during the 2008 global financial crisis, the country’s consumers weren’t yet spending at today’s levels. Now, with China becoming a major force in global consumption, the tide appears to be turning.

“In every stage of everything, there will be good periods and bad periods,” said a children’s clothing manufacturing manager who gave only his surname, Xie. “The changing trends are normal, and businessmen all know it. For the coming year, I would say it depends on the ability of each company. If they can sharpen and exercise skills in tough times, and get over it by using the right transformation and creativity, they will find their correct path to survive and develop.”

A spokesman for the China National Garment Association said the industry is changing fast and not necessarily in a negative way. China is moving up the value chain, he said, and producers are learning to adapt or leave the business.

“It is normal to have such changes, and there is no need to be overly worried,” he said. “Since production has moved from Europe and the U.S. to Japan, then to Hong Kong and Taiwan, and finally to the Pearl River Delta, it is normal that business conditions changed along with the market. After the transformation and upgrading of systems are done properly, the whole situation will be improved and enter a better path.”

To continue reading this article...

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus