WWD.com/globe-news/markets-features/focus-on-higher-costs-at-china-sourcing-fair-6931093/
government-trade
government-trade

Focus on Higher Costs at China Sourcing Fair

Labor shifts in China changing Asian dynamic.

View Slideshow

HONG KONG — Exhibitors and buyers at the China Sourcing Fair in Hong Kong aired the usual complaints about rising prices, but not in the ways that might be expected.

For all the labor and other price increases in China, Chinese apparel and accessories makers remain competitive on price, exhibitors said. Also, it’s not only China that’s seeing price increases; the cost of labor in other countries, such as India, is also going up.

 

Minu Kariwala, visualizer for Anges Bags in Kolkata, India, said labor prices increased 25 percent last year. The company, which exports cotton and jute bags around the world, makes 65,000 bags a day and employs 26,000 workers.

Labor prices have gone up across the board for all workers, Kariwala said, adding that it is also getting more difficult to hire artisans, the people who do hand embroidery.

“It’s only old people who want to do the handwork thing,” she said. “The new generation doesn’t want to continue doing the embroidery. It’s more passed down through the generations. That’s why it’s getting more expensive now, because there are less people doing that.”

Amrita Gulati, owner of New Delhi-based Old Village Overseas, a fashion accessories exporter, said it has gotten difficult to compete against Chinese companies based on price alone. Instead, the firm focuses on its natural fibers and coming up with original designs. Old Village Overseas exports primarily to Australia and South America, Gulati said.

Indian companies aren’t the only ones who don’t try to compete against Chinese on price.

“We focus on the high end of the market because [at] the low-end of the market we can’t compete with the Chinese shops,” said Pierre Smith, a buyer for Namibia-based Alexis Montrose Designs.

Namibia, which has a population of 2 million, is home to 35,000 Chinese, he said. Smith’s son, who has been based in Shenzhen for the last seven months, designs apparel and they source the material out of Hong Kong. Smith is looking to source the material from China, where prices are lower than Hong Kong and about half the cost of textiles in nearby South Africa.

Meanwhile, Chinese factories continue facing challenges with rising costs.

Gary Chan, sales manager for Hong Kong-based Hammerhead Shark Ltd., which makes fashion jewelry in Yiwu, China, said the company is starting to think about moving its factory operations further north as labor and other costs in Yiwu continue increasing.

“It’s getting more difficult right now, but we can still survive,” he said.

Southeast Asia has seen a boon in lower-end apparel manufacturing, as labor prices in China rise. To compete, Chinese companies have been working to go up the value chain, or have been moving operations to lower-cost areas in China or elsewhere.

Linda Su, manager at Xiamen Victex, has a factory in Bangladesh with 700 workers. The company’s factory is run by Chinese owners who have been living in Bangladesh for 20 years, she said. The company also has a factory in Zhangzhou, China.

Su said the factory has been closed for several days in the wake of the building collapse in Dhaka last month, which killed more than 1,100 garment workers. But overall, things have been fine, she said.
The company gets the majority of its orders from North America and Europe. Su said orders have been fairly steady, but that those from Europe have declined for the last two years.

Global Sources, which organized the show, said there were 1,200 booths and that the garment and textiles section grew by 28 percent at the event, which ended its four-day run April 30. Foot traffic at the fair was fairly light, though, and buyers said the selection at fairs in Mainland China, such as the Canton Fair, was better.

View Slideshow