“How about, where do you plan to go?” “Maybe to Africa.” “Africa? It’s too far. We still plan to go to Vietnam or Cambodia.” “But Cambodia has been in a lot of trouble recently… …” The conversation I heard was not from the mouths of two traveling friends who were planning to travel during the New Year, but a few words exchanged between two domestic enterprise representatives during the coffee break of the “2014 China and Asia Textile International Forum” held in Beijing not long ago. A few years ago, the term “Qunar” was only applicable to the trade layout planning of textile companies. Today, it has become synonymous with production transfer in the minds of many decision-makers.
From the perspective of promoting industrial transformation and upgrading, it is not a bad thing to transfer some low-end orders; for export companies, the price difference between domestic and foreign cotton, high labor costs, and regional free trade agreements are also urging them to “go out.” As for the pace of setting up factories, since the general environment poses some helpless multiple-choice questions to enterprises, the next question is: Where to go, where to transfer?
If measured by the labor cost scale, most people’s eyes will fall on Southeast Asian countries. In terms of basic salary, the monthly salary of garment workers in Cambodia, Bangladesh and other countries is generally only equivalent to RMB 600 or 700. Even in Sri Lanka, where labor costs are slightly higher, the monthly salary of garment workers is only about RMB 800. But is labor cost the only factor that affects companies’ overseas investment? of course not. A company CEO who had just returned from an inspection trip to Cambodia was worried about the stability of local production. He told the author that the conflict between labor and management in Phnom Penh, the country’s capital, lasted for more than 20 days. During his stay in Cambodia, he saw many passionate garment factory workers taking to the streets to demonstrate and protest, and most factories had to close down operations. “Orders cannot be delivered on time, which affects the company’s reputation. What’s the point of such a transfer?” the CEO lamented. In the author’s opinion, labor conflicts in Cambodia are by no means something that happened overnight. Since the second half of last year, a tug-of-war between garment workers and employers over whether to raise wages or not has been heating up day by day. Today’s strikes are also It is nothing more than a vicious ferment in which coordination between the two parties has yielded no results.
It’s not just Cambodia. Countries in Southeast Asia that are regarded as “hot spots for investment transfer” have their own pros and cons. In Bangladesh, hidden safety hazards in production buildings have attracted the attention of the International Labor Organization. Some intensive garment buildings are inspected by labor rights agencies in developed countries almost every two months. In Myanmar, the infrastructure is backward, and the tight and backward power supply cannot guarantee the round-the-clock operation of every piece of equipment in the factory. Looking at Vietnam, although the sewing efficiency of garment factories is relatively high, since domestic production of raw and auxiliary materials can only meet 30% of the production needs of the textile industry, imported raw materials have become a cost that cannot be ignored.
In fact, how to measure the pros and cons of investing in a country and how to find the optimal investment destination is closely related to the characteristics and investment orientation of the company itself, that is, production-oriented or resource-oriented. It is believed that the garment industry is a labor-intensive industry and is production-oriented. This kind of investment is suitable for Myanmar and Bangladesh. Investment in textile mills is generally resource-oriented. From a production perspective, it is necessary to consider whether the local procurement of raw materials is convenient. Of course, the people who have the most say in this regard should be those who have already “went abroad”. Taiwan’s New Wing Group has garment factories in Vietnam and Cambodia. The company’s current garment production capacity has reached 4 million pieces per month. In the view of Huang Guanhua, executive director of the group, in addition to early investment evaluation, integrating corporate management methods with local culture will test the wisdom of corporate operators. At this point, some of Huang Guanhua’s management experiences adapted to local conditions are worth referring to: “When I was running a factory in Africa, I would hire pastors as managers to participate in employee management, and through regular prayers, employees could keep their minds calm while working.”
Undoubtedly, no matter where you invest, there are certain risks, such as production management regulations, foreign exchange regulations, trade union laws, etc., which need to be carefully studied by enterprises. If necessary, you can also hire a professional consulting company to conduct a comprehensive assessment of the population, water and electricity costs, land ownership, labor costs and other issues in the investment destination. Let’s look at the question of how to choose a “going out” destination. I think it’s most appropriate to paraphrase a saying from someone who has experienced it: there is no best, only relatively suitable.
Investment hot spots: There is no best, only suitable
“How about, where do you plan to go?” “Maybe to Africa.” “Africa? It’s too far. We still plan to go to Vietnam or Cambodia.” “But Cambodia has been in a lot of tr…
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