Nikkei Chinese website reported that in the early 2010s, China once accounted for 40% of global apparel exports, but due to rising labor costs and other factors, this has now dropped to 30%. Japanese companies don’t want…
In the field of global clothing production, the trend of shifting from China to Southeast Asia is accelerating. Japanese clothing giants such as Fast Retailing, which operates Uniqlo, have begun to build a one-stop production system in Southeast Asia. In the early 2010s, China once accounted for 40% of global apparel exports, but due to rising labor costs and other factors, this has now dropped to 30%. Japanese companies will build a production system that is not dependent on one country and maintain price competitiveness.
Myanmar Garment Factory
Fast Retailing will establish a new joint venture factory in Indonesia with Toray and others in November 2018. Procurement of materials required for clothing production locally enables one-stop production. Previously, Fast Retailing purchased most of its clothing production materials in Indonesia from China. In the future, it will strive to establish a one-stop production system locally.
From the perspective of Uniqlo’s main factories, China accounts for about 60%, but the number of factories in Vietnam and Indonesia is increasing. Vietnam has joined the Trans-Pacific Partnership (TPP) and has lower tariff barriers, attracting the attention of apparel companies.
In order to increase production in Cambodia, ONWARDHOLDINGS, a large clothing company, has set up a local office. At present, China accounts for 60% of Enwade Holdings’ global commissioned production volume, while Cambodia accounts for less than 10%. The company’s president Michiobu Homoto said, “Compared with China (in terms of logistics network and labor costs, etc.), the parts that are more suitable for Cambodia will be transferred.”
Japanese clothing company Adastria purchases silk threads in Vietnam, Thailand, and Indonesia and launches one-stop clothing production locally. Although the company relies on China for about 80% of its production, it will increase the proportion of Southeast Asian production to 30% in the next 2-3 years.
There are also Japanese companies skipping Southeast Asia and directly entering the African continent, known as the “last paradise of textiles”. Stripe International, a casual clothing company, has started production in Ethiopia, and Fast Retailing is also discussing production in Africa. In addition to the introduction of a tariff-free system and low labor costs, Africa is attracting attention as a supplier to Europe and the United States.
Statistics from the Japan Chemical Fibers Association show that apparel exports from major countries around the world reached US$458.5 billion in 2016. Among them, China’s export volume was US$158.2 billion, accounting for 34%. China is the world’s largest exporter of apparel products, but it was down 5 percentage points from 2013. Although China’s proportion is significantly higher than that of Bangladesh (6%) and Vietnam (5%), which ranked second and third, the proportion in Southeast Asia is increasing rapidly.
The strategy adopted by various companies is to keep the development and production of high value-added products in China, while moving sewing and other products to Southeast Asia and Africa where labor costs are low.
Enwade has also transferred the sewing part to Cambodia and other places, but will also build a new sewing factory in Dalian, China, to produce customized clothing for Japan. The new factory will start production in the spring of 2019 and can produce approximately 100,000 sets of clothing per year, 2.5 times the previous volume.
StartToday, a Japanese company that operates the clothing shopping website “ZOZOTOWN”, launched the production of its own brand of customized clothing in China in July, but due to the failure to ensure production, delivery was significantly delayed. Clothing production is no longer limited to mass production, but is also moving towards diversified needs such as customized products. Depending on the application, competition to secure suitable production sites may become increasingly fierce. (Title: Japanese clothing production accelerates relocation to Southeast Asia, key business remains in China)
