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Greeting from China.
I’m Mike Bellamy from the CSIC and I’m back with a review of the headlines in the Chinese papers which are relevant for foreign buyers like us.
China’s textile sector rises 30% in first half of 2011
According to the Ministry of Industry and Information Technology, “China’s textile industry posted a 30-percent growth year-on-year in output in the first half of this year in spite of a raft of challenges.”
Now that is news! Let me explain why this is a big deal.
There is a group of pundits who says that China’s days are numbered as the low cost production base and production will move out of China due to rising costs. Another group, to which I belong, believes that there is “no next China” and that for the vast majority of industries the migration of factories will be from the Chinese coast to the less developed Chinese interior, rather than overseas. However, even the “there is no next China” crowd concedes that some very low tech / very high labor industries may start to leave China. We are talking about textiles. Simple cut n sew. Garments.
So imagine my pleasant surprise to read the not only are textile shops not leaving China in mass, but production is up 30%. This indicates, to me at least, that China has a long run left in it as the go-to production base.
On a side note. If you are asking yourself “How is this possible, when places like Pakistan and Bangladesh have lower labor rates that China?”, then you will enjoy my blog post Heavy hitters weigh in on future of China Sourcing which shares detailed analysis from some of the biggest players in the sourcing industry. For example, we go over some numbers from the likes of Li & Fung about how they calculate labor into the overall costs of production when making a decision to manufacture in China or elsewhere.