In recent years, due to the continuous rise in various costs of China"s manufacturing industry, especially labor-intensive manufacturing enterprises such as textile and clothing, have been seeking new production bases in inland provinces or Southeast Asian countries and regions. According to the World Investment Report 2012 released by the United Nations Conference on Trade and Development, foreign direct investment flowing into Southeast Asia in 2011 was $117 billion, an increase of 26% over the previous year, while China"s growth rate was less than 8% during the same period. What is the capacity of Southeast Asia to undertake the transfer of manufacturing industry? Does the transferred manufacturing industry adapt to the local survival rules?
Southeast Asia "refers to the southeastern part of Asia, including countries and regions such as Vietnam, Laos, Cambodia, Myanmar, Thailand, Malaysia, Singapore, Indonesia, the Philippines, Brunei, and Timor Leste. The cheap labor is the main factor attracting manufacturing to shift to Southeast Asia. But is the saved labor cost enough to compensate for the losses caused by deficiencies in other aspects? Behind the cheap labor, enterprises also need to face various practical problems such as difficulties in land acquisition, high land costs, low worker efficiency, and insufficient industrial support in the local area.
Although the salary is low, the efficiency is too poor
I used to run a factory in Indonesia, but because I felt that there were too many cultural differences there, the workers" work attitude was generally lazy, and various supporting facilities were not very complete. For example, if you want to find PU leather, you may not be able to purchase what you want, so I withdrew it in the end. ”Liang Richang, who runs the Maofu Footwear Factory, believes that. It is currently recognized that the quality and output rate of Chinese workers are higher than those of emerging Southeast Asian countries. Like Japan, South Korea and other East Asian countries, the collectivist national character of the Chinese determines that they are more suitable for manufacturing. At the same time, after 20 years of development, the proficiency of Chinese workers is far higher than that of emerging economies in Southeast Asia. According to Pang Jinfeng, Adidas has a group of Chinese technical backbone sent to Vietnam as technical guidance to ensure the operation of its factories in Vietnam.
Sewing machines enter Southeast Asia
After the textile and clothing manufacturing industry shifted to Southeast Asia, the sewing machinery industry, as a supporting equipment, also keenly sensed the market opportunities and began to pay attention to the Southeast Asian market, even taking concrete actions. However, most sewing companies still adopt a wait-and-see attitude towards the Southeast Asian market. After studying the Southeast Asian market, many sewing companies feel that the labor force in the Southeast Asian market is not cheap in the end because their work efficiency is very low. Therefore, entrepreneurs are cautious about exploring the Southeast Asian market after investigation. However, some larger distributors have been involved in the Southeast Asian market for several years and have achieved certain success. For example, Youcheng Company in Ningbo has established a branch in Cambodia, while Hongda Garment Company in Shenzhen has been operating in countries such as Bangladesh for many years. It can be confirmed that the current production and sales business of Chinese sewing enterprises has not been carried out on a large scale in Southeast Asia. According to data from the General Administration of Customs, the top two target markets for China"s sewing machinery exports in the past year were Japan and the United States.
However, some overseas sewing companies have also shifted their production operations from China to Southeast Asia in order to save labor costs. On February 25th of this year, the well-known sewing machine brand enterprise, Brother Industrial Company of Japan, announced that it will establish a subsidiary in Vietnam to produce industrial sewing machines. This is the first time Brother Industries has established a production base in Vietnam. This move aims to disperse production concentrated in China to Vietnam, where labor costs are lower. The subsidiary was established in April and began production in May 2014. Brother Industry will ensure 25700 square meters of land in an industrial park in Hai Yang Province, Vietnam in the future. The initial investment amount is about 2 billion yen (approximately 133 million yuan). The company"s industrial sewing machines are currently almost entirely produced in China.
Lack of industrial support, limited local market space
The view of Li Jinning, Chairman of Fuyi Group, on the issue of transferring to Southeast Asia is that the garment processing industry in Southeast Asia does have a foundation compared to the South Asian region. However, compared to their Chinese counterparts, the conditions for Chinese companies to relocate are still not mature. Fuyi"s sales in the Southeast Asian market have been mediocre, with agents in every country, but overall performance has been fluctuating.
Yang Xiaojing, Secretary General of the China Sewing Machinery Association, stated in an interview with our reporter that expanding into the international market is a difficult and complex project that requires full and comprehensive preparation, including a deep understanding and preparation of factors such as the industrial supporting environment, labor quality, economic policies, and cultural environment of the target market. I believe that currently sewing machinery enterprises should focus on the development of Southeast Asia and prepare for the early layout of commercial outlets, rather than the large-scale entry of manufacturing industry.
Behind the cheap labor
Although "Made in China" has faced challenges from "Made in ASEAN", experts generally believe that in the near future, China"s manufacturing industry still has strong advantages. The manufacturing industry chain and labor quality accumulated in China"s 30-year reform and opening up process are still in a leading position in the world. Firstly, the combined population of all Southeast Asian countries is only 560 million, and the labor market is always on the rise. Secondly, it seems that strikes can occur anywhere except in China, which is not as stable. Thirdly, the target market for foreign-funded enterprises is China. Chinese consumers can accept products originating from Europe and America, as well as products of foreign-funded brands produced in China, but may find it difficult to accept products of foreign-funded brands produced in small Southeast Asian countries. Fourthly, the additional transportation and inventory capital costs of foreign brands will relatively enhance the competitiveness of Chinese brands. Fifth, losing the benefits of supply chain and logistics support will significantly increase the costs of raw materials, components, and time.
In addition, some Southeast Asian countries have incomplete legal systems and are generally in a transitional period, so investing in Southeast Asia requires more adequate risk preparation. This requires investors not only to pay special attention to land ownership and environmental issues during the investment process, striving for sustainable development of the project, but also to strengthen communication with local communities, people, and media to shape a good public image; We need to clarify the potential interest chains involved in the project, promote local socio-economic development through public welfare projects, and drive the improvement of people"s living standards. An investor who can integrate with the local economy will definitely be able to stand firm.