China’s demand as the textile manufacturing hub is waning as Chinese workers are asking for a hike in wages and thus, local manufacturers are moving to other countries.
Higher pay, a stronger currency (it was 8 to 1 in the mid-2000s and is now 6.3 to 1) and Beijing’s desire to become a more automated, and high-tech society are all pushing clothing manufacturers to Vietnam and Bangladesh. However, Bangladesh is China’s biggest rival in shirts and sneakers.
Some large clothing retailers with global coverage have moved a portion of their production to Bangladesh and have gradually reduced their use of Chinese factories, as per CEIC data. The China contractor is taking their know-how and collaborating with firms elsewhere to keep the business of the big western clothing brands, in some cases. While in others, western brands are finding Bangladeshi companies on their own building new relationships.
Labour-intensive products have been produced by China and it has been selling them across the globe since the seventies. Subsequently, it has increased and through the decades gained market share. Trade volume as a share of GDP kept rising to a peak of 64.8 per cent in 2006. However, it declined steadily to 41.5 per cent in 2014.
The financial crisis in 2007-08 was one of the reason for the decline and another was that the wages of Chinese garment workers doubled, resulting in higher costs of production according to CEIC reports. The Chinese labour force has stepped up on productivity and skill level to compete in other industries.
