Chinese factories struggle to transform business

Jan 04, 2016

Chinese factories struggle to transform business

Chinese Garment Industry

The manufacturing industry in China is facing an economic slowdown, falling orders and rising labour costs. Across the country, small and medium-sized manufacturers have shut down, while the larger ones are somehow struggling to stay afloat.

Across China, factory activities have dropped to a 40-month low in December. Factory owners in Dongguan, the heart of the once-noted global manufacturing zone, have yet another thing to worry: finding enough workers to produce the world’s clothing. Exports are not good and the domestic market is as bad. The price of shipping containers for export has fallen by half, and now freight companies as well as factories are worried about going bust.

Zhejiang province in China produces more than a third of the world’s socks. For years, small factories have advanced products for their customers and collected payment later. But now the scenario has completely changed as most of the factories shut down. The town of Zhuji in Zhejiang represented what China’s manufacturing industry went through in the past one year. Small owners have started looking for other avenues.

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Zhao Feng is a bar owner, who previously owned a factory with 15 machines that made and exported thread to Egypt for making socks and underwear. During the political turbulence of 2012 in Egypt, orders for the thread started to fall sharply. Gradually, the business had to be shut down. There are scores of such stories to tell about the ailing Chinese textile and garment industry.

“It takes a lot of time and effort to develop a new product to replace the old one. For me, I tend towards quitting this industry,” Zhao said.

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China’s textile and garment industry is trying to adapt to survive through the crisis created by the rising costs of labour and production. In this regard, the country’s President Xi Jinping and other top officials have repeatedly emphasised on the need for China to rebalance its economy toward consumption and services. At the same time, they want to upgrade the industry under the “Made in China 2025” initiative, which is designed to create more skilled jobs.


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