China-textile-industry Bangladesh-garment-industry garment-labor-costs garment-exports Shaoxing Shaoxing-Textile-City textile-market chemical-fiber-production textile-raw-material Bangladesh-China garment

 

Labor costs are rising sharply. Is China's textile industry going to collapse?

 

A Chinese garment worker earns ten times more than a Bangladesh garment worker.  Will China's garment industry collapse? 

 

Visit China Textile City in Shaoxing.

 

China Textile City, the world's largest textile market, once created countless multimillionaires, but now looks a bit deserted. Under the competitive pressure of Bangladesh, India and Vietnam, can China's textile exports still maintain its world's number one trade position?

In recent years, South Asian countries, especially Bangladesh, have flourished in their clothing industry with their large population and cheap labor. In 2023, its export volume has surpassed India and has become the world's second largest textile exporter, second only to China.

So in such a competitive environment, can China still maintain its position as the world's number one textile exporter?

With this question, we came to Shaoxing Yuanda Foreign Trade Co., Ltd. to ask Mr. Fei about this question. He has been in this industry for more than 20 years, and I want to hear his views.

Hello, Mr. Fei,

The question I want to ask you today is whether China's textile industry still has a competitive advantage against the background of the rise of the textile industry in Vietnam and Bangladesh.

This is a good question.

In recent years, with the competition from countries such as Bangladesh and Vietnam, there are indeed many orders flowing out of China, especially large orders from some multinational companies, such as H&M, Levis and Adidas in Germany.

These companies have a stable order volume every year, but many orders have been transferred to Bangladesh and Vietnam because of the very low labor costs in these countries.

At present, the labor cost in Bangladesh is about RMB 800 per month, while in China, the monthly salary of an excellent textile worker can reach RMB 8,000 (about US$1,100), which is equivalent to the salary of ten Bangladeshi workers. Therefore, China has no obvious advantage in terms of labor costs.

In Bangladesh, labor costs only account for 10%-15% of the total cost of clothing, while in China it may account for 40%-50%.

Of course, different types of clothing have different cost structures. For example, low-cost clothing such as T-shirts will have a higher labor cost; while high-value clothing such as shirts and suits have a lower labor cost.

Although China's labor costs are higher, the quality of Chinese workers is also higher, which still has advantages for some clothing buyers with higher quality requirements.

Moreover, China's advantages in raw materials are very obvious. For example, China's chemical fiber production accounts for about 50% of the global production, and silk exports account for more than 80%, which has an absolute advantage. Cotton production has also reached a considerable scale, which is the basis for China to maintain its position as the world's largest textile exporter.

Our company is mainly engaged in the production of shirts. Our advantage is that we can respond quickly to market demand and undertake small and medium-sized orders. Due to the high labor costs, large orders are not much of an advantage in China at present, but for small and medium-sized orders, Chinese suppliers are still very competitive. Because our material costs are very well controlled and the entire industrial chain is very complete, we have advantages in production cycle, response speed, and quality control.

For other South Asian countries, such as Bangladesh and Vietnam, many of their raw materials need to be imported from China, which prolongs their production cycle and increases their production costs.

Our raw material procurement base is in the Light Textile City, and the factory is located near Ningbo Port. There is a complete textile industry chain around it. From raw material procurement to garment processing, it can be completed within a radius of 50 kilometers, and then shipped from Ningbo Port to various countries by sea (By the way, Ningbo Port is now the world's largest port).

After foreign customers place an order with us, we will arrange production immediately. From purchasing raw materials to final processing and export, the whole time is very short, about 2 to 4 weeks.

Now, because of competition, and also because of the new direction of world trade development in the era of Industry 4.0, we can accept smaller orders, such as clothing orders of about 2,000 pieces, and we can keep the price to the lowest. Even small orders of a few hundred pieces can be produced by us. Foreign businessmen are very welcome to cooperate with our company.

Next, I will take you to visit our sample showroom.

This is our sample cloth area, where samples of various shirts are displayed.

Like this shirt, the cost is about $5, including all materials and workmanship.

This is the tie area, and the cost of ties is very low, generally not more than one dollar.

Now, please follow me to the market.

We are now in the famous China Textile City, which is not a single market, but a market cluster with a very large scale.

Between the two highways surrounding the city, China Textile City is composed of 8 markets.

Including Beilian Market, Dongsheng Road Market, Old Market, Lianhe Market, Tianhui Market, East Market, North Market and South District Market, etc.

These markets together constitute the southern area of ​​China Textile City, with a total area of ​​1.02 million square meters. They operate all kinds of curtains, fabrics, clothing and related textiles. These markets together constitute the world's largest textile market.

Compared with the past, there are obviously fewer people in the market now.

This is because the three-year epidemic blockade from 2020 to 2023 has changed people's purchasing habits. Now most orders have been transferred to the Internet. People look at samples through photos online to understand the production process and raw material composition. If they like a certain style, they will get the real thing through express delivery to further touch and feel it. Now only some new customers need to go to the market to purchase, and most of the regular customers contact directly online.

Of course, new customers can also contact me through WhatsApp first, and come to the door to check it out after a preliminary understanding of the needs. Small-scale purchases can also be made directly online, which is cheaper and more efficient.

This is my WhatsApp QR code. Foreign guests in need are welcome to contact me.