China Manufacturers Survive by Moving to Asian Neighbors
The Chinese apparel company, Lever Style Inc. has declined by its workers and payroll, as they have chosen to move their production for a Japanese retail chain, Uniqlo to Vietnam. The company is also planning to shift to India as it will test to see whether or not the production will be as successful. A former investment banker who took over his family business claims that operating in Southern China is just leading to break even as many other companies are shifting their manufacturing to other countries. The costs in China have rising wages and a labor shortage, which a move would allow to keep consumer prices in check. In order to maintain the manufacturing companies in China, it would have to expand its service sector and create a higher-skilled manufacturing job as well as embrace research and high-technology, similar to other countries as South Korea and Japan.
Overall I believe that the company is making the right decision by deciding to relocate their manufacturers and in order to actually earn profit. This affects the economy overall because companies such as Nordstrom and Uniqlo would have to pay different prices compared to how much they would have to pay for their factories in China. Therefore, these companies might actually see profit because their costs would not be going towards the wages, but rather they would see an increase earnings.
Written by: Samantha Chin
Source: The Wall Street Journal