China’s reputation as the world’s factory of apparels appears to be standing on the edge as labour costs continue to rise, making country a costly manufacturing location. As a result, Japan, which runs apparel factories/stores in China, is focusing to shift out of the country; with some getting back to domestic production.
Womenswear retailer Honeys, headquartered in the city of Iwaki, in Fukushima Prefecture, has begun closing flagship stores in Chinese department stores. The company has decided to close down its 270 outlets in China in three years starting to Spring.
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In 2016, Tokyo-based women’s apparel company, Itokin, withdrew all its operations in China after the company came to realization that there is no prospect of improving there. Although the company had 300 stores in China at its peak, but intensifying competition from local rivals had cut the profits. Other Japanese apparel companies are also reportedly reviewing their manufacturing strategies in China.
It’s worth mentioning here that many Japanese manufacturers moved their production facilities to China in pursuit of cheap labour over the years, but surging labour costs is shaking the China’s image. Even though the country is no longer registering double-digit economic growth, average wages are increasing by 10 per cent a year which is driving up the production costs exponentially in China.
