Fashion factories move out of China as costs surge

Some global fashion brands' latest move to shift their manufacturing bases from China to Southeast Asia and developing countries close to Italy is a natural result of the changing landscape in the sector, experts said Monday.

In response to media reports that some Italian brands had moved production lines to Turkey and Tunisia, Wang Tiankai, president of China National Textile and Apparel Council (CNTAC), said that the trend is inevitable as China was no longer a cheap-in-everything paradise.

The latest movements came as China, dubbed as the world's biggest factory, grows more expensive as its labor and material prices rose significantly last year.

China's consumer price index, the main gauge of inflation, rose 5.4 percent year-on-year in 2011.

"Taking Dongguan (a manufacturing hub in Guangdong Province) as an example, labor cost had jumped 30 percent while that of raw materials rose over 20 percent since early February," said Liu Jintang, deputy director of the city's Small and Medium-sized Enterprises Bureau.

Official data showed a total of 24 provinces, autonomous regions and municipalities raised their minimum monthly wages by an average of 22 percent last year.

The increasing costs had weakened China's competitive edge, leading to a slowdown in the once booming area.

Statistics from the CNTAC showed that after adjusting for inflation, China's exports of textile in 2011 edged up 0.5 percent year-on-year, among which exports of clothes dropped 0.2 percent.

Wang said waning demand due to the global economic downturn and the industry's cut-throat competition had driven manufacturers to cheaper countries in Southeast Asia or to nearby countries in Western Europe, where they can better monitor production process.

"It is a natural trend for industrial adjustments and the trend will be more obvious in the coming years," he said, but adding that large-scale outflow of factories will not occur as China remains a big manufacturing center.

Besides cost concerns, some experts attributed the changing landscape partly to China's efforts to move up the value chain.

"Some of the native enterprises are also moving manufacturing bases to nearby countries, which is evidence that the native businesses are progressing towards the higher end of the value chain," said Chen Dapeng, executive vice president of China National Garment Association.

Chen said the ongoing China International Clothing and Accessories Fair (CHIC) had attracted more than 600 home-grown brands.