Take The "Go Out" Business: Optimistic About Low Wages In Bangladesh

Manpower cost

Despite the panic in Wenzhou's debt crisis, the Bank of America, Merrill Lynch

In fact, the rising cost of labor has become the main "culprit" for the tight chain of enterprises.

The revelation brought by this debt crisis in Wenzhou is, in addition to proving once again that Wenzhou's enterprises are highly dependent on private lending and even bank credit, and the weakness and passivity of enterprises in the rising cost environment.

So, what are the rising costs of human services in China?

This was not a whim, but it didn't take much time. The French made the decision to abandon Sichuan and directly pfer the production base to Bangladesh.

This is also defined as a jump shift. The pfer strategy of Peng Xing, chairman of the French group, has come a big turn in three years.

Abandoning Sichuan

For most China

The rise in costs forced companies to seek more capital to fill the gap. Unfortunately, there are few choices.

The pfer of French schools is one of the initiatives of enterprises to cope with rising labor costs.

In three years, the pfer of the plan to reverse the reconstruction, completely abandon the pfer plan to invest in a thousand acres of production base in Sichuan in 2007, and then quickly decide to pfer Bangladesh in 2010, a process that will bring inspiration to the industry.

"As early as 2007, we have set up manufacturing bases in Sichuan, which is to pfer the manufacturing to Sichuan. But recently, we changed our minds.

We decided to skip Sichuan and directly pfer our production base to Bangladesh.

Peng Xing said, "why did it change? In 2007, when the number of personnel in Western Sichuan was good or the cost was good, we could still accept a cost of 1/3 less than that in the eastern part.

However, now they are getting closer and closer, so that it is not very meaningful to set up factories in Sichuan now.

According to the current situation, I think at most not more than 5 years, the cost of Sichuan and the eastern region will be flat, including the cost of manpower, the price of land in Sichuan, including the government's attitude towards investment, which is changing at the moment, and the policy will also change.

5 years later, Sichuan is now.

"Bangladesh, however, has a monthly salary of only US $30 per person -40 US dollars, even if Vietnam is developing at an earlier time, it is only 100 US dollars now. Africa is also very low. Compared with that, the domestic cost is too high, and the average wage in China is now over 2000 yuan."

Peng Xing calls the adjustment of the production pfer plan a leap forward development.

The original investment Sichuan production base is adjusted to the French school's logistics land. "What the enterprises lack is not the industrial land. For the upgrading of the service enterprises, what is most lacking is the land for logistics.

At present, the Internet is so developed, Alibaba is encircling everywhere, all customers and Kyoto are also encircling the land. At this time, we have to pform. In 2009, we launched vip.com online, that is to do online shopping, and enhance the comprehensive competitiveness of enterprises.

Therefore, it is of strategic significance for us to pform our production base into vip.com's logistics land.

Unlike Peng Xing's worries about the cost of production in Sichuan, Lu Aijun, vice president of human resources in charge of France, is worried about Sichuan. Even if the French school is pferred to Sichuan, a large population province, it may not be able to recruit people.

"Last year we went to Sichuan again to investigate. It is no wonder that we can not recruit people there, which has shaken our confidence in Sichuan."

Afraid to order

According to Lu Aijun, at present, the growth of domestic labor costs has generally caused great pressure on the development of enterprises: "now everyone is adjusting the salary range, which is higher every year. For this year, the average salary of the first 7 months of the French school increased by 40% compared with the first half of last year."

In such an environment, it is quite urgent to find the right "export" for manpower costs and other operational pressures.

"The rising cost of mainland China is already a worldwide challenge. We can see the profit comparison between the global fast selling giants ZARA and H&M this year. Why is H&M doing so well this year and losing three consecutive quarters? It is because its purchasing cost has increased by 25%, and 25% of the increase has come from China, mainly from mainland China.

Why is ZARA's profit growing? The main reason is that its procurement costs remain stable. 70% of its purchases come from Spain, Portugal and Turkey, and China accounts for only a small proportion.

In the past two years, the cost of manpower has basically not risen, or even down, resulting in a decline in the profits of H&M, and ZARA can not be affected. This is the global impact of the rising cost of procurement in mainland China.

Peng Xing said, "this is why we are going to Bangladesh because we want to go to Bangladesh.

The choice to pfer overseas, especially the pfer of ASEAN countries, seems to be an important choice for Chinese enterprises to cope with rising costs.

For the French school, the realization of global purchasing means the enhancement of cost control ability and risk resistance ability, and the zero tariff trade treaty signed by ASEAN countries and China makes it a priority to undertake China's pfer.

"Bangladesh is just a starting point for us. After that, we will soon develop places like Kampuchea, because China has signed a trade treaty with ASEAN. ASEAN is now exempt from tariffs. The cost of procurement in ASEAN is just the same as that in China, but it only increases pport costs."

Peng said, "this is also our response to the financial crisis and the challenges of the post crisis era."

Made in China has only 5 years' advantage.

The direct pfer of overseas to most garment enterprises reduces operating costs and increases industrial risks.

Because most enterprises lack the experience of overseas market operation, they also need to face the problem that the industry chain can not be matched for a short time.

As for the pfer of French to Bangladesh, it also needs to bear certain industrial risks.

At present, Bangladesh can simply produce shirts, T-Shirts, jackets and the like, and can not make high-end marten fur, mink skin, fur clothing, especially western style clothing products.

Therefore, the pfer of Bangladesh from the French style group, which is dominated by men's formal clothing, requires a process, including staff training, industrial support and so on, which require enterprises to bear certain risks and costs.

Peng said: "pferring bangladesh must have a process, including staff training, supporting the whole industry, including political stability, etc. These Bangladesh are not as good as China, so at this stage, our manufacturing advantage can persist for several years. If at the industrial chain level, they are like China, then China will be very passive."

"From the competitiveness of the Chinese manufacturing industry, if we compare with the neighboring countries, it will be fine for us to maintain the advantage in 3 to 5 years, although it will be very difficult, but the advantage can be maintained."

Peng said, "but 5 years from now, we will not guarantee that our manufacturing industry will soon retreat if some of the countries around the world, including India and African countries, have gathered their manufacturing industries."

For China

As a member of Wenzhou entity operators, the French school is also faced with great cost pressure. In terms of human cost, the growth of 40% over the same period has increased from 10% to 15% per year in the supply chain cost.

Any enterprise will be depressed, so the French school will choose the global procurement road. This will help enterprises control risks, but it will also be a new topic for Chinese enterprises.