Adidas Closes At The Chinese Factory And Moves To Southeast Asia.

A rumor four years ago was recently confirmed.

Adidas, the sports apparel giant, has decided to close its only factory in China for the purpose of moving to Southeast Asia.

The factory is located.

It is a wholly owned subsidiary of Adidas group 100%.

The news that the factory will be closed was first reported by the workers who were facing the demobilization. Then NetEase finance confirmed to Adidas group. In July 17th, the China headquarters of the company confirmed that "the only private factory to be closed in China later this year".

Although there is no clear reason for closing the factory at the company level, analysts say that Adidas's actions to shut down factories are floating on the back of a sharp rise in China's sales volume. The only explanation is that the multinational company is ready to move its production line to Southeast Asia.

The closure of the only factory employees is highly compensated.

The news that Adidas will shut down the Suzhou plant has been circulating on the Internet since April.

A number of employees at the Suzhou plant said that the factory will be closed in October this year, according to the notice from the manufacturer.

Subsequently, reporters learned from the factory that the closure of the company is indeed a matter of fact, the company's personnel recruitment has been stopped.

According to Adidas official introduction, Adidas China is a wholly owned subsidiary of Adidas group 100%. It registered and opened production base in Suzhou. Its trade headquarters is in Shanghai, with branches in Beijing and Guangzhou.

The Suzhou factory is also its only own factory in China.

In July 17th, Adidas China headquarters confirmed that the Suzhou plant was about to close.

In the mail reply, Adidas showed that "Adidas will close the only one in China later this year because of the strategy of re integrating global resources."

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However, Adidas did not elaborate on the future direction of the factory.

According to a person familiar with the Suzhou Industrial Park, the Adidas Suzhou factory is ready to move to Burma, where all the employees will be disbanded, but Adidas will provide generous compensation.

About how to compensate the demobilized workers, the head of the factory administration said to NetEase finance, "at that time, the employees of the factory will get the compensation of N+1 (N for the whole year in the factory) multiplied by the monthly salary according to their jobs and years of work in the factory."

The person in charge stressed that the "compensation standard is far higher than the relevant national standards".

It is understood that the closure of Adidas's own factory is not isolated, as long as three years ago, its "forever competitor" Nike made the exact same decision.

In March of 2009, Nike shut down the only shoe factory in Taicang, the factory in China, which sent 1400 employees to China. At that time, the workers failed to reach agreement with the workers.

It is worth noting that the sales volume of Adidas in China has been increasing sharply in recent years.

China is now the second largest market in the world, and may overtake the United States as the largest market.

Against this background, the closure of the only factory in China is even more imaginative.

Production base, such as migratory bird migration cost considerations, is the key.

Adidas group is headquartered in the Herzog area of Germany, which has been expanding in China in recent years. It opened 1175 new branches in China last year, and now has 6700 sales outlets.

The company said earlier that Adidas group will continue its investment and hopes to create new sales records in China in 2012.

At present, Adidas group sells more than 1 billion euros in China's market and ranks second in the market share.

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In fact, rumors about Adidas's closure of China's production line came out around 2008.

At that time, Herbert Heiner of Adidas global CEO said in an interview with Germany that as the wage standard set by the Chinese government was getting too high, Adidas hoped to withdraw from China partially and move to cheaper labor areas.

This statement was immediately interpreted as Adidas will close the production line to evacuate China.

Although the company had to issue a statement at the end, it said, "Adidas has no intention of withdrawing any of China's production lines, but it will increase production in China."

But rumors about Adidas shutting down the production line are still circulating.

Is it also based on closing the factory in Suzhou?

In other words, Adidas's official saying is "out of the strategy of re integrating global resources", while the workers in the factory say that the factory is ready to move to Burma.

Wang Zhuo, Secretary General of the China clothing association, pointed out that "in the trend of rising labor value, production cost and peripheral costs in China, it is in line with the international environment and business needs that enterprises with international operations like Adidas choose some factories in Southeast Asian countries with lower labor costs."

It is understood that, like ADI, Nike, Puma and other garment enterprises are more sensitive to labor costs, ordinary enterprises will control labor costs between 20% and 30%.

Wang Zhuo said that only in a low cost environment, ADI enterprises can be competitive.

"You can see that in the past 20 or 30 years, Adidas Nike's production base is just like migratory birds, which is constantly closed and moved according to the changes in production costs all over the place."

Adidas pursued the cost advantage, its production base was first established in Europe, then fought to Japan, which was lower than the production cost, followed by South Korea and Taiwan, China, and then China. It experienced migratory routes like migratory birds. "Now as China's labor costs rise, their factories will be pferred to Kampuchea, Vietnam, Bangladesh and other Southeast Asian countries."

Experts say Southeast Asia is difficult to weather, but has a chain reaction in China.

For the closure of Adidas factory in Suzhou, garment industry observer Ma Gang said that because of the rising cost of manufacturing industry in China in recent years, the international competitiveness of "made in China" has gradually weakened and the cost has risen more than Adidas's expectations. In this case, it is reasonable to make factory pfer.

In the annual report issued earlier this year, Adidas pointed out that in 2012, the Adidas group's gross interest rate will reach about 47.5%, a slight decline compared with the same period of last year.

For this reason, Adidas said, "the increase in investment and labor costs will become a drag on group profit growth".

Recently there is just a proof of the cost of production.

British media recently broke the news that Adidas paid only 10 pounds (US $15) a week to the workers of the Kampuchea garment factories for the production of London Olympic licensed products, even if the average monthly wage of the local workers corrected by Adidas was 130 dollars (about 828 people's currency). This figure is also far from the declared "per capita monthly salary of not less than 3000 yuan RMB" when Suzhou factory had previously recruits.

However, there are different views on the way Adidas moves to the production base.

Li Peng, secretary-general of the footwear industry association of Asia, said that in addition to the low cost of labor, the Southeast Asian region has no competition compared with the Chinese region. The production facilities in the region are far from complete in mainland China, and a large quantity of raw materials are mainly purchased from mainland China. "Adidas closes the Suzhou plant or simply closes it based on the integration of resources, not relocation."

Whether it is relocation or not, in short, if Adidas closes the only factory in China, it marks that all products produced by Adidas in China will be completed by the factory.

It is understood that China has been regarded as the most important production base by Adidas. At present, Adidas has 300 foundries in China, involving more than 300 thousand employees.

Li Peng also pointed out that "if Nike, Adidas and other enterprises to reduce production lines on a large scale, the impact on the foundry and matching is very great. Influenced by the integrity of the product process, many foundries are difficult to survive independently. Under such circumstances, if the factories still want to rely on orders such as ADI, Nike and other enterprises, they must go to Southeast Asia together."

In the 300 factories for Adidas's OEM, Taiwan Yuyuan group accounted for a large share of the order. The company also has many factories in mainland China, specializing in services such as ADI and so on. However, "this enterprise has begun large-scale pfer to Southeast Asia in recent years, and factories in mainland China have begun to shift from coastal areas to low cost labor areas in the mainland," Li Peng said.