Li & Fung’s CEO recently gave an interview to Reuters that you can watch here. I wrote a few excerpts belo
w:
About China’s main advantage:
“China is by far the most efficient, quick-to-market, including price and quality, if you add it altogether.
About the shift of production areas within China:
“[Production] is not necessarily moving out of China, it is moving away from the coast of China”
“It is moving inland, and I would say it’s pretty rapid. And it’s been going on for the last few years and it will continue to accelerate away from the coast of China, and it’s going to places: places like Indonesia, Vietnam, bangladesh. And also to interior of China.”
About China’s place in global sourcing strategies:
“I think China as a whole will still be a very key, the most key market for exports over the next three years.”
“Today China is about 50% of our production globally”, “if you ask me what’s going to be in 3 years, I think it will be quite similar”
For more insights about Asian production, you can go watch the video.
What are you seeing, Renaud, as far as shifts to Indonesia and Vietnam? From my perspective and from my industry, I’m not foreseeing a major shift outside of the Motherland (China). One of the glories about China is having so many vendors, material suppliers, and 3rd party accessory suppliers all in one place. My knowledge is limited on the subject, but I don’t see Vietnam or Indo having such access.
Seen some clients wanting to shift to other nations to avoid the cultural “nuances” of dealing with Mainland suppliers, but what they are not considering is many of those manufacturers in Indo and Vietnam are setup by Chinese.
How are you seeing it?
~ It’s the weekend..not get off the computer 🙂
Jacob,
For your products (promotional goods), I bet the factories will simply go a little bit more inland, but still in China… Until 2020 or so, when China will REALLY be more expensive.
In the apparel industry, I definitely see a lot of activity in South Asia (India, Bangladesh, Pakistan) and Vietnam. And some in Indonesia, Thailand, Sri Lanka… China is still the No.1 exporter, but it seems its share has been dropping slowly. That’s what Li & Fung’s CEO says, since a good chunk of their business is in garments, and I think he’s right.