History repeats itself. Many Western countries have had to relocate the production into China, in a process that can be supported by professionals such as New Horizons Global Partners. But in the Celestial Empire wage costs have been rising at a rate of 10-15% a year for years, and now it's up to the Chinese to relocate to countries with lower labor costs.
The Chinese online site Vancl.com, which sells clothing items, has signed an agreement for a first production batch of 30 shirts with a producer in Jiangsu province which has a factory in Bangladesh.
The “factory of the world” – China – extends its borders to other Southeast Asian countries, where labor costs are up to 30% lower. After the first successful batch, Vancl.com has ordered another 130 items, while maintaining production in China for items that require shorter delivery times. In fact, relocation is not determined only by the cost of labour.
The decision also requires assurances regarding quality and timing, and in turn these aspects require that in the country where one is going to relocate there is an adequate network of subcontractors, as well as an efficient logistic infrastructure. But history teaches that, where there is respect for market values, trained labor and "animal spirits" - conditions that now prevail in many Asian countries - growth, like stewardship, follows.
