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Global garment factories leaving China

China,Business/Economy, Wed, 28 Mar 2012 IANS

Beijing, March 28 (IANS) Global fashion brands are shifting their manufacturing bases from China to cheaper countries due to high production cost, experts said.


President of China National Textile and Apparel Council (CNTAC) Wang Tiankai said the trend is inevitable as China was no longer a "cheap-in-everything paradise".


Media reports said some Italian have brands already moved their production lines to Turkey and Tunisia. The news comes as China's labour and raw material prices rose significantly last year, Xinhua reported Monday.


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


Labour cost jumped by 30 percent while raw materials rose by over 20 percent since early February, said Liu Jintang, deputy director of Dongguan city's Small and Medium-sized Enterprises Bureau.


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


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


China's textile exports in 2011 edged up 0.5 percent year-on-year, of which clothes exports dropped by 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, adding that large-scale outflow of factories will not occur as China remains a big manufacturing centre.


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


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


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