China's clothes retailer relocates part of business to Bangladesh
Vancl, a Chinese online clothes retailer, is relocating part of its production set-up to Bangladesh to reduce costs of production, Global Times reported on Wednesday.
"Labour costs have been greatly reduced by moving part of the production set-up to Bangladesh," the Chinese newspaper quoted Chen Chu, public relations director at Vancl, as saying.
The new move could cut 5-10 percent of the cost for each item, according to the newspaper.
Chen said the labour cost in China, the world's largest apparel supplier, surged to $400 per person per month while the labour cost in Bangladesh varies at $75-$80 per person per month.
Following higher cost of production and shortage of workers, the Chinese garment traders are either relocating their production base or sourcing from other countries such as Bangladesh.
China's leading position in global manufacturing is being undermined by rising costs in the country, Global Times said.
German sportswear maker Adidas AG announced in July that it would shut down its only self-owned apparel factory in East China's Jiangsu province in October.
Nike, Adidas' major competitor, closed its self-owned shoe plant in Taicang, Jiangsu province as early as in 2009, according to the report.
Vancl also eyes such opportunities in Indonesia, Cambodia, Vietnam and Pakistan.
Vancl has so far only moved the production of some basic clothing items to Bangladesh, such as polo shirts, which do not require a quick turnaround or high production expertise.
Chen said unstable political situation and inefficient infrastructure in the foreign countries may also create uncertainties for the company's overseas business plan.
Vancl aims to develop itself into a "fast fashion" company, posing high requirements for the production cycle, Global Times reported.
"But overseas production cannot meet such requirements. Despite higher costs in China, domestic factories still enjoy higher production skills and shorter production time," Chen said.
Vancl did not say how much they will invest in Bangladesh and who is the company's local partner.