Reasons and solutions for enterprise order loss

After the summer solstice, new summer clothes are hot-selling. However, unlike previous years when "Made in China" products were everywhere, this year's new models are more from Thailand, Vietnam, Bangladesh and other places. Recently, it was learned that due to the gradual increase in domestic labor costs, more and more international brands have transferred their orders to Southeast Asian countries. In this wave, Chongqing clothing OEM companies have not been immune, and some companies have seen their orders drop by nearly half.
The disappearing demographic dividend
Huang Mingwei, vice president of the Chongqing Yupai Clothing Association, believes that the rapidly rising labor costs are the main reason for the loss of orders.
He did some calculations and found that from 2008 to date, the monthly salary of ordinary workers in the clothing industry in Chongqing has increased from 1,000 to 1,400 yuan to around 2,000 yuan. If converted into US dollars, plus the appreciation of the RMB, the increase in labor costs has more than doubled. In addition, the auxiliary materials needed for clothing production in Chongqing need to be purchased from coastal areas of Guangdong, and the cost of raw materials is more than doubled.
"This directly leads to a decline in the competitiveness of clothing companies in the international market." He said that in order to maintain cost operations, buyers will choose to move orders to other regions or countries with lower costs.
How much trouble does the current labor cost cause to enterprises? Recently, analysts listed a set of latest statistics. Compared with Bangladesh, the average salary of employees in domestic textile enterprises is 188~300 euros, while the salary of local workers is only 80 euros. Compared with Thailand and Vietnam, the domestic labor cost is 5~6 times that of local countries, and the price difference can be as high as 10 times!
Response: Enterprises work together to establish regional brands
Faced with difficulties, some business owners want to get out of the low-end competition of the industry by operating brands. However, it is not easy to do so in practice.
"We also want to go the brand route." A boss surnamed Zhou of Yupai Clothing had a failed attempt. "Self-owned brands involve technology research and development, brand promotion, market sales, after-sales service and other links, which require a lot of manpower, material and financial resources. This process is full of risks and uncertainties."
Most of Chongqing's garment OEM companies have chosen a dormant strategy. Some continue with the existing OEM model and gradually expand their scale through "incremental" production; some start from manufacturing and move to design, strive for the agency rights of foreign brands, and adopt the ODM model (a manufacturer designs and produces products according to the specifications and requirements of another manufacturer) to produce; and some adopt both OEM and brand models to dilute risks.
"Most of Chongqing's clothing companies are small and medium-sized enterprises, and it is very difficult to build individual brands on their own." Li Yong said that in the next 3 to 5 years, by organizing companies to "band together" to attend conferences in various places, the exposure rate of Chongqing-style clothing will be increased and the overall brand image of Chongqing-style clothing will be established.

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