Some Japanese companies want to decentralize production from China

According to the "Nihon Keizai Shimbun" reported on the 20th, some clothing and garment manufacturers in Japan are gradually spreading their production focus from China to Southeast Asian countries. Ito Yokado has built a new underwear production plant in Thailand. The company’s Chinese plant is expected to reduce its production this year by 20%, while Japan’s large-scale retailer UNY Corporation expects that the company’s own branded apparel will be available in the Chinese factory by February 2014. The production rate will be reduced from the current 74% to 65%, the production rate in Thai factories will increase from 9% to 13%, and the new plant in Bangladesh will soon be put into production. The company left women's clothing with high difficulty in production in China, and gradually transferred other products with low difficulty to the factories in Southeast Asia. In addition to these large-scale retailers, athletes such as Acics and MIZUNO have also spread their production focus from China to Southeast Asia such as Indonesia and Vietnam. According to the statistics of Japan’s Ministry of Finance, the share of Japan’s garment companies’ imports from China fell by more than 10% in 2007 compared with 2007, while the import value from ASEAN countries has maintained a growth trend for eight consecutive years.

The main reason for this phenomenon is that China’s labor costs continue to increase. Compared with Southeast Asian countries, Japanese companies’ production costs in China are constantly rising. With the rapid development of China's economy, labor costs increased at a rate of 15% per year during the 10 years from 2001 to 2010. In addition, the annual Spring Festival holiday also makes many employers suffered a "labor shortage," and it is difficult to guarantee production for a time. Therefore, these companies have to find alternative ways to set up factories in Southeast Asian countries with relatively low labor costs and implement the “China Plus One” strategy, so as to reduce production costs as much as possible and ensure corporate profits. Some Japanese experts believe that in the long run, with the influx of foreign capital, labor costs in Southeast Asian countries will also continue to grow. Japanese companies need to develop diversified strategies to deal with this change.