In order to cut costs, many Japanese clothing companies, including GU, have gradually shifted production to Southeast Asian countries. Although the production cost has dropped, there have been logistics problems with a long lead time.
According to the Nikkei News, GU, which decided not to rely on wide-leg pants, changed its business strategy again and decided to move some of its production back to China.
Today, China's labor costs are twice that of Vietnam and four times that of Bangladesh. In order to cut costs, many Japanese clothing companies, including GU, have gradually shifted production to Southeast Asian countries. Although the production cost has dropped, there have been logistics problems with a long lead time.
When a company finds that a certain product is selling well and requires Southeast Asian factories to increase production, the increased production of clothing returned to Japan may face a situation that has not caught up with fast fashion. In order to dispose of the inventory, GU can only do regular discount promotions. GU did not explicitly disclose the direct impact of discount sales on profits, but at the business briefing session in August, President Gou Zhizhi said: “The discount to reduce inventory is the main reason for the deterioration of performance.â€
GU does not move all of its production back to China. New products in the current season will still be produced in Southeast Asian factories with low labor costs. Only the production-increasing garments that need to keep up with the trend will be produced in China. GU hopes to establish a 30-day production investment cycle in China. As China is closer to Japan, the increased production of clothing can reach Japan 1-2 weeks earlier than the clothing produced in Southeast Asia.
For example, after a certain product is sold out at the end of March, they will immediately ask the Chinese factory to increase production. In May, the clothing that was increased before the Japanese holiday will be sold directly in Japanese stores, so that GU can catch up with a holiday economy.
Also decided to transfer production back to China is the Japanese clothing company STRIPE INTERNATIONAL (a lot of girls like EARTH MUSIC & ECOLOGY endorsed by actress Miyazaki is the brand). The production ratio of STRIPE INTERNATIONAL in China once dropped to about 70%, but due to the advantages of logistics, the production ratio exceeded 80% again.
In the past 10 years, the Japanese apparel industry has been working hard to reduce its dependence on Chinese factories. According to statistics from the Japanese fiber import portfolio, 64.7% of Japan's garments imported from overseas in 2016 came from China, and this figure fell by 16% in five years. At the same time, the proportion of clothing imported to Southeast Asia has increased by 10%. At present, the number of garments produced in Southeast Asia in the Japanese market accounts for 23.4%.
Of course, the advantages of China's manufacturing industry, which has formed a mature industrial chain, are not limited to logistics. The member of the Japan Business Management Association, Sanhao Kangsi, wrote that the Chinese factory can flexibly mix fabrics, zippers and other auxiliary materials for production compared with factories in Southeast Asia. So after the turn around, the label of the place of origin on the Japanese clothing is still Made in China.
Editor in charge: Wang Zhen
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