In this article in the South China Morning Post, two of SDG’s global sourcing strategy experts comment on the movement of manufacturers out of China in search of lower-cost options in southeast and central Asia.
“The change is significant in the past two years,” said Peter Hopper, an SDG partner and advisor in manufacturing and sourcing strategy. “The cost of labor in China has become very high, growing at least 10 per cent every year.” Because global consumer demand is weak, brands are finding that they cannot pass along higher prices, and instead must focus on production costs. “As the global economy slows, brands are less confident to push up finished goods prices,” Hopper said.
Vietnam, by contrast, is rapidly increasing its market share in manufacturing categories such as footwear, garments and electronic products. “Considering both wages and productivity, the low-end production cost in Vietnam on average is about 30 per cent lower than in China,” said Jugnu Sakuja, a senior engagement manager at SDG.
Read the full context of their remarks in the complete article by Summer Zhen, which appeared in the print and online version of the South China Morning Post.