This clothing company quietly exited the Chinese market

According to “Nikkei Chinese Network”, Japanese clothing companies stationed in China are in trouble. Due to sluggish sales, except for the large clothing company Itokin (Itokin), which has decided to withdraw from China, the women’s clothing company Haolizi (Haolizi) with many stores Honeys) is also closing stores.

As local labor costs continue to rise, China’s advantage as a production base is also wavering. Japanese clothing companies that originally had expectations for this growth market have to adjust their strategies in both sales and production.

Yidujin once had 300 stores in China at its peak, but as competition with local companies intensified, its operating conditions began to deteriorate. Although the company was merged into the investment fund Integral in February 2016, there was still little hope of improving earnings, so it completely withdrew from the Chinese market in 2016.

Haolizi is also gradually withdrawing from department stores where it previously opened stores. It plans to close approximately 270 stores in three years. Although new stores are opening, the store network is expected to decrease from about 600 at its peak to 430. Haolizi said that not only in department stores, “competition in shopping malls is also intensifying.”

The Japanese manufacturing industry has moved its production base to China in search of cheap labor. However, wages in China are now growing at an annual rate of 10%, and production costs are rising sharply.

Asahi, a famous Japanese shoe factory, plans to move all production back to China within five years. The company stated that “in China, labor costs have skyrocketed to about seven times in 10 years” and that it will reselect its production base while taking into account the risk of exchange rate changes. Asahi plans to invest 1 billion yen to improve production efficiency and introduce automatic leather cutting equipment. Although the product price will increase by 20-30%, the production speed can be shortened by 2-3 months, thereby increasing the shipment capacity of best-selling products.

In the summer of 2015, suitcase manufacturer SUNCO has restarted its own factory in Japan. All its products were originally produced in China, but as rising wages and the depreciation of the yen were reflected in prices, customers began to lose. For this reason, SUNCO hopes to increase the added value of its products so that they can sell well even if the price doubles.

The larger the scale of China’s consumer market, the more intense the competition for the middle class. The “world’s factory” seems to be reaching an inflection point. Japanese clothing companies quietly withdraw from the Chinese market

AAA

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