Rising labor costs in China are forcing U.S. apparel and accessories retailers to consider relocating at least some of their garment production to countries with cheaper work forces. But doing so could risk increasing other expenses, such as shipping.
"We are looking to move production into lower-cost geographies, most notably Vietnam and India," Mike Devine, Coach's chief financial officer, said at a conference last week.
We pushed up Chinese labor costs by 5% to 15% on average this year, In the southern coastal province of Guangdong, one of a handful of hubs for apparel and accessories makers, the monthly minimum wage rose on average by more than 20%, effective May 1, the firm said.
The gains come as Chinese workers more broadly have been securing wage increases, partly through labor disputes. In addition, their government has sought to steer manufacturing away from labor-intensive, low-technology industries, such as textiles, into more-sophisticated products, such as electronics devices.
The higher pay has boosted the purchasing power of Chinese consumers, but is pressuring U.S. apparel chains and others that rely on low-cost labor.
