How is China’s Garment Industry Dealing with Rising Labor Costs?

Please feel free to share your views on the following discussion questions based on the video:

China is no longer one of the cheapest places to produce garments. The minimum monthly wages in China have far exceeded those in Bangladesh, India and Cambodia:

  • How are Chinese garment factories coping with the challenges of rising labor cost?
  • Is adopting Taylor’s “scientific management”, i.e. asking skilled workers to do less skilled jobs in a more specialized production line, a smart idea?
  • What is your view on the growing difficulty of hiring and retaining young skilled workers for the garment industry in China?
  • Any other thoughts on the video?

Appendix: State of China’s Apparel Exports in 2015

According to the UNComtrade, China remains the world’s largest apparel exporter in 2015 (37.4% world share for knitted apparel, HS61 and 34.9% for woven apparel, HS62).

61

62From 2011 to 2015, “Made in China” continues to acquire more market shares in some key apparel import markets in the world, including the United States and UK (i.e. China’s apparel exports to these markets grew at a faster rate than these countries’ apparel import growth from the world—bubbles in blue in the figures below). Nevertheless, in some other markets (bubbles in yellow in the figures below), notably Japan and Germany, China is losing market shares to other garment exporters such as Vietnam and Bangladesh.

61 market

62 growth

Advertisements

Author: Sheng Lu

Professor @ University of Delaware

13 thoughts on “How is China’s Garment Industry Dealing with Rising Labor Costs?”

  1. How are Chinese garment factories coping with the challenges of rising labor cost?
    Today, wages are climbing very rapidly as China’s urban workers have many options in terms of places and industries in which to work. Demand for workers is high, and they are able to expect much higher pay than those in less-developed nations. Labor costs are not the only challenge. Figures from the China National Textile and Apparel Council show that the momentum of China’s textile industry has slowed significantly since 2011. Because of this decline in the textile industry China is trying to make sure that workers don’t go to other countries to find work and are therefor paying higher wages.

  2. How are Chinese garment factories coping with the challenges of rising labor cost?
    I think that the question is very interesting. From the video, one significant point catches my attention. The point is trying to make garment practice more simple and more flexible. Thus, it can assist managers to control the quality in each step and make workers more willing to work in the industry. Actually, I have a friend whose home business is producing surgical dressing. And my friend is also facing the issue. For the issue, they start to invest machines to automatize their production lines. And they keep some loyalty skilled workers to train their new employees. I think that my friend will face the issue that the video mentioned. And I believe that offering more flexible time for young workers is a very good advice to my friend.

  3. China’s garment industry can use intelligent manufacturing to deal with high labor costs. Intelligent manufacturing not only reduces the cost, but it also improves the efficiency, and the stability product quality can also be improved. However, I think the intelligent manufacturing also brings challenges to the industry. Machine investment, maintenance, upgrades and a series of cost is not low. On the other hand, it means that a large number of workers may lose their jobs. The uncertainties factors caused by intelligent manufacturing will bother the industry.

  4. Is adopting Taylor’s “scientific management”, i.e. asking skilled workers to do less skilled jobs in a more specialized production line, a smart idea?
    I think this is a very interesting way for factories to do things and I agree with both the positive attributes it gives as well as the drawbacks. In the video the professor says that one of the benefits is that this process causes higher efficiency, both from day to day productivity and from not having key person dependency, I agree with this logic, I think this process makes manufacturing more robotic in a way, it makes the workers form a kind of machine, all working together to make the finished product. By each person doing the same short step over and over they will become faster and better at that task which will again increase efficiency, so for this reason I think that Taylor’s “scientific management” is successful. However, on the other hand I agree with what the Professor said about how this process has a negative effect on worker’s motivation. This process could become very tedious and tiresome for these workers which I think in turn could cause them to lack motivation to keep working fast and accurately, because they are just doing the same individual step over and over they could feel as though they are not actually achieving anything which could be bad for worker’s morale.

  5. What is your view on the growing difficulty of hiring and retaining young skilled workers for the garment industry in China?
    I understand the new difficulty of finding young workers to hire as workers in China’s garment industry. Young people these days are trying to break away from traditional expectations and trying to make a larger living for themselves. These people want to be out and living their life instead of inside a factory from 8am-9:30pm as the girl in the video described her hours. She also mentioned that she’s at the age where she should be getting married but hasn’t met anyone because she spends majority of her day inside the walls of the factory. I understand her position on wanting to make money to provide for her and her family but at the same time she needs to think about her future and what will happen after this factory job is over.

  6. How are Chinese garment factories coping with the challenges of rising labor cost?

    China is no longer one of the cheapest places to produce garments, as it is beat out by other developing nations, like Bangladesh. Accordingly, as the cost of labor rises throughout China, factories are willing to offer more attractive benefits to their workers, such as higher pay and more frequent rest breaks. Another mechanism for coping has been factories’ breaking down the production process into multiple steps that are highly standardized. Known as “Fordist production”, this mechanism increases overall efficiency, not just day-to-day productivity. Moreover, once the job is broken down, managers have an easier time evaluating the performances of their employees. Many factories are incentivized to continue these efforts for combatting the rising labor cost, so that they do not lose workers to their competitors.

  7. #2. Is adopting Taylor’s “scientific management”, i.e. asking skilled workers to do less skilled jobs in a more specialized production line, a smart idea?
    I think from a factory owner standpoint, it is a smart idea because it increases efficiency, decreases training costs and time, and allows the factory owner to determine performance on each employee. One key problem that the video mentioned was keeping the workers after the Chinese New Year and trying to find workers that can fill those spots of the people who left for other work. They mention that hiring workers gets more and more fierce each year, and in order to gain a sufficient amount they need to offer incentives. Many factory owners think an increase in pay is a good incentive, which is true, but it only creates temporary excitement. What motivates workers even more than pay is a sense of accomplishment. By using scientific management, the repetition of the same job creates a lack of motivation which may encourage a high turn around rate at the end of the year. Therefore, this method may not be the most beneficial.

  8. China’s garment industry is still the largest apparel and textile producer in the world. Even though they have rising labor costs they have made it apparent to have incentives for their workers. They are changing the idea of the production line with something called “fordist production” where each worker has one task to do for the product instead of making it from start to finish.

  9. I believe that specified management is a smart way for factories to produce more goods in a faster time. It allows those to focus on one task and become really good at it. However there are negative aspects to this approach as well. For example, doing one task may allow one to perfect it but could also make work feel longer and more tedious. Also, I think the use of younger workers should be frowned upon. The young girl interviewed did not get to enjoy her younger years and the perks of being a teenager due to her demanding work schedule.

  10. #3: What is your view on the growing difficulty of hiring and retaining young skilled workers for the garment industry in China?

    With the constant improvement of technology and trade negotiations, the garment industry is becoming even more global than it was before. Younger skilled workers have easier access to more opportunities, which is why it is more difficult for garment factories in China to retain their younger employees. In the past, China has had problems with treating their workers unfairly and for barely any money. Now that there are more opportunities for workers, few people are willing to work in such conditions for low wages. I think this situation, resulting in China’s dilemma of rising labor costs, was inevitable considering how much better working conditions are in countries that are China’s competitors, such as the U.S. Now the question I have from this is do you other developing countries like Vietnam, who are replacing China in terms of low labor costs, face the same fate as China and will have to deal with this problem later?

  11. Asking skilled workers to do less skilled jobs may be efficient for a more specialized production line, but definitely not sustainable. As mentioned, it is hard to keep those workers motivated as they seek for not just money but succeeding in challenges during the job. This creates difficulty in the hiring process as workers may not seem interested in simple tasks, although if these skilled workers are given benefits (i.e. housing and meals) they may be more motivated. Overall, if a company’s goal is to be more efficient with this method, they must prepare for high employee turn-over.

  12. ~Is adopting Taylor’s “scientific management”, i.e. asking skilled workers to do less skilled jobs in a more specialized production line, a smart idea?
    I think from a production stance, working with the “scientific management” concept would be beneficial to these factories. Specialization is very effective in allowing a party to place better attention on skilled activities that they exceed at for a higher competitive advantage.
    However, in doing so, may deter future and current employees from sticking with the factory (after the Chinese New Year) if they know they will be doing less than their capabilities. These skilled employees work hard to achieve their completed garments and by having them switch to working only on a section of the finished garments might discourage their participation.

    ~What is your view on the growing difficulty of hiring and retaining young skilled workers for the garment industry in China?
    I believe it is becoming more and more difficult to retain young skilled workers in factory settings that do not intellectually satisfy their minds. As said in the video, the younger workers are looking for that sense of fulfillment in their job (as I’ve noticed in my workplace also). Retaining younger workers will mean looking to adjust the environments to stimulate cohesive participation.

  13. What is your view on the growing difficulty of hiring and retaining young skilled workers for the garment industry in China?

    Nowadays, with the increasing number of university graduates in China, hiring and retaining young skilled workers for T&A industry may become a difficult issue. Many graduates may not be interested in doing “factory jobs”, mainly because of their misunderstanding on the jobs. They may think that the jobs are for unskilled workers that are not suitable for them. However, the T&A industry has been growing and many of the factories are now using technology in production. It is important to let them know these jobs require skilled workers to arouse their interest.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s