How Can China'S Manufacturing Costs Rise To Save Labor?

In December 9th, Adidas announced that it would open Speedfactory in Germany, using intelligent robots to make sports shoes.

Not long ago, at the investor conference, Adidas decided to gradually reduce its capacity in China and pfer manufacturing plants to Southeast Asia - Vietnam, Kampuchea, Burma and other countries.

This is not the first time multinational companies have announced closing factories or reducing production capacity in China.

Before and after August this year, Dhikav, a food giant, announced that the Shanghai plant would be shut down to optimize supply chains.

This is one of the 7 production bases in China, mainly producing biscuits.

At the peak of 2014, annual output can reach 30 thousand tons.

By the end of August this year, only 1 of the 4 production lines had been shut down.

The production line is also shrinking in Nestle's coffee factory in Dongguan.

Starting from the 1 month of this year, hundreds of tons of coffee valued at tens of millions of dollars were sent to the waste incineration power plant to destroy.

It is understood that some of the destroyed coffee has a shelf life of nearly half a year.

The reason for Nestle's official response is to destroy stock to keep the product fresh.

But from 2013, the start-up time of the factory has been continuously compressed.

Why do we buy and buy more and more holidays and reduce consumption? The fact that foreign capital closes factories and reduces production capacity in China is becoming more and more common. We sort out a few factors, which may be the reason why they have moved away from China.

In addition to returning to its German stronghold, Adidas announced that it would set up a new factory in Detroit, USA in 2017.

This coincides with Nike's move.

When Obama visited Nike factory in the 5 month of this year, Nike said it plans to provide more than 10000 jobs in the United States, including manufacturing posts, technology research and development engineers and so on.

In fact, Nike has been continuously stripping off non core businesses. In the 2012-2014 years, the number of Nike's global agency factories has decreased by 14%. It has spent more energy on technology, research and development, materials and so on to grasp future market demand.

In addition, the gap between manufacturing costs and China in developed countries is decreasing.

According to a 7 month report from Boston consulting company this year, because of the decline in energy prices, the average cost of manufacturing in the United States is very close to China's production cost, which is only 5% higher than that of China.

In this case, back to the production of our country, we can get rid of the word-of-mouth of "made in China" and the "sweatshops" that have been accused from time to time.

Among all the costs, the labor cost is the most significant.

According to the data of the National Bureau of statistics, from 2008 to 2013, the growth rate of above scale industries (which refers to industrial enterprises or state owned industrial enterprises whose annual main income is greater than 2000 million yuan) is two digit growth rate, reaching 11.4%, which is more than twice that of the same period labor productivity (per capita added value) growth rate 5%.

Why is the increase so fast? Because in the early days of reform and opening up, the wages of the manufacturing workers were low and the social welfare was poor.

With the awakening of workers' rights and interests and the enhancement of state protection of labourers,

The increase is relatively large.

Last year, 4 months and months, Yuyuan shoe factory, which was the foundry of Nike, Adidas, Puma and other brand footwear products, stopped working because of workers' social security disputes.

The storm ended with the shoe factory paying social insurance and provident fund and raising worker subsidies.

In addition, because of the aging of the population, the development of the third industry has brought more and more related career opportunities, and the number and proportion of young people willing to work in manufacturing factories have been reduced.

Many manufacturing factories complain that it is more difficult to recruit workers in China than in Southeast Asia.

In addition to labor costs, raw material prices and land prices have risen.

In addition, in recent years, the preferential policies for foreign investment have been reduced, and the country's environmental policy has been tightened gradually. The rising costs have made China's attractiveness as a "world factory" less attractive.

Like Speedfactory in Germany,

The new factories planned to be established in the United States also use robots and automated production methods.

This will reduce the amount of labor and produce no high labor costs.

They are also closer to their technology and development centers. Returning to developed countries may be more conducive to the implementation of robotics and automated mass production.

While returning to Germany to open Speedfactory, Adidas announced that it will cooperate with Johnson automation, engineering enterprise Manz, robotics development company KSL Keilmann, and a number of scientific research institutions.

In the new mode of production, only about 10 people will participate in the pre test stage, and then fully automated production.

They plan to sew all the machines in the new Speedfactory.

And make elastic soles.

Not only Adidas but also Nike has been upgrading technology since 2012, planning to increase machine production and reduce workers' participation.

In 2012, they introduced a technology called Flyknit, which can greatly reduce the participation of labor force in the production of sports shoes: only manual sewing of shoe upper and sole interlayer is needed.

However, the technology of machine tailoring and sewing has not been fully promoted.

I-Generator, a consultant at a business consulting firm who worked for Adidas and Nike, said: "the footwear industry in the past was labor-intensive, and there were several parts of each shoe that need to be sewn by hand.

In the future, reducing workers' participation is the ultimate goal of shoemaking industry. "

Not only in the footwear industry, but also in the garment industry, Gap (Gap) and J.Crew's OEM, TAL Group, are developing robots and automated production.