Apr 6, 2010

Fact or Fiction: China's Labor Shortage

Just as fast fashion is taking over the fashion industry for better or worse, labor shortages in China are proving to be problematic for many retailers and designers who are trying to get product into their stores faster and at lower prices than ever before. As a sourcing manager for numerous brands I can tell you that the media isn’t blowing this story out of proportion, the problem is real and it's been on the horizon for a very long time. Labor shortages surfaced when factory workers began to return from the Chinese New Year holiday and factory managers started to realize that not all workers planned to return to work, favoring jobs closer to their villages even if those jobs meant reduced pay. Meanwhile, factory wages in China have risen as much as 20% in recent months in an effort to bring back workers but it appears that the wage increases aren't enough to attract workers to return to work allowing their employers to get back to their pre-Chinese New Year productivity levels. 

Experts say that the labor squeeze could fuel higher apparel prices for manufacturers that will ultimately result in higher prices paid by consumers. As the shortage for workers grows companies will need to decide if they can risk placing future orders in China knowing that they’ll eventually have to deal with delays in lead-times and inconsistent quality from new workers who are being brought in to supplement the existing staff. Moving production to alternate countries isn’t as easy as it sounds. Prior to making a shift companies will need to seek out new resources, line up terms and agreements, do thorough development and sampling of their products, and of course, work out a calendar that allows them to thrive in the speed-to-market conditions that are crucial for the company to maintain a competitive edge.

It remains to be seen whether or not the current labor shortage will have lasting effects on the apparel industry but one thing is certain the problem will inevitably get worse before it gets any better.

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