Cheap clothes from China are over

It’s time to leave the principle “Chinese means cheap” in the past: the cost of clothing production in this country increased by almost 30% in 2023, and this is not the limit. Many brands can no longer afford to keep production in China; they choose cheaper Bangladesh or Vietnam. Experts told MK why maid in China clothing is not so relevant today.

The rise in prices for clothing production in China is associated with several factors: rising prices for fabrics, increasing transportation costs, and rising labor costs.

Items made in China can most often be found in the assortment of marketplaces – usually we are talking about things that were purchased in bulk on Chinese sites and are now resold in Russia. In regular stores, the situation is completely different, and the “Made in China” tag is not so easy to spot.

“Many brands today have transferred production to Pakistan or Vietnam,” says a salesperson at a large multi-brand store. — They still sew a lot in Bangladesh. China is becoming increasingly rare. By the way, local production has now become popular, and not only among Russian brands.

As proof, the seller shows a sweater from a famous Scandinavian brand. The tag says “Made in Portugal.” Next to it is a French skirt with an indication that it was made in Turkey. The pattern is quite simple: where labor is cheap (well, in Portugal it is significantly cheaper than in Sweden!), they sew there. That’s why China is losing ground: production there has become more expensive – the head of the Center for the Study of Modern China at the Institute of Oriental Studies of the Russian Academy of Sciences, Doctor of Political Sciences Andrei Vinogradov told MK about this.

— Light industry, as you know, requires a large amount of manual labor, human labor.

China has long been the “factory of the world,” including in light manufacturing, because China had cheap labor. But then China, by all indicators, left the ranks of poor countries, and there is no longer cheap labor there,” explains Vinogradov. — Therefore, over the past 15 years, large Western companies have been transferring their production to other countries.

If we are talking about shoe production, then this could be Vietnam, other countries in Southeast Asia, and to a lesser extent Indonesia. Well, clothes, including luxury brands, are now sewn in poor countries of Eastern Europe – Albania, North Macedonia, Bulgaria, Romania.

— These states 40-50 years ago were already large suppliers of clothing to the world market, they had cheap labor, then China took on this role. Now we are seeing a reverse process, when the palm in the production of light industrial goods is returning to the same countries. “Pakistan and Bangladesh should also be added here, of course,” Vinogradov added.

As for Russian brands, many have begun to locate production in post-Soviet republics – for example, in Kyrgyzstan and Uzbekistan. Moreover, some companies transferred production there from China. Firstly, it is easier to come to an agreement with former comrades in the USSR, secondly, logistics are cheaper and easier to organize, and thirdly, labor in these countries today is cheaper than in China. By the way, an important argument in favor of production in Uzbekistan is its own cotton (which turns into denim).

Another well-known Russian expert on China, director of the Institute of Asian and African Countries at Moscow State University, Alexei Maslov, confirmed to MK that global clothing brands are gradually leaving China – according to him, this began 5-6 years ago. Maslov explained that the production of high-quality clothing, the work of designers, and specialists in new fabrics in China is not cheap: sometimes 2-3 times more expensive than in Vietnam, India, Pakistan, and 3-5 times more expensive than, for example, in Cambodia.

“Even the leading Chinese brands themselves place the basic lines of their products in other countries, because it’s cheaper with comparable quality,” says the expert. – In general, “pret-a-porter” is leaving China, only the most current and innovative lines remain.

The expert added that in general, labor costs are rising in China; in most countries of Southeast Asia they are 30-50% of the Chinese ones, and Chinese enterprises also pay social benefits, sick leave, and support pension funds – all this is included in the cost. Chinese leading brands like Shein and many others in their premium and luxury lines are not much inferior in price to the world’s giants, and sometimes surpass them in quality and design finds.

Maslov also assured that clothing prices should not increase for Russians: the flows will simply come not from China, but from other countries in Southeast and South Asia, and given the very strict supervision system, the end consumer will not notice any changes in quality. The expert added that paying for goods in yuan, which seemed like a problem to many, does not result in any difficulties if business processes are structured correctly. Difficulties may arise when purchasing certain types of electronics or serious investment projects, but nothing more.