China: the metamorphosis of “Made in China,” Beijing outsources textiles

Plagued by overproduction, China searches for the cure to its ailing textile sector in outsourcing.  It finds, therefore, an element of rationality: transferring production to generally more convenient locations.  After attracting investments for three decades, China now finds itself in the reverse role.  It’s enough that it conquered the trophy for the largest textile and clothing producer and exporter in the world.  The achievement has lost its luster, and China would willingly do without it.  The textile industry is typical of countries undergoing development, a first step—according to economic literature—in the conversion from agriculture.  Despite its peculiarities, China was no exception; the textile industry was in fact a cornerstone of the virtuous cycle: investments, low-cost production and manufacture, export, accumulation, and new investments.  The country is still competitive, but it no longer needs the textile sector like in the past.  Rather, it must battle with the permanence of old interests that insist on pricing as the keystone of exports.  Nonetheless, it seems like normality prevails and investments in neighboring countries abound.  Bangladesh, Cambodia, Vietnam, Thailand, the Philippines and Indonesia are the new frontiers of the “go global strategy” promoted by the government.  Cost reductions are the first motor of change.  China is at this point decidedly more expensive than countries left at the fringe of globalization.  The average industrial salary is $170 per month compared to $130 in Indonesia, $50 in Vietnam and even $37 in Bangladesh.  The recent wage increases, accepted and even promoted by the government, can be explained by the necessity of discouraging investments—both national and international—in mature sectors.  If “made in China” is subjected to technical/political evaluations of labor and environmental standards, then a less stringent exam is frequently posed in emerging countries.  Chinese companies, by now devoid of their brand of origin, can continue to export and report profits.  The phenomenon is not limited to Beijing’s investments.  Many multinationals, both big names and companies of reduced dimensions, endorse Southeast Asia.  The conviction that socio-political stability is guaranteed prevails, that infrastructure is rudimentary but sufficient, and that government benevolence is generally assured.  Launching a textile industry is relatively simple: machinery, rapid training, the respect of certain union rules, and the availability of raw materials suffice.  Even less-developed Asian countries offer a valid industrial solution.  Their export tables register a strong growth, just like calculations of investments.  According to their chart of accounts, the new labor division appears to be an overall win-win situation for those countries, for China, and for companies outsourcing there.  However, questions tied to excess global supply and reductions of costs linger in the background, an investigation that frequently leads to the neglect of the most elementary security measures.