Due to unknown circumstances that surround the political and economic instability between the U.S. and China, it is understandable that alternative considerations are being passed around. What does this mean? Well, for as long as many can remember, China was the industry’s global leader. This is very much still the case - despite the recent COVID-19 pandemic. Though, in the beginning; it seemed that China may suffer from the wide speculations that the Coronavirus began in China, China still leads supreme.
In fact, it might be considered slightly foolish to believe that any one country could possibly replace China on this scale. How does someone challenge a country that is so large and has been the leader for so long. You have to own at least 50% of items or more than were made in China. It’s impossible virtually to think that you could find a replacement. But, not all things last and with the way the business is shifting, looking for countries to be alternatives is only smart thinking.
This doesn’t mean there will be just a single country to “replace” China. That thinking is considerably outdated and we saw how relying on one country during the global pandemic is not a smart idea. So, instead of looking at one country, we should be looking at multiple countries.
With tariffs and production costs rising, it seems that many supply chains are at least considering pulling out of China. Now, there have already been countries that have moved their productions out of China - such as Samsung, Hasbro, Nintendo, Apple, and even GoPro. Where have these countries moved? We will explore some of the countries they've moved to and some of the viable option below.
Where Have Companies Gone Who Have Moved?
While some Private label buyers considering it, some companies have left China and relocated elsewhere. One of the countries that has been occupied now has a replacement for China. They have found it in Vietnam. Due to the country’s cheap labor and stable government, it’s a viable and very appealing alternative to China. After companies started moving to Vietnam, the country’s economy has started to rise.
The only downfall to Vietnam gaining more popularity in the trade war, is that this could mean they are becoming too popular. Meaning they will attract the wrong attention i.e. tariffs being placed on them.
The Negatives of Going to Vietnam - or Any Poor Country
The cheap labor costs make Vietnam very appealing to companies who wish to shy away from China and the tariffs which has been placed on the large country. Going with Vietnam presents a higher risk of quality control. Vietnam is a very poor country and has never been the hub China is - therefore there may be hiccups along the way that must be accounted for when wanting to move to this country.
Private Label Products in India
India is another country being eyed by companies to be an alternative to China. India, like China, is a large country. While their manufacturing company is fairly new compared to great China, it’s growing rapidly. It’s due to India’s close proximity to China that allows a lower cost of importing raw materials. And in general, their overall factory labor costs are significantly lower. Companies need to go with lower options due to the Coronavirus pandemic - so India seems like a good choice for companies.
Private label Products in Bangladesh
Bangladesh is the world’s second-largest exporter right behind China. Due to their textile manufacturing recovering quickly from the factory collapse of Rana Plaza in 2013, it’s become a quick-acting second to China. This incident caused people to start looking at their safety precautions better and due to this, they have seen a rise in labor costs.
What Should Be The Biggest Concern?
One of the largest concerns you probably have when manufacturing private label apparel is the cost of labor. This is due to the labor-intensive of textile production. Now, you must understand that just because costs in certain countries are low at the moment, this may not always be the case. As it’s been made abundantly clear, China currently remains at the top of textile exports. Then again, their labor costs are currently rising. India, Indonesia, and Vietnam may pose as good ideas, they certainly aren’t perfect alternatives to China.
Also, keep in mind that even though you’ve moved your company out of China, raw materials are still being made in China. Your company in Vietnam may look to China as a part of the assembly line. Either way, it’s very unlikely to ever fully get away with China. And if this is to happen, it might not happen for a very long time.
Another Thing to Consider
Due to the COVID-19 outbreak, and especially in wholesale everyone is looking to save a bit of money. This is why going to a cheaper country may seem like an appealing notion to you. If this is the case, you need to take in to account other aspects. Underdeveloped countries [in this area]may lack the overtime labor and skilled workers that you would find in China. This could cause a delay in the production - which, is something no company wants. Especially in the time we’re in now where more people are remaining home. Just keep in mind that with developing countries, they may not properly compensate or protect the very people that work in the factories. Something China has perfected throughout the years and why people have kept with China for so long.
It should also be considered, by the graph below; that companies have remained in China despite the tariffs:
Conclusion: What Should You Keep in Mind?
If you are considering moving your private label production out of China due to the tariffs the U.S. has been putting on the country, then you need to keep in mind certain things. India and Vietnam seem as if they are viable alternatives. Countries you may feel inclined to move your company to in order to avoid certain costly rises, but things must be kept in mind. Most importantly, that these countries are not developed enough or experienced the way China is. There could be problems in production that could slow down everything. Or the quality may not be as good. It doesn’t seem, despite people wanting it to happen; that there could be any great alternative to China. Although, the way everything is shaping, it could be the time to at least start thinking about how to develop alternatives.
