On June 6th, from Jakarta Airport in Indonesia, it was already 6pm. All the way to traffic jam to the hotel, open and stop, a member of the group smiled and said "as if it has returned to the congested Beijing." Indeed, traffic congestion shows to some extent the degree of economic development of a city. There is a corresponding relationship between the degree of economic development and investment opportunities.
Buy expensive but cost-effective
The visit to the Indonesian textile industry began with Ousite Energy. The company's newly-built 200,000-spinning yarn production line uses mostly world-renowned Swiss Rieter equipment, and its cotton yarns are mainly exported to China. In the vast workshops, there were few workers. At some positions, they could not even see a worker. They only saw the machines operating in an orderly manner.
In addition to the praises, the company's business owners quietly calculated the accounts: the biggest cost of the spinning mill is depreciation, the domestic equipment is 1,500 yuan per ton of yarn, the Swiss equipment is 3,500 yuan per ton of yarn, and the Indonesian labor force should still have certain advantages. Why use such expensive equipment?
"Economically," said the person in charge of the plant, although Swiss equipment prices are about twice as high as those in other countries, but they are worth the money. "The use of cheap equipment in the process of operation will result in unstable operation and reliability. It is not as good as buying the best quality, eliminating the need for maintenance and allowing customers to have more confidence in our products."
OusiteEnergy is located in West Java, about an hour and a half drive from Jakarta. Allegedly, salaried wages here have grown rapidly and this year has grown by 20%. The local minimum monthly salary is about 1,000 yuan, and the average monthly salary is 2,000 yuan. “The industrial development of this zone has been relatively mature. The original production capacity of 80,000 spindles took three months to build. Now it takes only three months to produce 160,000 spindles,†said the person in charge of the company.
“Investing and building a plant usually takes 3 years to recover costs. According to current trends, the labor cost in Indonesia after 3 years is likely to be almost the same as in our country.†According to Luo Zhenwei of Shanghai Huashen Import & Export Co., Ltd., investment in Indonesia is It is too late.
On June 8, the delegation arrived at Sritex, located in Boralali Province, Central Java. The largest textile company in Southeast Asia covers an area of ​​130 hectares and employs 25,000 people. The car runs in the factory area. It is surrounded by a bright and spacious factory building. The whole industrial chain from spinning, weaving, dyeing and finishing to garment making is available. The members of the delegation of the numerous factories also opened their eyes.
“We Chinese have always said that we have thrown our troubles on the island of Java. We did not expect to have the largest garment factory in Southeast Asia on the island of Java. I really did not expect it. It was shocking!†said Tan Huaqiu, chairman of Jiangsu Guotai Group International Trade Co., Ltd.
The temptation of tariff preferences
On the afternoon of June 8, accompanied by the Indonesian Textile Association, the delegation visited the nearby city of Solomon to assess the possibility of establishing a Chinese textile and clothing base in the local industrial zone.
After understanding the environment of the industrial zone on the map, Hong Tianzhu, the board of directors of Rainbow Textile Group, described to the local officials the ideal conditions for the textile and clothing base: close to the port, densely populated and stable power supply, and the foundation is hard. There is no need to piling; the land is best for the government and there is no need to expropriate the land to the peasants. "We hope to implement the industrial chain support at the base and develop related commercial real estate, and eventually develop into a small town with a population of 200,000 people."
Other investigators also asked questions about their interest:
- What kind of plant is suitable for the climate here?
Spinning mills are relatively cool because of their relatively high topography.
What is the price of land three years ago?
It's about 1/4 now.
- What about transportation conditions?
There is land for development at a distance of 1 km from the airport and the highway is also in planning.
- What is the salary level of local workers?
The monthly salary is about 100 US dollars.
In view of this, the planning of Hong Tianzhu is not easy to achieve. It is only at the point of land price. It is about 40 US dollars per square meter, which is equivalent to 252 yuan per square meter. There is no infrastructure. Even if the investment is large, there is no preferential policy in the local area.
Chen Guoxin, Chairman of Chenfeng Group, also shook his head at the high land prices here: “In Jiangsu, the price of 70 years of industrial land use rights is generally unlikely to exceed 300 yuan per square meter.â€
“Although Indonesia does not have a great advantage in labor costs, it has a relatively large government support and zero tariff on cotton imports. Therefore, if there is still a certain possibility of doing business with Indonesia,†Tan Huaqiu of Jiangsu Guotai analyzed that he used to avoid With quota restrictions on textiles, many Chinese enterprises have set up factories abroad. In addition to the low labor force, there is an important reason for the transfer to Southeast Asia is the local preferential tariff policies.
As domestic cotton prices are significantly higher than international cotton prices, the competitiveness of Chinese textile and apparel in the international market is greatly weakened. According to the monthly situation report released by the China Cotton Association in May, the imported cotton after deducting the sliding tax was RMB 15,366/ton, which was nearly RMB 4,000 lower than the cotton price index of China during the same period.
“I really felt the pressure this time! I did not expect that Indonesia already has such advanced large-scale textile and garment enterprises.†Chen Guoxin, chairman of Chenfeng Group, frankly stated that China is no more than Southeast Asia in terms of labor costs; in terms of transportation costs, China Compared to some European countries. It takes only about 3 days for the land transport from Turkey to the EU countries and at least 45 days for us to take the sea. "Only making a contribution to the high-end market and doing products that others cannot do is the way out for Chinese textile and garment companies."
Overall considerations weigh the pros and cons
Song Weisheng had traveled to many countries in Southeast Asia to inspect and invest in factories. As a vice president of the beautiful group in Bangladesh, he feels that the investment environment in each country has both advantages and disadvantages:
- Cambodia, Bangladesh and other countries are among the least developed countries. Their textile exports to the European Union, Canada and Japan can enjoy tariff-free treatment. The minimum wage of Cambodian workers is 60 US dollars, an average of about 100 US dollars, efficiency is about the same with China, but the workers are basically saturated.
- Bangladesh has become the world's second largest exporter of knitwear after China, with thousands of factories and even tens of thousands of people. The monthly salary is 50 US dollars. However, the two sewing workers are equivalent to the efficiency of a Chinese worker, and the local transportation and power infrastructure are backward, which seriously restricts the development of the textile and clothing industry. In addition, the country has a long rainy season and it is easy to delay delivery.
- Vietnam's average salary is 200 US dollars, not counting pieces, the efficiency is already comparable with China. In the past two years, more companies have transferred to Vietnam and the labor supply is relatively scarce.
- The advantage of Myanmar is that labor costs are cheap. For example: The processing fee for jeans is $8 per dozen. Our domestic equivalent is $15 per dozen. If the United States, the European Union, and Japan are exempt from taxes, there is still considerable potential for investment. However, industrial land is too expensive and there are too many policy uncertainties.
This is an era that needs to go out and find a comparative advantage. Chinese textile companies allocate resources globally, and they must be careful about what they think.
“This time organizing companies to invest in Southeast Asian countries to conduct investment inspections is to guide companies to explore the international market, avoid trade risks, and gradually cultivate the concept of globalization.†According to Chang Huihui, vice president of the China Textile Import & Export Chamber of Commerce, if China wants to To continue to maintain competitive advantage in the international textile trade, it is necessary to transform and upgrade, extend the industrial chain, strengthen design and development and brand building, otherwise there is no future.
Buy expensive but cost-effective
The visit to the Indonesian textile industry began with Ousite Energy. The company's newly-built 200,000-spinning yarn production line uses mostly world-renowned Swiss Rieter equipment, and its cotton yarns are mainly exported to China. In the vast workshops, there were few workers. At some positions, they could not even see a worker. They only saw the machines operating in an orderly manner.
In addition to the praises, the company's business owners quietly calculated the accounts: the biggest cost of the spinning mill is depreciation, the domestic equipment is 1,500 yuan per ton of yarn, the Swiss equipment is 3,500 yuan per ton of yarn, and the Indonesian labor force should still have certain advantages. Why use such expensive equipment?
"Economically," said the person in charge of the plant, although Swiss equipment prices are about twice as high as those in other countries, but they are worth the money. "The use of cheap equipment in the process of operation will result in unstable operation and reliability. It is not as good as buying the best quality, eliminating the need for maintenance and allowing customers to have more confidence in our products."
OusiteEnergy is located in West Java, about an hour and a half drive from Jakarta. Allegedly, salaried wages here have grown rapidly and this year has grown by 20%. The local minimum monthly salary is about 1,000 yuan, and the average monthly salary is 2,000 yuan. “The industrial development of this zone has been relatively mature. The original production capacity of 80,000 spindles took three months to build. Now it takes only three months to produce 160,000 spindles,†said the person in charge of the company.
“Investing and building a plant usually takes 3 years to recover costs. According to current trends, the labor cost in Indonesia after 3 years is likely to be almost the same as in our country.†According to Luo Zhenwei of Shanghai Huashen Import & Export Co., Ltd., investment in Indonesia is It is too late.
On June 8, the delegation arrived at Sritex, located in Boralali Province, Central Java. The largest textile company in Southeast Asia covers an area of ​​130 hectares and employs 25,000 people. The car runs in the factory area. It is surrounded by a bright and spacious factory building. The whole industrial chain from spinning, weaving, dyeing and finishing to garment making is available. The members of the delegation of the numerous factories also opened their eyes.
“We Chinese have always said that we have thrown our troubles on the island of Java. We did not expect to have the largest garment factory in Southeast Asia on the island of Java. I really did not expect it. It was shocking!†said Tan Huaqiu, chairman of Jiangsu Guotai Group International Trade Co., Ltd.
The temptation of tariff preferences
On the afternoon of June 8, accompanied by the Indonesian Textile Association, the delegation visited the nearby city of Solomon to assess the possibility of establishing a Chinese textile and clothing base in the local industrial zone.
After understanding the environment of the industrial zone on the map, Hong Tianzhu, the board of directors of Rainbow Textile Group, described to the local officials the ideal conditions for the textile and clothing base: close to the port, densely populated and stable power supply, and the foundation is hard. There is no need to piling; the land is best for the government and there is no need to expropriate the land to the peasants. "We hope to implement the industrial chain support at the base and develop related commercial real estate, and eventually develop into a small town with a population of 200,000 people."
Other investigators also asked questions about their interest:
- What kind of plant is suitable for the climate here?
Spinning mills are relatively cool because of their relatively high topography.
What is the price of land three years ago?
It's about 1/4 now.
- What about transportation conditions?
There is land for development at a distance of 1 km from the airport and the highway is also in planning.
- What is the salary level of local workers?
The monthly salary is about 100 US dollars.
In view of this, the planning of Hong Tianzhu is not easy to achieve. It is only at the point of land price. It is about 40 US dollars per square meter, which is equivalent to 252 yuan per square meter. There is no infrastructure. Even if the investment is large, there is no preferential policy in the local area.
Chen Guoxin, Chairman of Chenfeng Group, also shook his head at the high land prices here: “In Jiangsu, the price of 70 years of industrial land use rights is generally unlikely to exceed 300 yuan per square meter.â€
“Although Indonesia does not have a great advantage in labor costs, it has a relatively large government support and zero tariff on cotton imports. Therefore, if there is still a certain possibility of doing business with Indonesia,†Tan Huaqiu of Jiangsu Guotai analyzed that he used to avoid With quota restrictions on textiles, many Chinese enterprises have set up factories abroad. In addition to the low labor force, there is an important reason for the transfer to Southeast Asia is the local preferential tariff policies.
As domestic cotton prices are significantly higher than international cotton prices, the competitiveness of Chinese textile and apparel in the international market is greatly weakened. According to the monthly situation report released by the China Cotton Association in May, the imported cotton after deducting the sliding tax was RMB 15,366/ton, which was nearly RMB 4,000 lower than the cotton price index of China during the same period.
“I really felt the pressure this time! I did not expect that Indonesia already has such advanced large-scale textile and garment enterprises.†Chen Guoxin, chairman of Chenfeng Group, frankly stated that China is no more than Southeast Asia in terms of labor costs; in terms of transportation costs, China Compared to some European countries. It takes only about 3 days for the land transport from Turkey to the EU countries and at least 45 days for us to take the sea. "Only making a contribution to the high-end market and doing products that others cannot do is the way out for Chinese textile and garment companies."
Overall considerations weigh the pros and cons
Song Weisheng had traveled to many countries in Southeast Asia to inspect and invest in factories. As a vice president of the beautiful group in Bangladesh, he feels that the investment environment in each country has both advantages and disadvantages:
- Cambodia, Bangladesh and other countries are among the least developed countries. Their textile exports to the European Union, Canada and Japan can enjoy tariff-free treatment. The minimum wage of Cambodian workers is 60 US dollars, an average of about 100 US dollars, efficiency is about the same with China, but the workers are basically saturated.
- Bangladesh has become the world's second largest exporter of knitwear after China, with thousands of factories and even tens of thousands of people. The monthly salary is 50 US dollars. However, the two sewing workers are equivalent to the efficiency of a Chinese worker, and the local transportation and power infrastructure are backward, which seriously restricts the development of the textile and clothing industry. In addition, the country has a long rainy season and it is easy to delay delivery.
- Vietnam's average salary is 200 US dollars, not counting pieces, the efficiency is already comparable with China. In the past two years, more companies have transferred to Vietnam and the labor supply is relatively scarce.
- The advantage of Myanmar is that labor costs are cheap. For example: The processing fee for jeans is $8 per dozen. Our domestic equivalent is $15 per dozen. If the United States, the European Union, and Japan are exempt from taxes, there is still considerable potential for investment. However, industrial land is too expensive and there are too many policy uncertainties.
This is an era that needs to go out and find a comparative advantage. Chinese textile companies allocate resources globally, and they must be careful about what they think.
“This time organizing companies to invest in Southeast Asian countries to conduct investment inspections is to guide companies to explore the international market, avoid trade risks, and gradually cultivate the concept of globalization.†According to Chang Huihui, vice president of the China Textile Import & Export Chamber of Commerce, if China wants to To continue to maintain competitive advantage in the international textile trade, it is necessary to transform and upgrade, extend the industrial chain, strengthen design and development and brand building, otherwise there is no future.
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