Rising labour costs in China are forcing US apparel and accessories retailers – such as AnnTaylor Stores Corp. and Coach Inc. – to consider relocating at least some of their production to countries with cheaper work forces. But doing so could risk increasing other expenses, such as shipping.
"We are looking to move production into lower-cost geographies, most notably Vietnam and India," Mike Devine, Coach’s CFO says at a conference last week. The luxury-handbag retailer already produces goods in those countries, but plans to increase its presence in both of them.
Recent minimum-wage increases have pushed up Chinese labour costs by on average 5 to 15 percent this year, said Rick Darling, president of LF USA – a unit of Hong Kong-based Li & Fung Ltd. – which acts as a go-between for retailers and their network of suppliers.
(Source: The Wall Street Journal Online)