14 November 2023

China - Despite its higher costs, China is still a supplier to big brands


Although many Western companies began after the pandemic to look for other suppliers outside China and set up factories in other Asian countries, it comes with its risks and challenges. For this reason, many companies are once again choosing the Asian giant to serve their supply chains. Report by CueroAmérica.

In a global economic scenario where uncertainty predominates and the drop in demand raises certain alarms, many companies reconsidered the decision to look for alternative countries and are returning to settle in China.

Laura Magill, global head of sustainability for the Bata Group footwear brand, assures that “this mature ecosystem established for decades in China not only guarantees competitive prices, but also offers stable quality in mass production that is difficult to copy.” The executive added that “I can’t think of another place like China that can offer quality, quantity and price,” she said.

The restrictions resulting from the pandemic drove many manufacturers away from China who decided to settle in countries like Vietnam, tempted by the low wages paid in that country. But, once there, they realized that the number of orders they were receiving was lower and they decided to return to producing in China.

In Zhongshan, an industrial city in southern China, wages are 30% higher than what a worker earns in Cambodia, but production rates in Chinese factories are 20% better and workers are more skilled. China’s advantage over other countries in the region is its full integration into the global supply chain. On the other hand, Asian countries depend heavily on Chinese inputs for thir production.

Another reason why China retains its leadership position is that its workers are more accustomed to dealing with Western clients and, therefore, language barriers and cultural clashes are lower compared to other countries in the region.

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