When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .


Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

China’s Once Mighty Garment Industry Is Starting To Unravel

The clothing factories of Shenzhen have been hit by a perfect storm, battered by rising labor costs, unstable prices for raw materials, currency appreciation and dipping demand. By year’s end, more than half of the once bustling businesses could be shutte

Hard times have befallen China's once booming clothing industry
Hard times have befallen China's once booming clothing industry
Yang Xingyun

SHENZHEN - One by one, the garment factories of Shenzhen are shutting down. Industry analysts say that by Christmas, 60% will be gone. A business that was once worth 150 billion RMB (23 billion dollars) per year has been battered on all sides: rising costs of labor and raw materials, an appreciating currency, inflation, and a slump in demand.

I went down to Shenzhen's Luohu District to see what could be seen. Where thousands of small factories had been in production, most are now boarded up. Of the few hundred that do remain open, many operate just a handful of days per month.

I talked to one factory boss, Mr. Wang, a man who used to receive massive orders to supply brand-name retailers. He invited me onto his empty factory floor. He said the greatest difficulty the business faces is the continuing appreciation of the Chinese currency, RMB, which intimidates factories from taking orders. He now accepts only urgent and short-term contracts.

Wang pointed to the hundreds of automatic sewing machines sitting idle, noting that his garment production capacity used to be hundreds of thousands of pieces annually. Since January this year, production volume has not even reached 5,000 pieces. The factories used to hire thousands of workers. Now they employ just a few dozen. And even with these workers, the factory is only in operation for less than 10 days a month.

Wang told me that if the situation does not improve, his factory will eventually collapse altogether. For now, he is one of the luckier ones, able to maintain a skeletal operation; large numbers of smaller enterprises are already doomed no matter what happens.

Another factory boss, Liu Quande, confirmed the predicament of the business. He said that, since last year, the zone's once prosperous industry has been reduced to sporadic operations for a few surviving factories. Mr. Liu says that in addition currency woes and growing labor costs, there is also the problem of sharp price fluctuations for raw materials. Last year, the price of cotton shot up from 20,000 RMB per ton to 30,000 RMB per ton. Many garment factories then opted for synthetic fabrics to reduce costs. But the inferior garment quality was thought to be responsible for sluggish sales. Others hoarded cotton stock, but then the price of cotton dropped so much these businessmen went broke.

Liu says the Chinese garment industry is at a crucial point, and he is not particularly optimistic. The small enterprises are badly positioned in a competitive global environment, while the bigger ones will be difficult to restructure. He reckons that maybe 10% to 20% have a chance to survive.

The secretary-general of the Apparel Industry of Shenzhen, Shen Yongfang, said the region's garment export industry used to sell more than 100 billion dollars worth of goods per year. Now, at the best, it can generate just a few billion. Shen said that most of the entrepreneurs are eager to rebuild their businesses, except they don't know how.

Read the original article in Chinese.

Photo - Marc Oh

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Migrant Lives

They Migrated From Chiapas When Opportunities Dried Up, Orchids Brought Them Home

An orchid rehabilitation project is turning a small Mexican community into a tourist magnet — and attracting far-flung locals back to their hometown.

They Migrated From Chiapas When Opportunities Dried Up, Orchids Brought Them Home

Marcos Aguilar Pérez takes care of orchids rescued from the rainforest in his backyard in Santa Rita Las Flores, Mapastepec, Chiapas, Mexico.

Adriana Alcázar González/GPJ Mexico
Adriana Alcázar González

MAPASTEPEC — Sweat cascades down Candelaria Salas Gómez’s forehead as she separates the bulbs of one of the orchids she and the other members of the Santa Rita Las Flores Community Ecotourism group have rescued from the rainforest. The group houses and protects over 1,000 orchids recovered from El Triunfo Biosphere Reserve, in the southeastern Mexican state of Chiapas, after powerful storms.

“When the storms and heavy rains end, we climb to the vicinity of the mountains and collect the orchids that have fallen from the trees. We bring them to Santa Rita, care for them, and build their strength to reintegrate them into the reserve later,” says Salas Gómez, 32, as she attaches an orchid to a clay base to help it recover.

Like magnets, the orchids of Santa Rita have exerted a pull on those who have migrated from the area due to lack of opportunity. After years away from home, Salas Gómez was one of those who returned, attracted by the community venture to rescue these flowers and exhibit them as a tourist attraction, which provides residents with an adequate income.

Keep reading...Show less

The latest