The global OEM industry chain has passed from Europe and the United States to Japan, South Korea, Hong Kong, and Taiwan in Asia, and finally passed through mainland China. Now it has gradually turned to Southeast Asian countries such as Vietnam and Cambodia, and has extended to Africa. Among them, the textile and apparel industry is the most obvious.
Africa will be the last in the textile and apparel industry A “New World”
All this stems from the increasing saturation of other global clothing markets and the swelling of various corporate costs, and the financial crisis sweeping the world has contributed to the situation.
Africa is close to European and American markets and has important cotton-producing areas, and merchants are “very cooperative”. Compared with East and Southeast Asian countries, in addition to cheap labor, it is cheaper to transport clothing to Europe or the United States in East African countries. In addition, African countries signed a special trade agreement with the United States in 2000, and American clothing enters the African market duty-free. As the local cotton industry in Africa develops, local resources can be purchased to further reduce costs.
H&M and Primark international giants began to purchase from Ethiopia
International giants H&M, Tesco, Primark and other companies have also begun purchasing from Ethiopia because the country has no minimum monthly salary restrictions. For unskilled workers, the monthly salary is only 35 to 40 US dollars, which is obviously much lower than that in Myanmar. These foreign clothing manufacturers are very popular in African countries, and they also benefit from the abundant local cheap labor and energy. Kenya’s garment industry is also developing. Although the monthly salary in the country is about US$120, the government attracts these foreign businessmen with generous incentives.
The garment industry is one of the main pillar industries in Africa
The main participants in the world’s textile and apparel market and important customers in the cotton market are mainly from Asia, of which China accounts for a large proportion.
The textile and garment industry is one of the main pillar industries in Africa. Southeast Africa has the most dynamic textile industry in Africa and is an important cotton-producing area. In recent years, it has attracted more A lot of money. Chinese companies can bring advanced technology and management methods to Southeast African countries, helping to improve local production processes; and try to transfer large-scale clothing production processes to realize the overall transfer of the clothing industry and related supporting industries to Southeast Africa.
Investment of US$220 million: Another textile giant officially put into production the Ethiopian textile factory in Africa!
Recently, the launch ceremony of Wuxi Yimian (Ethiopia) factory was held grandly at Wuxi Taihu Hotel. Representatives of the Rong family, the founder of Wuxi Yimian, representatives of the Chen family of Hong Kong Changjiang Garment Group, an important joint venture partner, leaders and experts from national and provincial industry authorities, industry associations, and universities, major leaders of the Wuxi Municipal Party Committee and Municipal Government, brothers in the textile industry Company representatives and other guests and friends from all walks of life gathered together to witness the launch of the No. 1 Cotton (Ethiopia) factory.
Wuxi Yimian Party Committee Secretary and Chairman Zhou Yejun said in his welcome speech that a century-old dream has come true, and this is Wuxi Yimian’s ” The emotional dream of “Serving the Country through Industry” is also the dream of creating a world-class textile factory. Wuxi Yimian will not forget its original aspirations, forge ahead and embark on a new journey in the new century with full vigor. Wuxi Yimian Ethiopia project is an important project for Wuxi Yimian to respond to the national “Belt and Road” strategy, implement the decision-making and deployment of “strengthening the city through industry”, and promote international production capacity cooperation.
Textile companies: how to seize new opportunities
Overseas Considered to be the most advantageous cotton textile company in China, Wuxi Yimian’s every move has attracted great attention from the industry. Wuxi No.1 Cotton will enter the 100th anniversary of its establishment. As a “hundred-year factory”, Wuxi No.1 Cotton is thinking about how to find new opportunities and how to successfully navigate the “next hundred years”. The new opportunity is to “go global”. But to where?
Chairman Zhou Yejun revealed that at a council meeting of the China Textile Federation a few years ago, she was greatly inspired by the advice of economist Lin Yifu. Lin Yifu said that Africa is the last low-value land in the world. Zhou Yejun remembered this sentence, and from then on Wuxi Yimian set his sights on Africa. “Wuxi No.1 Cotton is a state-owned enterprise. Risk control is the first priority. The investment location must have a good relationship with China.” Ethiopia has a long history and culture, and the government very much welcomes investment in the textile industry.
After many investigations, Ethiopia’s rich resources, national policies to encourage investment, export tax exemptions, and abundant labor force all aroused Zhou Yejun’s great interest. In particular, the price of electricity is the lowest in the world, which is crucial for a spinning enterprise. This has also become an important factor in Wuxi Yimian’s decision to invest.
Project land acquisition 51 hectares, with a planned investment of 300,000 spindles, with a total investment of approximately US$220 million. The first phase of the 100,000 spindle project started construction on June 28, 2018. After more than 400 days of intense construction, the construction of the spinning department workshop, open-end spinning workshop and warehouse has been basically completed; more than 400 containers, 212 spinning machines (100,000 spindles) Spindles) and supporting winders, 28 roving frames, 30 draw frames, 24 combing machines and other equipment have been installed. After it is put into production, it will mainly cooperate with international first-line brands to produce supporting high-end yarn-dyed, knitted, and home textile products. It will also be equipped with African ethnic clothing production lines and establish cooperative relations with domestic enterprises. The completion of the project will provide employment opportunities for about 3,000 people in Ethiopia.
Investment: Comprehensive costs must be considered
The cost of production is undoubtedly an important factor for every enterprise investing in Africa. The most concerning thing is that in addition to water, electricity, steam and other costs, low labor costs are a major comparative advantage of Africa, but it is not all. Zhou Yejun believes that Ethiopia has the lowest labor costs, but it must also be considered that this is related to production efficiency. Wuxi No.1 Cotton invested 300,000 spindles and employed 3,000 local people. It took into account the actual local conditions and did not use the most advanced automation equipment. The most critical thing to reduce costs is how to train skilled employees within the company, respect local customs, respect local culture, care for employees, and make them willing to stay and work in the company.
Zheng Haosheng said that Africa is most suitable for the development of the textile industry, and local people feel honored to work in foreign-funded enterprises. Over the past two decades, the company has trained a large number of industrial workers, and the current production efficiency is almost the same as that in China. The company places design and difficult production in China, while relatively simple production is placed in Africa.
Zhu Xingjian believes that the consideration of cost is a comprehensive cost. Although labor costs in Egypt are higher than those in Ethiopia and Madagascar, production efficiency will also improve. In addition, Egypt’s power supply is also relatively stable, and natural gas resources and water are also guaranteed. Similarly, we should also pay attention to the tariffs on raw materials in each production link, as well as transportation costs. These comprehensive factors determine the relative cost. “‘Going global’ is not as good as you think, but it is not as bad as you think.” Zhu Xingjian reminded enterprises to look at cost advantages objectively and comprehensively.
Africa, a new continent with extremely rich resource endowments, is attracting the attention of many Chinese advantageous textile companies with its comprehensive advantages such as demographic dividend, preferential export tariffs, and low energy costs. </p
