When the red dragon breathes fire

Why do designer goods cost what they do? That was the question posed to me by a glossy fashion title late last month; part of a story seeking to explain the difference between High Street pricing and that of its more exclusive counterparts.

It was certainly a humbling experience, moving me away from breaking news content and back to the nuts and bolts of the trade.

A few ‘refresher’ calls to local designers about their supply chain put it all back into focus.
There’s the thousands they spend on sampling garments each season, the growing premiums they pay for producing smaller runs and the refusal of larger fabric firms to wholesale fewer metres for fledgling brands.

“And they wonder why we just go straight to Hong Kong,” one Melbourne-based designer fumed. “And stay in Hong Kong when we do meet their [minimums].”

But the interview also reminded me about the growing pressure on larger chain retailers.
Particularly those which have resisted the urge to move their manufacturing to emerging markets like India and Vietnam, in favour of the tried-and-tested China.

The expense of onshore production is no doubt steeper still, but the cost of doing business in the land of the red dragon is getting hotter by the year.

The Council of Textile and Fashion Industries of Australia reports that Chinese labour costs have surged some 25 per cent in the last 12 months. Previously, workers received from around 64¢ to 92¢ per hour or $125 to $147 per month depending on region and product.

Some select workers are now earning up to $240 per month and more.

This is not a celebration for ethically minded fashion brands either, because while these (still) piecemeal rates assume a 40-hour week, the reality is most are clocking 60 to 80- hour slogs.

Fresh reports from Guangdong, the country’s export heartland, indicate that manufacturers will lift minimum wages there by around 19 per cent in March.

The wage adjustment is the second such increase in the last 10 months, and follows similar bids in other cities with Beijing lifting wages this year after a 20 per cent rise just six months earlier.

For more commentary on increasing cost pressures in China (and an update on the affairs of the UTT Group), turn your gaze to Fraser McEwing’s regular column on the adjacent page.

Feel free to email me at assiabenmedjdoub@yaffa.com.au to share your insights and experiences of manufacturing – at home or abroad.