The current situation of China’s economy has caused trouble to many enterprises, including some multinational enterprises. They need to adapt themselves to the situation. Maybe Adidas and its supplier have set a good example for us.
Wanbang Shoes Co. Ltd is presently trying to overcome the bottleneck existing in the development of China’s economy. The experts think that the influence on China’s economy brought by the cooling of the economy of the USA and some European countries will last one year to one and a half year. Some factors have brought negative influence on the production cost of the manufacturers. However, Adidas still emphasizes that China will be its main manufacturing base in Asia.
In Guangdong Province, South China, there are some factories closed every day. Due to the huge increase of the cost, they have lost the ability to finish the compact signed with Carrefour and Wal-Mart a year ago. The factors, such as the rapid increase of the raw materials’ price, the rise of the employees’ salaries, the appreciation of Renminbi and the new rules on export tariff all make it hard for many enterprises to maintain their business. The so-called “process of maturation that export-oriented economy must experience” is a deadly catastrophe for the managers and employees of some enterprises.
Wanbang Shoes Co. Ltd (Wanbang), which is the main supplier of Adidas in China, now faces great cost stress. This factory is located in Qingyuan, Guangdong. The present shoemaking industry is still labor-intensive, so its 17 thousand employees or so only produce 1.2 billion pairs of sports shoes every day. In order to maintain its profit, Wanbang has already transferred the job of sewing to the peripheral areas, because the salaries of the employees in the satellite factories there are lower. Charles Yang, manager of Wanbang said: “The next step is to realize the automatization. If we can finish the present workload with only 50% of employees, we certainly can sustain our management.”
According to the estimation of this manager, the influence on China’s economy brought by the cooling of the economy of the USA and some European countries will last one year to one and a half year. Against that Wangban has adopted active measures. Now it has set a plant in India, where the employers’ salaries are much lower than Chinese. The average salary of Chinese employees is about 130 Euro, while the one of Indians is only 30-65 Euro. Charles Yang said that Wanbang would only finish half of the order forms from Adidas in China and the other half in India. He also attenuated that Chinese employees would not lose their jobs because they will be needed to finish the production procedures which are more complicated. “In the long run China will be the largest manufacturing base. Many manufacturers know that point. Chinese employees have good abilities of technology and obeying labor disciples. Though the employees in India are trying to catch up with Chinese, at present they still need to change from making leisure shoes into making sports shoes. Henceforth China will get more contrasts of manufacturing high-tech and high-end products, while the economic and functional products will be mainly made in India.”
In the past few months, the sayings that Adidas will reduce the production proportion in China and that parts of the order forms will be transferred from China to other Asian countries have attracted a lot of attention of the public. Though such transfer can not be avoided, William Anderson, Adidas Asia-Pacific’s head still denoted that China would be the largest manufacturing base in Asia. “We have given 20 countries in Asia the authority to manufacture Adidas products. But only China, Indonesia and Vietnam are the most important ones. Before long India became one of our manufacturing bases. If allowed to predict the future, I think China will be our most important base and Indonesia will get more order forms. However, I don’t think the plants in Vietnam will develop fast. And some new countries will become important manufacturing bases, like India.”
