Hong Kong-based apparel manufacturer TAL Group is planning to close its pants manufacturing factory at Dongguan in Southern China by 2016. The company will move its base to Vietnam, but for now it is transferring pants orders to its factory in Malaysia. This particular factory in china that employs 2,400 workers was started 8 years back and at that time it was said that this factory would be there for at least two decades.
Rising wages is one of the main reasons behind this step as labour costs in China are expected to increase by 8.6% this year. China’s average labour cost of US $ 3.27 an hour in the manufacturing sector is two-third higher than Vietnam’s and a quarter above Malaysia.
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“The last two or three years, we’ve been losing money. We always knew China was going to be a challenge because of rising labour costs”, Roger Lee, Chief Executive of TAL told The Wall Street Journal. The Group plans to keep its other 4,000-employee factory in China that makes dress shirts open as of now.
TAL Group is one of Asia’s largest manufacturers of pants for brands like Banana Republic and J. Crew. The Group also claims that it makes one in every six dress shirts in the US.
