Rising tide of price increases and wages under the tide of the Pearl River Delta garment industry

The Pearl River Delta remains a major hub for China's garment industry, but recent challenges have begun to shake the sector. Reporters visiting cities like Guangzhou and Dongguan have observed signs of closures among low-profit apparel companies, driven by rising fabric and labor costs. In response, many businesses are now focusing on brand development, order transfers, and automation in an effort to survive and adapt. “Purchases are going up, but sales aren’t,” said Chen Bo, owner of Takeoff Garment Factory in Kangle Village, Haizhu District. With over a decade of experience in Guangdong, he described this year as the toughest yet. “Everything is getting more expensive, but the selling price can't keep up.” Liu Huisheng, owner of Friendship Garment Factory, echoed similar concerns. He explained that the peak season was once crucial for annual profits, but this year’s performance has been barely sustainable. “We’re just breaking even,” he said. A significant factor behind the crisis has been the sharp rise in cotton prices. According to data from the Zhengzhou Commodity Exchange, cotton prices nearly doubled between September and November, reaching 33,720 yuan per ton. Even though prices have since dropped slightly, they remain at historically high levels. This surge has led to increased costs for polyester and other synthetic fibers, further squeezing margins. At the Humen International Cloth Trade Center in Dongguan, textile prices have soared. Chang Feng of Changfeng Mesh Weaving Co., Ltd. noted that nylon prices have risen by over 10,000 yuan per ton compared to last year, driven by higher oil prices. Many factories have switched to nylon, leading to a 70% drop in orders for some stores. Additionally, accessories like zippers and buttons have also seen steep price increases. In Zhenkou Industrial Road, a major clothing area in Humen, most factories are struggling with labor shortages. At one workshop, only 20 out of 70-80 spots were filled, highlighting the growing difficulty in hiring. Zhang Wenjian of Dongguan Jiawen Garment Factory said wages have risen significantly, with general workers earning 2,500 yuan per month, up from 1,600. Despite this, worker turnover remains high, and younger workers are hard to find. Some small and medium-sized enterprises have been forced to shut down due to the pressure of rising costs and wages. Li Yasheng of Dongchen Costumes said that their Japanese clients are very sensitive to price hikes, so they cannot afford to raise prices. As a result, production has slowed dramatically. With fierce competition, weaker factories are absorbing most of the cost increases. Yu Hongfeng of Tianshi Fashion Co., Ltd. mentioned that despite a modest 5% price increase, a long-term client, American brand MissMe, has shifted part of its orders to Vietnam and India, cutting their orders by a third this year. Chen Bo is considering moving operations back to his hometown, where costs are lower. “It’s not enough to just move the factory back; it’s about reducing expenses,” he said. Meanwhile, branded apparel companies are faring better. At the 15th China (Humen) International Apparel Trade Fair, local brands like Chun and Song Ying showcased their strength, emphasizing branding, fashion, and international appeal. Li Yasheng, however, admitted that building a strong brand is challenging. “E-commerce is competitive, and the future is uncertain. I just hope prices stabilize soon,” he said. To cope with rising costs, many companies are shifting focus to the domestic market and building their own brands. Qin Yingfu of the Humen Garment Association noted that several factories previously focused on exports or wholesale are now rebranding. Emerging local brands such as Kai Luobini, K Brand, VOZO, and Fren Pak are gaining traction. Jiesheng Clothing Co., Ltd. recently launched a spring-summer 2011 fashion conference, signaling its shift toward brand development. Hu Xiangyun, head of the production department, said the company has increased prices by 7% to 8% through branding efforts. “It’s tough, but we now have more control,” she added. Some companies are relocating production to inland provinces like Jiangxi, where rent and labor costs are significantly lower. Shantong Garments plans to move its factory there, expecting a 30% reduction in rent and lower wage costs. Tianshi Fashion has already moved part of its orders to Jiangxi, citing a 10% overall cost reduction. Automation is also becoming a key strategy. Zhang Wenjian recently purchased an apparel plotter for 22,000 yuan, which saves around 3,000 yuan monthly. Lin Chao of Humen International Garment Machinery City noted that demand for machinery has increased as companies look to offset labor shortages. Overall, the garment industry is undergoing a transformation. While challenges persist, many companies are adapting through innovation, brand building, and strategic relocation. The road ahead is uncertain, but survival depends on flexibility and resilience.

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