The garment makers in Foshan, South China's Guangdong Province, have the same problems as the rest of the manufacturing industry in the Pearl River Delta (PRD): rising labor costs and listless demand for their products. Some companies have abandoned the region, but experts say Foshan's garment industry has advantages that can't be replicated elsewhere. Some enterprises serve as role models for where the industry can go. Nonetheless, it's a time of upheaval for the industry, and experts cautioned that enterprises in the city need to upgrade their production. This story is the last one in a series of four reports by the Global Times about the PRD.

Workers for Foshan-based garment maker Everstar assemble fabric to make into clothing at the company's workshop in Foshan, South China's Guangdong Province. Photo: Courtesy of Everstar

In the workshop at Everstar, a custom-tailored clothing manufacturer based in Foshan, South China's Guangdong Province, a laser bean swept across a piece of grey denim, sending sparks flying in all directions, before leaving about a dozen neatly cut pieces in its wake.

Eighteen second later, workers were already carrying the cut denim out of the workshop. In just a few hours, workers would stitch the cut material into a pair of jeans.

Everstar has spent about 40 million yuan ($5.97 million) and four years developing the laser cutter for its production lines.

In seconds, the machine can do a job that used to take workers 30 minutes to an hour to do by hand.

In a city where clothing production is a pillar industry, Everstar stands out as an example of a company that is investing in technological upgrades in an effort to ensure its future, while many others are struggling to survive on thin profits and meager orders.

Signs of trouble

As the garment manufacturing base of South China's Pearl River Delta (PRD), Foshan produces one-fifth of the total clothing made in the entire province in terms of value.

But the industry hasn't escaped the downturn that has ravaged the region's prominent manufacturing industry, causing factories to close and companies to move elsewhere.

There were about 6,000 garment manufacturing companies in Foshan by the end of 2015, official data showed.

"The number of garment enterprises, especially the small and medium-sized private enterprises, has declined greatly in the recent years," said Wu Haoliang, secretary-general of the Foshan Textile and Garments Association. "And the trend will continue."

There has always been turnover in the industries, Wu said. Some factories open; others close. But now, more factories are closing than are opening. Local residents tell similar stories of factories nearby closing down and companies moving away.

High product inventories are another sign of trouble.

"Some enterprises have enough inventory for three years of sales, even if they don't produce a single new item," Wu told the Global Times on July 7.

But it's not all bad news.

Clothing exports have picked up. According to local customs data, Foshan's garment exports surged by 30 percent in 2015 despite the bleak environment for manufacturing in general.

Wu attributed this to the growth of e-commerce, through which manufacturers can expand their sales channels and spur exports.

"Besides, although some Chinese garment enterprises have moved their factories to Southeast Asia, they still need to buy clothing material from China, which has spurred exports of raw materials for clothing," said Du Weizhi, deputy secretary-general of the Foshan Textile and Garments Association.

Although media reports and local residents said that many local garment makers have moved their factories out of Foshan -  and even out of China - in pursuit of lower costs, the situation isn't as bad as it seems.

"Foshan's garment manufacturing industry has a lot of advantages, such as skilled, diligent workers and a complete industrial chain that has been built up over the last decade," Du told the Global Times on July 7.

Du said that some company owners who have moved their factories to Southeast Asia have complained to him about idle workers, government corruption and other intangible costs at their new locations.

Wu said the situation in Foshan is different for different kinds of garment companies.

"Orders didn't decline for large- and medium-sized garment enterprises that have their own specialties," he said.

"But small and micro businesses could collapse at any time because they can't handle risks and have poor technical skills, especially in design," he noted.

No choice but to change

Over the past few decades, small garment makers in Foshan have relied heavily on sample processing and processing customers' material business orders. But as labor costs have soared and customer requirements have increased, the business model has grown untenable.

"These orders now significantly flow to medium and large enterprises thanks to their capacity for standardization and mass production, which small enterprises don't have," Wu said.

So for these small enterprises to survive, they have to build their own brands and have their own products so they aren't so dependent on customer orders.

In Wu's view, small garment enterprises have to transform themselves from production-oriented enterprises to service-oriented ones by manufacturing personalized products.

Customers now have countless options thanks to China's developed Internet platform, on which they can see products from all over the country. This situation doesn't leave a lot of room for homogeneous products.

Everstar is a model for Foshan's high-end garment manufacturing industry. The company uses the Internet and digital manufacturing to create customized products that can be ordered online.

Customers can place an order online with a customer's measurements and then select a clothing style. When the order reaches Everstar, it can then create a garment according to the customer's requirements within 72 hours.

Everstar's advantage lies in this model. So while its competitors are shrinking production, Everstar is expanding to handle the rising number of orders from both individuals and enterprises.

In the view of Everstar CEO Fan Youbin, upgrading Foshan's garment industry requires a change.

"The remote customization model is the future of the garment business," Fan told the Global Times on July 7, noting that there are great changes taking place in consumer tastes and buying habits.

"This kind of garment enterprise has a strong ability to attract orders, even if it does not have a strong production capability," Wu said.

In Wu's view, Foshan's garment manufacturers have to undergo fundamental changes. Otherwise, they risk going under.  Those that can transform will thrive, but those that can't will disappear as if falling under a "mighty wave crashing on a sandy shore," he said.
Newspaper headline: Upgrade or fade away