White-collar permanence gives Shoes & Leather Guangzhou new life
09/06/2011
Industry observers have said this is interesting because in recent years the number (and quality) of exhibitors appeared to be sliding downward and because a substantial number of businesses in Guangdong Province (in which Guangzhou, China’s third-largest city is located) seemed to be either going out of business or moving elsewhere.
Guangdong has accounted for some 44.5% of total Chinese shoe production. There were around 6,000 shoemaking enterprises there in 2005, turning out four billion pairs a year. Exports were valued at over $7 billion.
With average wage rates, even for unskilled workers, increasing by up to 100% over the past couple of years it’s easy to see why many manufacturers have moved into China’s vast hinterland. Chinese government policy encourages this but it’s the all-too-real upward spiralling wage levels that have made it happen.
Yet, Guangzhou remains a busy, bustling and – superficially at any rate – a typically confident Chinese city. So, too, the recent exhibition. But why, if vast chunks of the industry have high-tailed it elsewhere? Who’s exhibiting? Who’s visiting?
Hard to say for sure, but here’s a possible scenario. Companies are indeed moving away from the now rather costly regions of China’s coastal provinces. They are relocating inland, where costs are still low. But this applies primarily only to the actual manufacturing stage. Other parts of the business, mainly those which could be termed ‘white collar’ have not moved. They have remained based in cities like Guangzhou because those parts of the company–including finance, design, sales and marketing and so on–are simply impossible to set up in the new locations because of a lack of the right people with the right skills.
This is pretty much what happened to Hong Kong companies some 10 years back. Manufacturing moved to the mainland, but the rest of the business remained in Hong Kong. Indeed, it’s highly likely that for many companies this move to relocate inland is not their first (nor their last). An established trade event, such as the recent exhibition in Guangzhou, would offer a good time and place for those companies that have re-located, or those who stayed behind while their suppliers or customers made the move, to meet up again in one location.
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