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US Footwear Importers to Diversify Sourcing as China

Faces Labor Challenges


Bill Mongelluzzo, Senior Editor | Mar 12, 2014 4:59PM EDT

Rising labor costs and a shortage of workers in coastal China are two of the most serious problems footwear
producers in that country face, and those challenges will motivate U.S. footwear importers to diversify some of their
sourcing to other countries.
Labor is one of several factors driving sourcing to other countries, Matt Priest, president of the Footwear Distributors
and Retailers of America, told the JOC.

U.S. containerized footwear imports in the last two years.

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FDRA today released its annual Factory Survey Analysis of footwear production in China. As in previous surveys, the
2013 report cited the cost of raw materials, wages and compensation and labor shortages as the most significant
business issues, by far, affecting footwear manufacturers in China. Of course, these challenges are relative because
China continues to be the main supplier of footwear to the U.S., and is likely to remain so for some time. According to
PIERS, the data division of the JOC Group, China accounted for 70 percent of U.S. footwear imports in 2013.
U.S. imports from China increased 5 percent last year, but Chinas share of the U.S. import market decreased 0.7
percent compared with 2012. Vietnam, Indonesia, India and the Dominican Republic fractionally increased their share
of U.S. footwear imports.
Vietnam recorded the largest growth. U.S. footwear imports from Vietnam increased 27 percent over 2012, and
Vietnams market share increased 1.9 percent, according to PIERS.
Factories in China cited the cost of raw materials as the most significant business issue they faced, although that
response was down slightly to 75.8 percent from 76.4 percent the year before.
The wages and compensation issue shot up to 73.6 percent from 51.4 percent, and labor shortages were cited as a
key issue by 67 percent of the factories, up from 55.6 percent. Currency appreciation, worker retention and business
competition were at 16.5 percent or lower among the responses.
Priest said labor costs and worker shortages are of growing concern to footwear manufacturers in coastal provinces
such as Guangdong and Fujian because factories there are competing for labor with higher-paying industries such as
electronics and autos.
Footwear manufacturers are tied primarily to the hourly wage system, but an increasing number of factories are
supplementing the hourly wages with piece-rate incentives and bonuses.
The more motivating a factorys wage system, the fewer issues the factory experiences with worker turnover and
labor shortages, the FDRA study stated.
Footwear manufacturers have a significant problem holding on to new hires. The survey found that footwear factories
lose 30 percent of new hires within the first three months. Factories that establish strong recruitment and internal
communication systems experience fewer losses of new hires.
The survey also showed that factories which in the past produced almost exclusively for the export markets in North
America and Europe are selling an increasing share of their production within China. That trend indicates that Chinas
overall economic goal of promoting domestic consumption and relying less on exports is affecting the footwear
industry.
Although footwear manufacturers in coastal China are contending with labor issues, relocating factories to lower-cost
locations in western China or Southeast Asia carries with it issues such as inadequate infrastructure and
transportation services, so there is no panacea, Priest said.
An important message for U.S. footwear importers is that they should look closely at the macro-economic trends
outlined in the report as they develop their future sourcing plans, he said. This summer, FDRA will come out with its
annual sourcing report that goes into greater detail as to what countries importers are turning to for their sourcing
needs.

Biaya tenaga kerja meningkat dan kekurangan pekerja di pesisir Cina adalah dua produsen alas kaki
masalah yang paling serius di wajah negara itu, dan tantangan-tantangan akan memotivasi importir
AS alas kaki untuk diversifikasi beberapa sumber mereka ke negara lain.
"Tenaga kerja adalah salah satu dari beberapa faktor mengemudi sourcing untuk negara-negara
lain," Matt Priest, Presiden alas kaki distributor dan pengecer of America, mengatakan JOC.
FDRA hari ini mengeluarkan analisis survei tahunan pabrik sepatu produksi di Cina. Dalam survei
sebelumnya, laporan 2013 dikutip biaya bahan baku, upah dan kompensasi dan kekurangan tenaga
kerja sebagai isu-isu bisnis yang paling signifikan, sejauh ini, mempengaruhi alas kaki produsen di
Cina. Tentu saja, tantangan-tantangan ini bersifat relatif karena Cina terus menjadi pemasok utama
alas kaki ke Amerika Serikat, dan kemungkinan akan tetap demikian untuk beberapa waktu. Menurut
PIERS, Divisi data dari kelompok JOC, Cina menyumbang 70 persen dari impor alas kaki Amerika
pada tahun 2013.
US impor dari Cina meningkat 5 persen tahun lalu, tetapi Cina pangsa pasar impor AS menurun 0,7
persen dibandingkan dengan 2012. Vietnam, Indonesia, India, dan Republik Dominika fraksional
meningkat bagian mereka dari US alas kaki impor.
Vietnam mencatat pertumbuhan terbesar. US alas kaki impor dari Vietnam meningkat 27 persen
selama 2012, dan Vietnam pangsa pasar meningkat 1,9 persen, menurut DERMAGA.
Pabrik di Cina mengutip biaya bahan baku sebagai masalah bisnis paling penting yang dihadapi,
meskipun respon itu turun sedikit 75.8 persen dari 76,4 persen tahun sebelumnya.

Upah dan masalah kompensasi menembak hingga 73,6 persen dari 51,4 persen, dan kekurangan
tenaga kerja disebutkan sebagai isu utama 67 persen dari pabrik, naik dari 55.6 persen. Apresiasi
mata uang, pekerja retensi dan bisnis kompetisi adalah 16,5 persen atau lebih rendah antara
tanggapan. Imam mengatakan kekurangan biaya dan pekerja buruh dari keprihatinan kepada
produsen sepatu di pesisir propinsi seperti Guangdong dan Fujian karena pabrik di sana bersaing
untuk tenaga kerja dengan industri yang tinggi seperti elektronik dan autos. Produsen alas kaki
terikat terutama untuk sistem upah per jam, tetapi peningkatan jumlah pabrik yang melengkapi upah
per jam dengan sepotong-rate insentif dan bonus.
"Semakin memotivasi sistem upah pabrik, semakin sedikit masalah pengalaman pabrik dengan
pekerja kekurangan omset dan tenaga kerja," studi FDRA menyatakan.
Alas kaki produsen memiliki masalah signifikan berpegangan pada karyawan baru. Survei
menemukan bahwa sepatu pabrik kehilangan 30 persen dari karyawan baru dalam tiga bulan

pertama. Pabrik-pabrik yang menentukan kuat perekrutan dan sistem komunikasi internal mengalami
lebih sedikit kerugian karyawan baru.
Survei juga menunjukkan bahwa pabrik yang di masa lalu menghasilkan hampir secara eksklusif
untuk pasar ekspor di Amerika Utara dan Eropa menjual pangsa peningkatan produksi mereka
dalam Cina. Tren menunjukkan tujuan ekonomi Cina yang mempromosikan konsumsi domestik dan
kurang bergantung pada ekspor mempengaruhi industri alas kaki.
Meskipun alas kaki produsen di pesisir Cina bersaing dengan masalah buruh, relokasi pabrik ke
lokasi rendah biaya di Cina Barat atau Asia Tenggara disertai dengan masalah seperti infrastruktur
yang memadai dan transportasi, sehingga "tidak ada tidak ada obat mujarab", kata imam.
Pesan penting untuk importir alas kaki AS adalah bahwa mereka harus meneliti tren ekonomi makro
yang diuraikan dalam laporan ketika mereka mengembangkan rencana sumber masa depan
mereka, katanya. Musim panas ini, FDRA akan keluar dengan sumber laporan tahunan yang masuk
ke dalam lebih rinci tentang apa yang negara importir yang beralih ke untuk sumber kebutuhan
mereka.