In Vietnam's Haiphong industrial zone, the group's $230m smart factory is weaving Chinese yarns into high-end fabrics for direct supply to European fast-fashion brands via Turkish ports. Thousands of miles away, Ethiopia's Eastern Industrial Park, its denim production line has occupied 70% of the market share in East Africa. As a benchmark enterprise in China's textile industry, the boss said bluntly in the chat, "Globalization is not a choice, but a survival problem."
Reporter: In the past five years, the proportion of your overseas production capacity has soared from 15% to 48%. What is the core driving force behind this strategic shift?
Boss: (laughs) There is no deep strategy, we are forced out by "three knives". The first knife is the cost. In 2019, the cost of hiring workers in our factory in Shaoxing has exceeded 6,500 yuan/month, and the wage of Vietnamese workers was only one-third at that time. The second knife is tariffs, the average tax rate of the United States on China's textiles is 12-18 percentage points higher than that of Southeast Asian countries, and customers directly say "either go to Vietnam to build factories or lose orders"; The third knife is environmental protection, Zhejiang "double carbon" goal, our annual investment in environmental protection equipment more than 20% of profits.
But after going out, I found that this is actually the key to open the "triple door" - the cost door, the market door, and the technology door. Last year, we acquired non-woven core technology through the acquisition of German machinery companies, which in the past could not enter the negotiating table.
"In Africa, we give employees leather shoes as bonuses" Reporter: Many companies complain that overseas investment is "not suitable for the soil", how do you crack?
In the first year of operation in Ethiopia, we were sued seven times by the local union. It turned out that Chinese-style "pay for performance" didn't work at all - African workers might not turn up for work the next day after being paid weekly. We now split salaries into three parts: basic salary in local currency, performance rewards in kind (shoes, flour), and annual bonuses deposited in a bank account. Productivity has increased by 30%.
Culture clashes are more subtle than you might think. Factory strikes in Indonesia were triggered by toilets facing an unMuslim orientation. Vietnamese workers took a collective leave on the "anniversary of the death of their ancestors", and we had to adjust the production schedule. Every overseas factory now has a team of local consultants, and even cafeteria menus are subject to religious censorship.
"Industrial transfer is not as simple as moving the machine away" Reporter: How to view the phenomenon of the failure of overseas investment of some enterprises?
Boss: There is a peer in Myanmar invested 120 million to build a factory, the result is the local requirements must purchase the specified raw material supplier of cotton, the price is 40% higher than the market, this is the early adjustment did not do a good job. Industrial transfer is not as simple as moving the machine, we must settle the "three accounts" : political accounts: political changes in Southeast Asia may make preferential policies invalid, our factory in Cambodia and the military joint venture, although the 15% shares, but to ensure the power supply; Ecological account: the EU will implement carbon tariffs next year, and if overseas factories fail to meet environmental standards, they will be double taxed; Industrial chain account: Although Vietnam's labor is cheap, 80% of buttons, zippers and other accessories are imported from China, and the comprehensive cost may not be superior.
"In the next ten years, the battlefield of the textile industry is digital" Reporter: What are your suggestions for small and medium-sized enterprises that are planning to go to sea?
Boss: Don't take overseas factories as "low-end capacity garbage cans"! Our factory in Vietnam is fully 5G connected, and there are more AGV handling robots than in China. Three tips: Asset-light water test: you can first contact overseas customers through cross-border e-commerce, and then gradually establish overseas warehouses; Bind the big ecology: join the overseas parks led by central enterprises (such as China-Belarus Industrial Park) to share legal and logistics resources; Local talent: The CEO of the overseas company must be a local, and we even hired a child nutrition expert from UNICEF to educate the children of our African employees. At the end of the interview, the boss showed the real-time data on the mobile phone: the energy consumption curve of the Algerian factory, the shipment warning of the warehouse in Turkey, the patent application progress of the research and development center in Vietnam danced on the screen. "in the past we said 'Made in China', now we want to pursue 'Managed by China'." Outside the window, cargo ships in Shenzhen Bay are sounding their horns and setting sail, just like the horn of China's textile industry to the deep blue.