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31 May, 2017 - 02 June, 2017
02 June, 2017 - 04 June, 2017
The December 5 2004 is a date that is ingrained in the minds of all those involved in global sourcing. It was the moment BusinessWeek published a momentous article entitled “The China Price” which made the point that companies like WalMart were demanding all their suppliers matched the prices then available from highly efficient Chinese manufacturers.
Of course the trend towards China had been going on since the first Taiwanese business people set up there in the late 1980s and accelerated after the recession of the early 1990s. Yet the article that appeared in BusinessWeek brought into focus that Chinese companies were able to make almost anything at 40% less than competitors. Suppliers to many major brands and retailers had to find that 40% or lose the business. And move was what the brands did, like a tidal wave, to the extent that in product category after product category China was soon producing around two thirds of the world market while follower nations struggled in single digits.
By 2007 China was so dominant that some brands were working on a China plus one strategy as some form of defence. Yet less than 10 years on from the BusinessWeek article we have the PC 16 article to explain and define the emergence of countries now expected to replace China as a high-growth low wage region. Not one country but several around the world, which they are calling the Post China 16 or PC16.
Many have argued that China would always remain by far the major supplier as no other country had the capacity to compete. Given that China had the long efficient production lines, had invested in clusters and in infrastructure this appeared true, but events are starting to prove otherwise. China wants to move up the value chain and its costs have soared.
So which are these countries in the PC16?
The PC16 by region:
To those of us in the leather industry these are not surprising names although some had thought that the Dominican Republic had seen its best days and Peru features more strongly than expected. Ethiopia has been developing quickly in recent years, which is not surprising given its magnificent raw material supply, but can Kenya, Tanzania and Uganda really follow it? It is significant that a large country expected to do well long term, Nigeria, is missing. It has significant raw material for leather making but the misuse of its oil wealth over the years, which has lead to poor infrastructure and instability issues around Kano mean that further development is difficult.
China will remain huge for a long time to come, but change happens quickly. In the leather industry the reasons are not all about cost.
About the author
It is now two years since Mike Redwood was asked to become the spokesperson for Leather Naturally! This voluntary role fits well with Mike’s long held belief that the leather industry needs to become much more consumer oriented. Redwood has a portfolio of jobs. He works with the newly formed Institute for Creative Leather Technologies at the University of Northampton and teaches marketing at the University of Bath. Before transferring into marketing Mike trained and worked in the leather industry as a technician and tannery manager in the UK, Italy and Latin America with a number of major businesses such as Barrow Hepburn, ADOC, Pittards, Gruppo David, FootJoy and ECCO.comments powered by Disqus