Workers at a factory in China’s manufacturing hub are making manual adjustments to printed images of flowers to increase profits in the face of declining global demand. Wang Xiaosha, the general manager at Fujian Jie Ao Industrial, acknowledges the challenges posed by the current global economy, where higher quality products are not necessarily more profitable.
While President Xi Jinping is pushing for a shift towards “new quality productive forces” like green technology and electric vehicles, low-end factories remain crucial to China’s economic growth and job creation. These factories are now facing challenges such as weak orders, trade restrictions, and increased competition from countries like Vietnam, Indonesia, Bangladesh, and India.
Despite being the world’s largest exporter of apparel, China’s share of global footwear and apparel sales has decreased in recent years. Competition from lower-cost rivals has led to a decline in China’s market share for brands like Nike and Adidas. The shift in manufacturing capacity to Southeast Asian countries like Vietnam reflects a search for lower labor costs and efforts to diversify supply chains.
As traditional labor-intensive industries face pressure in China, policymakers are wary of potential job losses. Maintaining a productive capacity in all types of goods, including lower-end products, is seen as crucial for the country’s economic stability.
The manufacturing landscape in cities like Jinjiang showcases the challenges faced by shoe and textile factories. While there is demand for advanced materials used in industries like EVs, weak overall demand hampers the adoption of new technologies. Competition to produce cheaper synthetic fabrics remains intense, but declining orders pose a significant challenge for manufacturers.
Despite China’s dominance in advanced fabrics for footwear production, the manufacturing base for shoes has dispersed to other provinces and overseas locations. Companies selling unbranded products to factories are particularly affected by falling demand and tariffs imposed by countries like the US.
How do they manage to support such a large number of people?
Upon entering the warehouse of Jie Ao Industrial, visitors are greeted by a sign that proclaims: “Innovation is the root, quality is life.”
Despite facing stagnant demand and customers relentlessly seeking lower prices, the company has had to reduce its workforce of approximately 300 painters by fifty percent, according to general manager Wang.
“There are numerous challenges for us traditional enterprises,” she explained.