Business / Green China

Dark legacy of Fumian's factories

By Li Yang (China Daily) Updated: 2014-02-11 07:17
Dark legacy of Fumian's factories

But its cheap labor costs faded by the decade's end, when locals awakened to the notion of registering their own brands.

A pair of jeans sold for 20 yuan in 1998 in Fumian. But after the factories in Shenzhen and Guangzhou stitched a brand onto the jeans, the price multiplied to hundreds of yuan.

Now, Fumian has 1,600 jeans factories with annual sales of 3.5 billion yuan and nearly 200 registered brands, though most of them are known only to wholesalers.

The township government created a parent company with 550 private member workshops in late 1998 and a jeans market, though both exist only in name and on government documents.

"Most jeans factories in Fumian still fight on their own," said Gao Mingfu, who reports on Fumian's garment industry.

"Fumian's brand strategy is at a low level because of backward management, limited advances in technology and design, and fierce price competition," Gao said.

According to Liang Shao, a Fumian trade bureau official, hundreds of jeans factories closed because of a withering market.

"Only the factories with the most advanced management and incentive systems will survive," Liang said.

The net profit on a pair of jeans dropped from 3 yuan before the global financial crisis in 2008 to 1.5 yuan now in Fumian's workshops.

"But the rise in labor costs is not fatal. What really takes us by throat is the sharp decline in market demand," said Tang Yue, general manager of a jeans factory with registered brand YZY.

"We target the town and county consumers in China. The decline in foreign demand has turned more quality jeans makers in Guangdong to our market segment," said Tang, 33, who was a street vendor in Shenzhen before opening his own jeans factory in 2012.

He employs 169 workers, including a designer and several salesmen, producing 600,000 pairs of jeans in the first year of operation and last year, 1 million pairs.

Like other workshops in Fumian, his building's three stories are used as a raw materials warehouse, design and sales departments, and a workshop. Finished pairs of jeans tumble down to waiting minivans via a cloth chute on the third floor.

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