US Footwear Importers to Diversify Sourcing as China Faces Labor ChallengesBill 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.Full-size imageFDRA 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.