Ancillary industries bolster exports
China is one of the world’s largest producers of backpacks, supplying at least one-third of global output. The country is home to more than 1,500 suppliers, 70 percent of which are private businesses. More than 20 percent are funded by investors, including those from South Korea, Japan, Hong Kong and Taiwan. The US, the EU and Asia are the main export destinations. Slowing economies in these areas have led a number of companies to increase shipments to emerging markets such as Eastern Europe, the Middle East, Africa and South America. OEM orders account for about two-thirds of exports. Thirty percent of outbound shipments are under ODM and the rest are OBM. Production is concentrated in the coastal provinces of Fujian, Zhejiang and Guangdong. Backpacks made in these hubs exceed 60 percent of national output and exports. Fujian accounts for approximately one-third of the country’s overall supply, with manufacturing centered in the cities of Quanzhou, Fuzhou and Xiamen. Quanzhou alone contributes 90 percent of the province’s exports. The hub is home to nearly 500 backpack manufacturers, 90 percent of which have export capability. Fujian makers generally offer midrange backpacks, although low-end and upscale models are also available. In Zhejiang, low-end and midrange designs dominate output. Most of the factories are based in Yiwu, Dongyang, Jiaxing, Ningbo and Wenzhou. There is a well-established network of ancillary industries within the province, giving suppliers convenient access to raw materials and specialized processes. Lower labor and real estate costs, as compared with other hubs, are secondary advantages. Overhead expenses are a lot higher in Guangdong than in Fujian or Zhejiang, and this is why many companies have shifted their focus to high-end models. Key production hubs include the cities of Guangzhou, Dongguan, Shenzhen, Zhongshan and Foshan. Guangdong has a full range of support facilities, including fabric mills, materials and components factories, R&D centers, and quality control and testing laboratories. Makers enjoy the advantages of having easy access to raw materials and skilled labor. The province’s proximity to Hong Kong provides companies extra leverage against competitors in other hubs as well. Suppliers in Guangdong, for instance, are able to benefit from the SAR’s R&D strengths. Additionally, proximity to Hong Kong makes it easier for companies to cull industry insights from major buyers. Quanzhou Hexiang makes backpack model HX354, which has an 840d polyester shell and 210t nylon lining.
|