The supply chain impact of minimum wage increases in China, Vietnam and Indonesia

An article in the Wall Street Journal (March 14,2012) describes the impact of wage increases in China on Charming Shoppes, owner of the Lane Bryant, Fashion Bug and Catherine labels. In addition to wage increases, the company realized that 60% of the employees (2000 in all), at one of their plants did not return after the New Year visit back to their villages. The company started moving production to Indonesia and Vietnam, but their wages are now going up 10-12%. The next option – Egypt and Jordan, countries with dutyfree agreements with the US. How should apparel companies plan in a world where rising wages create aspirations across developing countries ? Should apparel supply chains develop a portfolio of capacity, distributed across countries, to hedge against such sudden shifts ? Will countries with policy consistency now have an edge in attracting foreign manufacturers ?

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , , , , . Bookmark the permalink.

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