China has been the largest apparel manufacturer for the last 10 years globally but is soon going to lose its lead position in the apparel market. The reason is the increase in wages of Chinese workers as per the World Bank Report. This presents a big opportunity for South Asian countries including India.
As per the report, even a 10 percent increase in Chinese apparel prices could create at least 1.2 million new jobs in the Indian apparel industry. China last year had to put a stop to its one-child policy which had prevented an estimate of 400 million births. Labor in China is looking for different alternative employment with higher wages, several importers and manufacturer from US are also planning to shift their manufacturing bases away from China due to the reason of less availability of cheap labor.
Women will be benefitted the most with the price increase in Chinese apparels as their share is much higher in the total apparel employment when compared to their share in other industries. If there is a rise in expected wages by 1 percent in the textiles and apparel industry then the probability of women entering the labor force increases by 18.9 percent, says the report.
“Apparel manufacturing not only has a huge potential for creating jobs, particularly for the poor but also has a unique ability to attract female workers. Employed women are more likely to create positive social impacts as they tend to spend their income on the health and education of children,” said Onno Ruhl, World Bank Country Director, India.
To help increase apparel exports in India, the report suggests increasing the product diversity by reducing tariffs and import. It also suggests lowering excise taxes or providing other incentives to develop a domestic manmade fiber industry. It also suggests to improve productivity by helping firms enter the formal sector and to improve market diversity and shorten lead times.
Read our News Feature on China’s abandoning its one-child policy