PEST Factor: Economic
Rising labour costs in China are causing foreign companies and investors to retreat from manufacturing in China. According to the article, a survey that was conducted among 3,000 enterprises showed that China’s overall salaries were expected to rise another 9% in 2013. And more than 80% of the companies that took the survey were foreign companies. Some firms were forced to move their factories to smaller towns or out of the country to places like Vietnam due to the rising labour costs. This serves as a threat to Adidas because if they continue to manufacture in China, it will reduce the competitiveness of the product as production becomes more expensive. Adidas already said in July 2012 that it would close its only directly-invested Chinese plant in Suzhou, but will continue to source its products from Chinese manufacturers.
Sources:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130118000003&cid=1102
http://www.chinadaily.com.cn/bizchina/2012-07/19/content_15599684.htm
Rising labour costs in China are causing foreign companies and investors to retreat from manufacturing in China. According to the article, a survey that was conducted among 3,000 enterprises showed that China’s overall salaries were expected to rise another 9% in 2013. And more than 80% of the companies that took the survey were foreign companies. Some firms were forced to move their factories to smaller towns or out of the country to places like Vietnam due to the rising labour costs. This serves as a threat to Adidas because if they continue to manufacture in China, it will reduce the competitiveness of the product as production becomes more expensive. Adidas already said in July 2012 that it would close its only directly-invested Chinese plant in Suzhou, but will continue to source its products from Chinese manufacturers.
Sources:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130118000003&cid=1102
http://www.chinadaily.com.cn/bizchina/2012-07/19/content_15599684.htm