Rising labor costs in China are forcing U.S. apparel and accessories retailers, such asAnnTaylor Stores Corp. and Coach Inc., to consider relocating at least some of their production to countries with cheaper work forces. But doing so could risk increasing other expenses, such as shipping.
"We are looking to move production into lower-cost geographies, most notably Vietnam and India," Mike Devine, Coach's chief financial officer, said at a conference last week. The luxury-handbag retailer already produces goods in those countries, but plans to increase its presence in both of them.
Guess Inc. is thinking along similar lines. Dennis Secor, the fashion brand's chief financial officer, said in an interview that Guess is looking to build its production capabilities in Vietnam, Cambodia and Indonesia.
JC Penney says its apparel makers have been leaving China for Indonesia, Vietnam, India and Bangladesh for the past five years.
Nobody can sit still on the production chain, and China, with its rapidly aging population, has to move faster than most.