I often have informal discussions with factories’ representatives or buyers. We talk of Cambodia, Vietnam and other Asian countries. The reason behind that is a simple reason of costs. Labor costs are increasing sharply in China these last years. Thus many people are looking for an alternative production area.
In the past years, many buyers have “discovered” Asia with China. Productions have been massively relocated in China since 15 to 20 years, a little more for the forerunners. It’s a lot and indeed very little. Habits are set already. So when looking for an alternative production source, a quite obvious solution is to look for an equivalent. Thus, Asian countries are considered as an obvious choice. They are Asian countries, they are a little less developed and for most have a recent past or a present situation of communism as China. So, they are often described as China of few years ago.
However, why should they be really equivalent? The geographical distance between Berlin and Roma is shorter than the one between Guangzhou and Ho Chi Min. The roots of Chinese culture are found in Confucianism and Taoism while in Cambodia, Buddhism is the most important. China has a massive population with an important rate of urban citizen while Lao is a still mainly a country of farmers with only a little less than 6 millions inhabitants.
Thus, there is not only the well know custom taxes which are different, but on every topic and every level, each country have its specificity. There are differences on an industrial point of view as the supply-chains are less integrated than they are is China. The difference are also cultural with impacts on the workers’ expectations and, as a results, on the social audits practices. The balance between the wages expectations and the working time can be very different from one culture to the other. One shouldn’t forget China is, in term of working time, not the norm but the exception. It is unusual to have workers accepting working weeks of more than 70 hours.
Thus, it seems obvious to take the actual situation of the countries into account for the buying strategy. As well, assessing the social conditions can’t be done without taking into account local specificity.