It Is Puzzling For Asian Button Manufacturers To Close Chinese Factories.

A Kitasa Hariayushu button manufacturer made a puzzling move: he closed the factory in China.

"Hi, America."

It is a rare cautionary tale that Scovill withdrew from the cheap Chinese market and turned back to the United States.

China is not a paradise for all manufacturing industries.

The president of Scovill was the first person to say that he failed in mainland China.

But it is true that China's economic growth has raised wages, business expectations and living standards, making it more difficult for American companies to make profits here.

The so-called "China price" (the cost of saving 30%-50%) in the US manufacturing industry has ceased to exist.

After the Scovill company withdrew from China, it was immediately discovered that it was more cost-effective in Ohio than in China.

At the same time, as it withdrew to the United States, 170 Americans were able to keep their jobs.

"But don't expect to withdraw from China, you can reverse the employment situation in the United States," experts said.

Each company faces different challenges in the global market.

For example, Scovill customers in Mexico never moved to China as expected.

"Five or six years ago, everyone went to China and we thought we should go to maintain competitiveness," said factory manager MichaelLowery. "We learned a painful lesson.

We have failed in China, and we are at a loss for our environment.

But our decision to return to the United States will be a successful start.

At present, Scovill fastener has 250 employees in Georgia.

They produce snap fasteners for children's conjoined clothes, button production for Wrangler jeans, and leather strap for producing football helmets.

China's accession to the world since 2001

"Manufacturers and management think that jeans will be produced in Asia in the future, but it is not exactly the case," said StewartLittle, President of Scovill. "The factories in Mexico have been very efficient.

It is still profitable to produce these jeans in the Western Hemisphere.

The owner of Scovill, a private equity firms in New York, decided to turn it into a wholly foreign-owned company with larger profit margins.

This brought him trouble.

Scovill's field manager is a highly educated and fluent English native of Hongkong.

But workers from mainland China do not like this boss.

And another Chinese custom makes them unprepared: the lunar new year.

On this day, thousands of workers will go home for a week's holiday.

"About 20%-25% workers will not come back, we lose a lot." Lowery said: "in a year, we will lose most of the workers.

This is beyond our expectation. "

China's rapidly rising middle class has higher demand for income.

Excellent people can choose jobs, especially in those highly competitive special economic zones.

In the process, Scovill lost a group of elites, and they had to spend time training new employees.

Besides, not only is Scovill, but many companies have encountered macroeconomic problems.

The appreciation of the renminbi, the increase in oil prices and pportation costs have led to an increase in the cost of exporting Schovill to the jeans factories in Mexico.

Lowery describes Mexico's tariffs as "appalling".

In the end, Scovill shut down the Shenzhen plant.

It is no longer meaningful for them to run factories that manufacture the same products.

Little, who has served as CEO since 2007, says Scovill has lost tens of millions of dollars in China.

"Fortunately, we are reluctant to cut meat at the last moment," Lowery said. "If we hang on for another 5 or 6 months, we will lose everything."

Scovill has considered moving to cheaper labor in Burma, Bangladesh or Vietnam, like other multinationals, but in the end they decided to return to Georgia.

Now it is relatively cheap to run a factory in the library.

The wages of employees were reduced by 10%, about 13-14 dollars per hour.

Productivity has also increased dramatically over the past few years and the number of workers has also been cut by half.

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According to a recent study by the Institute of economic policy, Georgia has lost 60 thousand and 400 jobs since 2001.

Scovill had planned to reduce the number of employees in Georgia from 250 to 80, so the decision to finally withdraw from China saved 170 American jobs, which is a great comfort for a country whose unemployment rate is 11.1%.

"China is not a utopia," said JudyTaylor, chairman of the Commerce Department of the union of HA. "This event conveys to us an important message: we have better employees ourselves, and we need to keep our capital and jobs in our own territory than to build bricks for other countries."

Like other interviewees, Taylor suspects that other US companies have also withdrawn from the Chinese market.

But no one - the US, Georgia and Atlanta chambers of Commerce, the national manufacturers' Association or the Georgia Economic Development Department - can list the specific names of these companies.

"There may not be a" Renaissance "here. Even if it is not China, American companies will look for other places," Little said. "There is no denying the possibility of manufacturing returning to Asia." the unemployment rate may gradually stabilize and decrease.

But if those companies in China think they are losing competitiveness, they will shift their positions to another Asian developing country rather than back to the US. "