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2017-08-11 00:00:00
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For many years, China has been seen as the land of cheap labour and we’ve seen multiple companies relocate to Asia as a result. However, the increase in labour costs in recent times has now forced businesses to act and many are choosing to move to Eastern Europe with Poland benefitting perhaps more than most.
Jysk - Firstly, Jysk, originally from Denmark where they’re known for producing home furnishings, has held their factories in Wuhan and Hangzhou for a long time now. With production costs continuing to soar in China, however, they have announced their intentions to move to Eastern Europe with Poland as their preferred location. Not only will Polish facilities allow the company to save money, it’ll also bring Jysk closer to key export destinations.
Jabil - With headquarters in Florida, Jabil, an electronics manufacturer, is known for having facilities right across China including Wuhan, Chengdu, and Yantai. With the cost of production increasing, a significant section of their manufacturing process now takes place in Kwidzyn thus creating hundreds of jobs along the way.
Although this pattern seems to be coming to a head in 2017, there’s evidence to suggest the trend starting in 2013 (and perhaps even before). Prochnik, a manufacturer of men’s clothing, is a brand that originally developed in Lodz but they outsourced to China back in 2005. At the time, they suggested China was 70% cheaper when it came to producing clothing. Now, the difference is thought to be less than 10% which has rendered the move to China no longer beneficial and they’ve decided to go back home to Lodz in Poland.
Although Prochnik seemed to start the movement in 2013, many Polish clothing companies have followed suit in coming back home ever since. For example, LPP, who own the Mojito, Cropp, and Reserved brands from Gdansk, has decided to split their time and efforts between China and Poland. In the last couple of years alone, LPP has promised to increase production at home but the small capacity in Polish clothing factories is causing issues which is why they still hold a presence in China for now.
If we look into different markets, we see the frozen fish business from Denmark, Espersen, leaving China and being joined by the Polish pram manufacturer Baby Design Group. In fact, Espergen has recently announced the closure of their facilities in Denmark too as they’ll be operating from Koszalin in the northwest of Poland. After noticing the increase in costs in China, Baby Design Group built a specially-designed facility in the Special Economic Zone of Katowice (the zone now employing 65,000 staff across 250 businesses).
Although cost has been a major motivator for change, we should also note that quality control seems to have been the main factor for eSmoking World. As a Chic Group (China) subsidiary, eSmoking World now competes on a global level for e-cigarettes and has recently moved to Ostrzeszow for quality control purposes. With EU applying certain quality standards, it seems as though their Chinese production facilities were missing the mark somewhat.
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