Cheap labour not the only driver of factories' flight from China

Foreign buyers are fleeing China for Bangladesh, Cambodia and Indonesia not just for cheaper labour but also because of rising tensions between the workers and their employers, in some cases because of poor corporate social responsibility on the part of the companies.

Swedish firm H&M, the world's second-biggest clothing retailer, now sourced about 45 per cent of its needs from Bangladesh, and Cambodia's share was growing, said Goran Larsen, a former chairman of the Swedish Textile Importers Association.

Larsen said the shift from China to other Asian countries had little to do with cost, although that had been widely perceived as a major reason.

"In simple garment manufacturing, the direct labour cost is rarely above 10 per cent of the FOB [free-on-board] price," he said. "Today, we buy better products, produced under higher ethical standards, in Bangladesh than in China," said Larsen, who has travelled in China as a buyer over the past 20 years.

His comments appear to be at odds with reports of fires and a factory collapse in Bangladesh within the past two years that killed many workers.

But Mainland Headwear, which operates factories in Shenzhen, Panyu in Guangzhou, and in Bangladesh, has seen the tightening in the requirements for fire equipment and building safety in the South Asian country.