Japanese garment companies are shifting their manufacturing and procurement bases from China.

The main reason is rising costs. Major apparel companies, such as Adastria, Aoyama Trading and suppliers of Uniqlo, are moving some of their production bases from China to RCEP (Regional Comprehensive Economic Partnership) member countries in southeast Asia such as Cambodia and Vietnam to take advantage of exemptions from textile import tariffs.

The average monthly salary of a factory worker in China is almost double that of an average worker in Cambodia.Other factors such as the depreciating yen are some of the other reasons behind the decision of the Japanese garment manufacturers to move out.

The RCEP that came into effect in January has given several companies a new lifeline. Adastria, operating retail stores under 26 brands, for example, has already increased production in Cambodia and Vietnam this year. Moreover the company also plans to expand production areas to include Indonesia, Bangladesh, and other countries, and increase production in southeast Asia to 50 percent by 2026. Out of Adastria’s total clothing imports into Japan, the number of items produced in China fell to 59 percent in 2021, down from 81 percent a decade earlier.