Aussie Department Store, Myer To Hike Outsourcing Manufacturng To China
June 8, 2011
Australia’s biggest department store, Myer, is expected to increase its outsourced merchandise from China by twofold. The merchandise includes fashion and homewares.
Myer will import consumer goods worth $200 million a year from China by 2016 This is designed to buttress support for the Myer brand experiencing a growth in sales. The department store has implemented a robust roll out plan for its products.
In an interview with Business Day, Myer CEO Bernie Brooks said after a board meeting in Shanghai that about $70 million in outsourcing contracts had already been offered to Chinese outsourcing manufacturers. Approximately $50 million of that was awarded to Li& Fund, the world’s largest outsourcing manufacturing firm; that contract is scheduled to expire in August 2011.
On his return from Shanghai, Brooks commented that his firm will set up an office in Shanghai and another in Hong Kong. James Amm, the general manager of outsourcing at Myer, will provide oversight for the increase in outsourcing coming from China with fourty staff members at each of these locations.
Most of these outsourced materials will be shelved as Myer’s in-house inventory. The store’s exclusive brands have reeled in large profit margins for the retailer with more than 17% sales growth during the last fiscal year, reports the age.com.
Working conditions are improving in China with 44 hour weeks and overtime pay. This signals good news for outsourcing manufacturing who have monopolized the industry and localized it to China. However, the bade news is that worker demand could increase outsourcing costs up to eighty percent with electricity bills. Textile mill workers are in high demand and this is expected to send prices soaring in the near future.
At any rate, Australian retailers say that this is a positive development with China since they found it difficult to compete with Chinese manufacturers.