Evergreen goes west for cheaper labor costsBusiness | Avery Chen 4 Feb 2020
Hong Kong-based hair product maker Evergreen Products (1962) plans to expand its production base in Bangladesh due to lower overall labor costs compared to China.
Corporate finance director Anthony Yuen said the company's production capacity in both China and Bangladesh had reached 100 percent, and the revenue generated from Bangladesh factories contributed over 95 percent of total revenue.
The company will continue to increase production capacity in Bangladesh due to the lower labor cost, he said.
The company's net profit for the first half this year fell 7.4 percent year-on-year to HK$51.7 million, largely due to the increase in minimum wages of Bangladeshi workers since December 2018.
Yuen said labor costs accounted for 30 to 40 percent of the company's total cost, with Bangladesh accounting for 20,000 staff and over 40 production lines.
He said there are about 500 to 600 staff in mainland China while the products from mainland factories mainly target the domestic market. Revenue from e-commerce platform attributed 8 -10 percent of total revenue, Yuen said, which the company expecting to further increase the proportion in the future.
Evergreen Products mainly sells products through Alibaba's (9988) Taobao and JD.com's platform, he added, with the company seeing double-digit sales growth during the Chinese Singles Day shopping event last November.
Shares of Evergreen Products slid 0.73 percent to HK$1.36 yesterday.