China’s Strategy Gives it the Edge in the Battle of Two Sock Capitals

At first glance, the Robin-Lynn Mills sock factory in Fort Payne, Alabama, seems impressive – with some the world's most advanced knitting machines, costing over US$25,000 each, a single sock is spun in 75 seconds. The Three Star factory in the Chinese city of Datang, on the other hand, stands in stark contrast: Its machines only cost US$1000 and take much longer to complete a sock. However, while employees at Robin-Lynn typically earn about $10 an hour, the Chinese workers at Three Star earn 60 cents for the same period. With these numbers in mind, it's easy to understand why Robin-Lynn failed to turn a profit last year, while Three Star made about US$500,000. Aside from advantages in low-cost labor, what really distinguishes Chinese cities like Datang is the practice of clustering. In Datang, more than 10,000 households in 120 villages make their living of socks. By geographically clustering themselves together, producers, suppliers, and contractors all share in reducing costs and increasing efficiency. With these kinds of advantages, it's no wonder China's shipments of socks to the United States have soared from 6 million pairs in 2000, to 670 million pairs last year. – YaleGlobal