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New Horizons in Frame Production

Eyewear's manufacturing Mecca is in flux with rising labor costs and a declining workforce that have many looking to new horizons. Still, greatly improved quality and reliability have elevated attitudes about a product's “Made in China” stamp

By Erinn Morgan Illustration by Jon Krause

The times are a-changing in The People's Republic of China, especially in terms of eyewear manufacturing.

Overwhelmingly, China continues to be the main country of origin for U.S. frame imports—and its influence continues to grow. According to The Vision Council's December 2011 International Optical Trade Analysis, China sent more than 76.3 million frame pairs (80.9 percent of total) to the U.S. during 2011—a 3.9 percent increase from 2010 (primarily from growth in plastic frame imports).

U.S. frame importing's runner up? Italy comes in a distant second, accounting for 7.8 percent of U.S. frame imports by quantity.

At the same time, the total value of China-made eyewear imports to the U.S. grew. Indicating a rise in the quality and cost of frames made in China, U.S. imports from the country in 2011 were valued at $551.4 million, a seven percent increase over 2010.

Chinese frame manufacturing has come into its own in quality and consistency over the past several years. This shift, along with similar shifts in other product categories, has helped reshape consumers' attitudes about goods made in China.

“Consumer acceptance is definitely there for eyewear made in China,” says Jamie Shyer, chief operating officer at Zyloware and chairman of The Vision Council. “The big thing is that the quality has remarkably improved.”

Still, this upside is countered by the downside of today's reality— doing business in China also has an increased cost. “The factories got on it—they got better machinery, they got better people that they trained well, and they didn't cut corners. But, now prices are going up, which makes things tougher for eyewear companies in the U.S.,” Shyer says.

This squeeze, arriving just in time for today's recessionary economy, has many companies looking to cut operating costs at home and work better with their Chinese manufacturers to lower costs on the front line. It also has existing factory owners and suppliers looking to new, lower-cost manufacturing centers to provide some relief.

ELEVATED STATUS

When frame manufacturing started to make its way to China in the 1970s and 1980s because of rising costs in Europe, there was a marked resistance to the movement. The sea change occurred, however, when major eyewear companies and trusted brands moved manufacturing to China.

“When bigger brands went over there, it created a greater acceptance on the part of the consumer,” says David Friedfeld, president of ClearVision Optical. “If the brand is a good brand and their standards are good for quality, it makes sense that the consumer accepts it. Country of origin becomes less important, but the quality of the product is very important.”

While the overall level of quality of Chinese-made eyewear has gone up in recent years, some suggest that there are still variances in quality depending on the region—and on the factory. “There are 3,000 optical factories in the Wenzhou area and more than 6,000 in the entire country and every factory is unique unto itself,” says Mike Hundert, president of REM Eyewear. “Today's discussion about country of origin is not really relevant; it's more about factory of origin. There are some that make the cheapest frames and some that make the finest frames in the world.”

Adds Jennifer Coppel, ClearVision's manager of product design & development, “In my opinion, it really depends on where you are manufacturing in China. The more established factories in the Guandong province right outside Hong Kong are producing excellent quality eyewear. But, manufacturing in Wenzhou north of Shanghai is more hit or miss. The pricing is lower, but [so] is the consistency.”

The bottom line is that, even while quality varies by factory and region, China's overall production quality has greatly increased. Experts agree that eyewear companies and consumers are confident about the quality standards coming out of China, but some say that some ECPs still need convincing.

“A lot will dismiss Made-in-China product without understanding the real quality of today's product,” says Blake Kuwahara, founder and president of Focus Group West, a boutique design firm. “It's incumbent upon wholesalers to educate the buyer and, thus, the end consumer, and really judge a frame for what it is.”

Adds Coppel, “The apparel industry really primed the American consumer to trust products made in China. We don't get any customer or consumer pushback on Made-in-China product, especially for any frame that retails under $250, and that threshold is only going higher.”

Frame Imports:
Top 10 Origin Countries Based On Value (All Materials)

RISING COSTS

In manufacturing, elevated quality often equates to a rise in costs—and eyewear is no exception. Beyond the cost for high-tech, automated manufacturing equipment and skilled labor, plus a rise in raw materials costs, Chinese eyewear manufacturers are now seeing cost increases that are due to a government-mandated minimum wage enacted in 2011.

“There's easily been a 20 percent increase in minimum wage since then,” says Hundert. “The realities of that are certainly having an effect on our cost of goods.”

Workers at eyewear manufacturing plants in China are now garnering around $300 a month, says Hundert, depending on the province. “In third-world countries such as Bangladesh, wages are about $50 a month, so it's very attractive for some manufacturers to start thinking about moving some of the more labor-intensive parts of production to other places.”

Certainly, Chinese workers are getting paid more fairly today than ever before. And, many can now afford to live near the factories with their families instead of living in factory dormitories to make enough money to go home again.

“The idea of someone getting paid a low wage in China is no more. China is looking to build a consumer economy and, in order to do so, they have to have people who make money,” says Friedfeld.

This increase is causing Chinese manufacturers to raise their costs to suppliers. “It's a big margin squeeze for everyone,” Friedfeld adds. “Chinese factories are working on half the profit margin they used to. U.S. importers are working on lower profit margins as a result. So, everyone is looking for ways to create bigger margins—from cutting costs to using technology.”

A CONSUMER CLASS

In addition to the cost squeeze, China's eyewear manufacturers are seeing a reduction in the available labor pool. As China strives to create a consumer class, the younger population of workers is choosing instead to work at Starbucks and retail shops.

This has left some looking, again, to automation that eliminates the need for the worker or hand work and considering factories in other parts of China or other countries.

“What's happening in China right now is so complex, and it's changing so rapidly,” says Hundert.

COPING MECHANISMS

How are eyewear suppliers dealing with the costs passed along from their increasingly squeezed manufacturers? “Manufacturing is moving to Wenzhou to avoid some of the rising costs,” says Friedfeld. “Land and labor are less expensive there, so a lot of people there can afford to produce at lower prices.”

Many suppliers are also working harder than ever to partner with factories and reduce costs. Coppel says they are seeing between a three to 10 percent increase annually from their factories in China.

“They've told us that their internal costs are now increasing between 20 and 25 percent per year,” she says. “This has been going on for at least two years now.”

While both manufacturer and supplier work to whittle down their own operating costs, price increases to the eyecare professional are inevitable.

“There's no way around that,” says Hundert. “You have a choice: You can compromise the product and keep the prices the same or you can not compromise and adjust the prices reasonably.”

THE NEXT MIGRATION

Where will manufacturing go as rising costs drive suppliers to search for better pricing? Some say it will remain in China but that suppliers will look to different areas and factories for lower costs.

“A lot of companies are going to Northern China,” says Kuwahara. “The wages are lower, but the delivery times are longer.”

At the same time, even some Chinese manufacturers are looking at setting up new manufacturing centers in other countries where costs are decidedly lower. “We are seeing some Chinese factories that have explored Bangladesh, Pakistan, Vietnam, and India to see if their products can be made less expensively there,” says Friedfeld.

While these new centers of focus will offer some benefits, especially on the cost front, it will be many years before any significant change could occur to shift China's production over. “We currently don't see a lot of export quality coming out of these countries. Could it happen in six to eight years? Of course. But, realistically, it may take another 20 years before another manufacturing center could be established that could rival China,” says Friedfeld.

Adds Hundert, “You also have to take into account the wealth of frame parts manufacturers in China. Does that exist in Vietnam? No, it doesn't. So you have to bring it. It's not so simple as saying, ‘Let's go set up shop in Indonesia.’”

Still, some factory owners in China are forging ahead and building factories in Bangladesh and Vietnam. “Their costs have gotten so out of control, they decided to purchase land in Southeast Asia, where labor is less expensive, and build factories there,” says Coppel. “It will take them a few years to set up and get the quality up to the proper level, but these factory owners are familiar with the American market, so they know the quality expectation.” EB