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1、New challenges for developing country suppliers in global clothing chains:A comparative European perspectiveFLORENCE PALPACUER, University of Montpellier, FranceISEM Rue Vendmiaire CS 1951934960 Montpellier, Francetel: + 33 4 99 13 02 49 ; + 33 6 07 24 53 70fax : + 33 4 99 13 02 10palpacuerwanadoo.f
2、rPETER GIBBON Danish Institute for International Studies, Copenhagen, DenmarkStrandgade 561401 Copenhagen K, Denmarkpgidiis.dkand LOTTE THOMSENDanish Institute for International Studies, Copenhagen, DenmarkStrandgade 561401 Copenhagen K, Denmarklthdiis.dkForthcoming, World Development.Summary. - Thr
3、ough an analysis of clothing import patterns and sourcing practices of major clothing retailers in the UK, France, and Scandinavia, this paper uncovers salient differences between global value chains (GVCs) serving European clothing markets. It highlights entry barriers for developing country suppli
4、ers into the sourcing networks of UK retailers, and relates these to corporate financialization in the UK. Although suppliers entry and industrial upgrading remain easier in mainland European sourcing networks, the maturation of GVCs challenges classical industrial upgrading paradigms and the role o
5、f the clothing sector as a stepping-stone in the industrialization of developing countries.Key words Developing countries, Europe, clothing, global value chains, sourcing, entry barriers.1. INTRODUCTIONThe clothing industry has had a critical part in the industrialization process of a wide range of
6、countries, over a period covering two centuries. This was the case with Britain and the United States during the early nineteenth-century, with Japan in the first half of the twentieth century, and with Hong Kong, South Korea, and Taiwan in the 1950s. The sector played at least four important roles
7、in these countries economic development. Firstly, it absorbed large magnitudes of unskilled labor. Secondly, it produced goods that satisfied elementary needs for large segments of the domestic population. Thirdly, despite low investment requirements, it served to build capital for more technologica
8、lly demanding production in other sectors; and fourthly, it financed imports of more advanced technologies by generating export earnings. Many developing countries, especially low-income ones, believe that the industry can play a similar bootstrapping role for them today, and on this basis they prom
9、ote its development and its links to the global market. The extent to which the hopes such policies express are realistic depends, of course, upon whether the assumptions lying behind the successful experiences of Japan and the NICs remain valid. There are both macro-economic and some more micro-eco
10、nomic and sociological reasons why this may no longer be the case. On the macro-economic side, the relevant issues concern the global supply-demand balance and since clothing is (after agriculture) the most trade-regulated of all sectors - developments within the field of trade restrictions and pref
11、erences. On the more micro- and socio-economic side, the relevant issues concern the evolution of relations between developed country buyers and developing country suppliers, with respect to sourcing principles, supplier selection policies and supply base management. Some hard data relevant to the m
12、acro-economic aspect of the question is publicly available. As far as the micro- and socio-economic side of the question is concerned, an arguably relevant literature has also emerged, but mainly in relation to clothing buyers in the US. Some material exists on the nature of global sourcing by Europ
13、ean retail, but practically without exception this covers sectors other than clothing.As will be seen in a moment, both some of the hard economic data, and the wider literature referred to, suggest that the assumptions upon which the Japanese and NIC experiences rested upon are indeed no longer vali
14、d. This paper reports research aimed at testing part of the argument behind this suggestion, on the basis of interviews with global buyers of clothing in three distinct European markets (UK, France and Scandinavia). In the process, it also explores the issue of the extent to which Anglo-Saxon busine
15、ss models, at least with reference to global sourcing, have spread to mainland Europe and with what implications for developing country suppliers. Its main findings are that entry barriers have substantially increased in the UK, while for those developing country suppliers already in the game upgrad
16、ing opportunities are essentially confined to mainland European markets. Differences between European markets in opportunities available for suppliers relate partly to the uneven diffusion of Anglo-Saxon business models, and to closely-related differences observable across countries in the size of b
17、uyers enterprises.The paper falls into five main subsequent sections. In Section 2, existing direct and indirect evidence is reviewed for and against the proposition that developmental effects still can be expected from clothing sector growth, and the degree of convergence between national or region
18、al patterns of buyer-producer relations in the global clothing industry is discussed. In Section 3, recent clothing import data from the UK, France and Scandinavia is presented, followed by a discussion of the changing geographical patterns of sourcing that these reveal. Section 4 presents the resul
19、ts of interviews on sourcing strategies with leading clothing retailers and importers in these countries. Section 5 discusses explanations for some of the national differences revealed by these interviews, while Section 6 identifies implications for developing countries, in regard to entry barriers
20、on the one hand and opportunities for upgrading on the other.2. VALUE-CHAIN RESTRUCTURING AND OPPORTUNITIES FOR SUPPLIERSRecent changes in the global clothing industry will first be reviewed from the perspective of suppliers opportunities for successful entry and industrial upgrading within this ind
21、ustry (a), before addressing the issue of inter-country differences in buyer-supplier relations and factors that potentially explain them (b).(a) Questioning the opportunities available to developing country clothing industriesFour main assumptions lying behind the successful developmental clothing
22、experiences of Japan and the NICs can be identified: three concerning entry barriers, and one concerning upgrading. The first was that of low or very low initial financial requirements - especially important in Taiwan, where the development of the clothing industry involved hundreds of SMEs (Shieh 1
23、992). A second was low labor costs as the key global competitiveness factor. First Japan, then the NICs and subsequently new entrants like Indonesia, Thailand and later China established positions in the world market largely by paying their workforces much less than did competing countries.A third a
24、ssumption, concerning trade regulation, should be mentioned in relation to post-NICs entrants to the global market. The main importing countries, anxious to protect their own domestic industries, imposed a succession of physical restrictions on exports from supplying countries through the Multifibre
25、 Arrangement. For new entrants, such restrictions served to dampen competition from established producers such as the NICs, and later China. Because importing from these countries entailed buying quota, it meant also that imports from new entrants were cheaper in relative terms, thus providing a com
26、petitive advantage to late comers.A fourth assumption was the availability of opportunities to use the clothing sector as a basis for industrial upgrading, either within the clothing and textile sector itself, or cross-sectorally but on the basis of capital and know-how built up in clothing. Althoug
27、h clothing has never been a high margin business, until recently profits and learning opportunities proved adequate to allow a significant minority of entrepreneurs to move up and/or off its value-added ladder. These assumptions can be challenged in view of recent developments in the global clothing
28、 industry.(i) Entry barriersIn questioning whether the assumptions about low entry barriers still hold, an appropriate point of departure is the literature on global commodity or value chains (henceforth GVCs). GVCs are the internationalized structures of production, trade and consumption pertaining
29、 to specific products. Gereffi (1994, 1995) identified four dimensions of GVCs: (i) input-output structures; (ii) geography; (iii) chain governance structures and (iv) institutional frameworks through which national and international conditions and policies shape the globalization process. Governanc
30、e structure has a double meaning. On the one hand, it refers to organizational processes of chain coordination while, on the other it refers to means of influencing the distribution between agents of total income generated along the chain. Gereffi distinguished two basic varieties of these structure
31、s. Producer-driven chains are led by manufacturers who tend to retain control of capital-intensive operations and organize more labor-intensive ones in tightly integrated often captive networks Following Palpacuer and Parisotto (2003), we use the term chains with reference to broad patterns of indus
32、trial organisation, and networks when describing micro-level inter-firm relations. The two terms might be alternatively used when referring to general inter-firm dynamics in global value chains. By contrast, buyer-driven chains are found in more labor-intensive sectors (garments, footwear, toys), wh
33、ere retailers and branded marketers entirely outsource production to less integrated and internally competing - networks. Gereffis contributions imply important insights concerning entry barriers for suppliers within GVCs. Buyers, he argues, capture higher shares of income by re-engineering the divi
34、sion of labor along value-chains. They oblige suppliers to take on a succession of generally low-profit functions that they no longer wish to perform. By implication therefore, entry barriers to supplier roles (or at least some of them) increasingly include the capacity to perform a range of service
35、 functions, as well as production ones. Gereffi does not elaborate this insight or qualify it in relation to different national or even (product-specific) sectoral contexts. But the observation is certainly resonated in much of the recent literature on the food retail sectors of the US and, particul
36、arly, the UK (Dolan & Humphrey 2001, Fearne & Hughes 1999). Here researchers have pointed out that, against the background of the rise of managerial doctrines such as Efficient Consumer Response and Category Management, large-scale retailers are systematically re-engineering their supply bases. This
37、 involves identifying core suppliers for each product category, and transferring to them functions such as analysis of sales data, prediction of demand, holding stock and new product development. It further involves an expectation of delivery of products on ever shortening lead times. Correspondingl
38、y, suppliers who lack the financial and human resources to perform these functions are relegated in importance or eliminated completely.Some of the contributors to this literature (Fearne & Hughes, op.cit.) go on to argue that, since the role core suppliers are now expected to play includes a wide v
39、ariety of functions over and above production, buyers will incur increased transaction costs if and when they change suppliers. Against the background of the rise of another set of managerial doctrines, this time concerning the advantages of buyer-supplier partnerships, this factor implies that buye
40、rs will behave in a less footloose way in relation to suppliers, thereby reducing the extent to which new suppliers are prospected and recruited.These arguments are echoed by Abernethy, Dunlop, Hammond & Weil (1999) in their analysis of changes in the clothing sector. These authors focus less on esc
41、alating demands on suppliers financial and human resources, and more on the issue of supplier location. Because, in their view, just-in-time delivery is attributed highest priority amongst new functions cascaded to suppliers, locational advantage shifts from far-flung low-cost countries to (often hi
42、gher-cost) closer-to-home ones, in order to allow for very short lead times. Adoption of new technologies and production planning techniques in these locations can thus significantly narrow the strictly wage-based advantage of developing countries.While these reported developments might lead to dimi
43、nished competitiveness for developing country suppliers offering only basic manufacturing services from a far-flung location, changes in the field of trade regulation point in the direction of their greater exposure to competition from China. In 2005 the Agreement on Textiles and Clothing (the succe
44、ssor to the Multifibre Arrangement) will conclude, and quota restrictions will be removed from WTO member countries. Most projections converge towards a strong increase in Chinas global market share, on the grounds of its ability to make almost any type of clothing at any quality at a competitive pr
45、ice. This is predicted as occurring particularly at the expense of those low-cost countries that cannot offer trade preferences on high duty items, and whose suppliers cannot offer add-on services or short lead times (cf. US International Trade Commission, 2004).To sum up, the rising expectations of
46、 retailers in terms of suppliers service capabilities and locational proximity, and changes in the international regulatory context of the clothing sector, are likely to increase barriers to new developing country suppliers entry into clothing GVCs.(ii) Upgrading opportunitiesSeveral dimensions of i
47、ndustrial upgrading have been distinguished in the GVC literature, mainly inspired by the successful Japanese and NICs experience See, for instance, Gereffi and Tam (1998), Gereffi, Humphrey, Kaplinsky and Sturgeon (2001), Humphrey and Schmitz (2000).:- service-based upgrading, or the provision of a
48、 broader range of services beyond simple assembly, including product design, fabric sourcing, inventory management and management of production sourcing,- volume-based upgrading, or the ability to reduce unit production costs on the basis of scale economies,- a related form of process-based upgradin
49、g, involving reduced inventories and waste through the adoption of lean production systems, and- product-based upgrading, defined as suppliers ability to manufacture higher quality products for higher price market segments.However, there are reasons for questioning the opportunities that the clothing sector currently presents for sup
