THE SUSTAINABILITY OF GARMENT PRODUCTION AMONG NEW ASIAN EXPORTERS

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THE SUSTAINABILITY OF GARMENT PRODUCTION AMONG
NEW ASIAN EXPORTERS

• John Thoburn
• Professor of Development Economics
• Ritsumeikan Asia Pacific University (APU),
  Japan
• and
• Senior Research Fellow
• School of Development Studies/Overseas
  Development Group
• University of East Anglia, UK
• International Conference on Globalization and
  Development in the Chinese Economic Region
• National Taiwan University, Taipei, 22-23 June
  2007

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Research context and questions

• Context garments have been the classic way in
  which developing countries have entered global
  markets as manufactures exporters
• Can vulnerable developing countries stay in the
  game now that the Agreement on Textiles and
  Clothing/Multi-Fibre Arrangement has ended?
• In particular, recent entrants in Asia,
  vulnerable with heavy dependence on garment
  exporting
• indirectly we are asking
• Can textile and clothing (TC) exporting remain a
  driver of industrialisation and development for
  developing countries?
• Higher barriers to entry
• Low labour costs no longer a key source of
  comparative advantage?
• More difficult to upgrade products, processes,
  functions
• Intensified competition from China
• And a supplementary question does the footwear
  industry offer any pointers to likely post-MFA
  developments in the garment industry?

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Dependence on garment exporting (share of
total merchandise exports, 2003)
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More on the context long term challenges to
garment exporters and the end of the Multi-Fibre
Arrangement

• Exporters must sell within global value chains
• Control by global buyers over entry into the
  global value chain
• demands by global buyers for cheaper products,
  higher quality, shorter lead times, as buyers
  themselves face more competition
• pressures to meet environmental and labour
  standards
• buyers wishing to reduce number of suppliers
  countries, and vendors in each country
• Cheap labour now not enough for competitive
  advantage
• More barriers to entry in garments (need
  full-package manufacture)
• Textiles have grown more capital-intensive and
  technologically advanced
• Competition from China
• Predictions that China would sweep the board once
  MFA quotas had gone
• Example of world footwear industry as pointer for
  post-MFA scene for clothing?

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Countries and stage of the research

• Country focus
• Initially Vietnam and Cambodia, including
  footwear industry
• Research on global buyers in Hong Kong and
  London, and key informants in China
• Later Laos, and
• Bangladesh and Myanmar cooperative research
  under discussion
• Status
• Joint research proposal with Professors Kenta
  GOTO and Kaoru NATSUDA of APU for Japanese
  Ministry of Education Finance, and also APU
  internal funding
• Discussion underway about links with
  Manchester/IDS/OU Asian drivers project
• Relevant recent research projects
• UK DfID globalisation project, 2000-2003
  (Thoburn)
• EU research project on Vietnamese garments,
  2006-7 (Thoburn)
• ILO research on garments and labour standards
  (Goto)
• JICA joint study team in Cambodia (Natsuda)

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The Taiwan dimension

• Taiwanese investment in garments, textiles and
  footwear in Asia
• Importance of Taiwanese small traders in linking
  domestic firms to export markets
• Possible Taiwanese researcher collaboration
• study of industrial relocation from Taiwan in
  garments, textiles and footwear
• Interviewing Taiwan head offices of producing
  firms to discuss location policy
• interviewing of Taiwanese producing firms
  in-country to discuss operations
• Investigate links between garment competitiveness
  and Taiwanese direct investment in textile
  production in garment exporting countries
• Study of Taiwanese intermediation in global
  garment and footwear trade
• interviewing of global buyers located in Taiwan
• interviewing of small traders in-country

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Direct foreign investment in Vietnam,
1988-2006(MPI figures)
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Initial answers to the research questions based
on earlier research for further investigation

• Can vulnerable developing countries stay in the
  game after the end of the ATC/MFA ?
• Varied experience so far serious problems for
  sub-Saharan Africa, but in US most Asian
  countries have done so, even those with many
  structural weaknesses, like Pakistan. Vietnam has
  functioned as China but one using mainly
  Chinese textiles
• Can textile and clothing (TC) exporting remain a
  driver of industrialisation and development for
  developing countries?
• More control and consolidation by global buyers
  than in the past, so entry much more difficult
  and may be temporary, and staying more difficult
• Limited freedom of action even for best-practice
  Hong Kong companies for example (eg not getting
  fruits of upgrading)
• perhaps this is changing as bigger NIC companies
  taken on more functions
• Difficult for domestic companies (like Vietnams
  SOEs) to undertake essential product development
  normally done in foreign investors head
  offices
• In long term, need good local textile industry
  too to be competitive.