Global Value Chain

GLOBAL VALUE CHAIN - GARMENT INDUSTRY

Impact of Globalization

Globalization has been described in various ways . Globalization ' in its modern form implies integrating geographically dispersed activities functionally (Gereffi . Memedovic : 2003 ) In as much as the textile industry is concerned , globalization entails efficient and low cost of transportation , efficient logistics from the point of production to the sales counter , adapting to new customer patterns and harmonizing with the evolving trade regulations (Jens . Langkilde : 2003 . A value chain is defined as a range of activities which are involved in the design production and

marketing of a product . Value chains are buyer driven and producer driven (Gereffi . Memedovic : 2003 . A textile industry value chain is buyer driven . In the recent past Chinese manufacturers have closed the quality gap with American and other apparel manufacturers brought about through innovation , research and productivity (Fong Wonacott . Aeppel : 2004 . The Chinese model thus needs close scrutiny

Changing Global External Environment _and Growth of Chinese Textile Industries

Chinese textile industry success has been due to factors which are related to the emerging global textile industry environment . Over the years , textile industry has moved to low wage countries especially to those as China and other East Asian countries which have been able to evolve a more integrated and value added exporting model called as the OEM (original equipment manufacturing ) model . The textile OEM model entails commercial sub contracting . The supply firm produces the product based on the design which has been specified by the buyer which is then sold under the buyer 's brand name . Supplier and buyer thus are two different firms (Gereffi . Memedovic : 2003 . A buyer driven value chain in the case of a textile industry is one in which large retailers marketers and manufacturers of branded items set up decentralized production networks in a number of exporting countries particularly the low wage ones as China . This model is prevalent in labor intensive industries as garments (Gereffi . Memedovic : 2003 . A typical apparel value chain is organized in five parts , raw material supply which includes supply of natural and synthetic fibers , provision of components , production networks of garment factories , export channels by trade intermediaries and retail marketing networks (Gereffi . Memedovic 2003 . The difference between these parts such as location , labor skills , technology , scale and type of enterprises affects markets Leading firms control access to major resources that is the product design , technologies , brand names and consumer demand , thereby gaining over the non lead firms (Gereffi . Memedovic : 2003 . Chinese manufacturers have gained control over design and technologies established excellent rapport with the retail industry in the United States , which is the biggest apparel market in the World to establish an effective control over the value chain . Since in the US , the apparel industry is concentrated in five of the largest soft goods chains , by trading with select number of outlets , it has been possible for these manufacturers to gain access to and dominate the apparel industry in the United States

Shift of Apparel Industry from the United States

Over the...