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Europe and Global Value Chains. Gary Gereffi, Duke University Global Apparel/Clothing Europe Conference at the University of North Carolina, Chapel Hill October 15-16, 2004. 4 Themes. Apparel Value Chains: Dispersion and Consolidation The Emergence of Central and Eastern Europe

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Europe and global value chains

Europe and Global Value Chains

Gary Gereffi, Duke University

Global Apparel/Clothing Europe

Conference at the University of North Carolina, Chapel Hill

October 15-16, 2004


4 themes
4 Themes

  • Apparel Value Chains: Dispersion and Consolidation

  • The Emergence of Central and Eastern Europe

  • The Impact of Quota Phase Out in 2005

  • What Is Europe’s Future Role in Global Apparel Sourcing?


Apparel Value Chains:

Dispersion and Consolidation


Apparel value chain dispersion
Apparel Value Chain: Dispersion

  • 1970s - Global buyers source from East Asia

    • Retailers –JC Penney, Kmart, The Limited, Gap

    • Brands – Liz Claiborne, Nike, Polo, Calvin Klein

  • 1980s – U.S. buyers use East Asian firms to source from new locations under quota system

  • 1990s – Central and Eastern Europe expand OPT with EU

  • Mid-1990s – Post-NAFTA: Mexico shifts from assembly (maquilas) to full-package production for USA

  • 2000 – AGOA grants tariff preferences to sub-Saharan Africa

  • 2005 – Quota phase out … and globalconsolidation!


  • Apparel value chain consolidation
    Apparel Value Chain: Consolidation

    • Buyers

      -Wal-mart is largest U.S. apparel retailer and buys 14% of all Bangladesh garment exports

    • Suppliers

      • Li & Fung (Hong Kong trading company) has offices in 56 countries and 400 factory relationships

      • Supply chain rationalization: fewer, larger factories

    • Countries

      • Apparel exports from China account for 20% of world total ($41.2 B in 2001)



    Figure 1 northeast asia s apparel exports to the world sitc 84 1985 2001
    Figure 1: Northeast Asia's Apparel Exports to the World (SITC 84), 1985-2001

    Source: World Trade Analyzer, based on United Nations data for SITC 84 (“Articles of apparel and clothing accessories”).


    Figure 2 shifts in the regional structure of us apparel imports from 1990 to 2003 1
    Figure 2: Shifts in the Regional Structure of (SITC 84), 1985-2001US Apparel Imports from 1990 to 20031

    North America

    Central America and the Caribbean

    5

    4

    Canada

    Northeast Asia

    South Korea

    Dominican Republic

    3

    Macau

    Guatemala

    ElSalvador

    2

    Hong Kong

    Honduras

    Costa Rica

    Taiwan

    1

    Mexico

    China

    Singapore

    Malaysia

    Philippines

    Turkey

    Indonesia

    Thailand

    Italy

    Vietnam

    Cambodia

    Europe

    Southeast Asia

    Bangladesh

    The rings indicate the share of total U.S. imports in U.S. dollars by partner country:

    1. 10% +2. 6.0% - 9.9%3. 4.0% - 5.9%4. 2.0% - 3.9%5. 1.0% - 1.9%

    Total value of U.S. clothing imports was $25.0 billion in 1990 and $68.1 billion in 2003.

    Sri Lanka

    India

    Coming on Strong

    Jordan

    Peru

    Colombia

    Russia

    Lesotho

    Pakistan

    South Asia

    1The 2003 position corresponds to the ring where the country’s name is located; the 1990 position, if different, is indicated by a small circle. The arrows represent the magnitude and direction of change over time.

    Source: Compiled from official statistics of the U.S. Department of Commerce, U.S. imports for consumption, customs value.


    The Emergence of (SITC 84), 1985-2001

    Central and Eastern Europe


    Table 1
    Table 1 (SITC 84), 1985-2001


    Table 2
    Table 2 (SITC 84), 1985-2001


    Table 3
    Table 3 (SITC 84), 1985-2001


    Figure 3 shifts in the regional structure of eu 15 apparel imports from 1990 to 2001

    Other Europe (SITC 84), 1985-2001

    Switzerland

    Northeast Asia

    Eastern Europe and ex-USSR

    Taiwan

    5

    Lithuania

    South Korea

    4

    Poland

    3

    Hungary

    Malaysia

    Turkey

    China

    Czech Republic

    Romania

    H Kong

    Indonesia

    2

    Singapore

    Vietnam

    1

    Bulgaria

    Bangladesh

    Thailand

    India

    Morocco

    Tunisia

    Sri Lanka

    USA

    Pakistan

    South Asia

    North America

    Mauritius

    Africa

    Figure 3: Shifts in the Regional Structure of EU 15Apparel Imports from 1990 to 2001

    Southeast Asia

    The rings indicate the share of total European imports in U.S. dollars by partner country:

    1. 10% +2. 6.0% - 9.9%3. 4.0% - 5.9%4. 2.0% - 3.9%5. 1.0% - 1.9%

    Total value of extra-regional European clothing imports was $22.8 billion in 1990 and $51.3 billion in 2001.

    1This chart excludes intra-European trade among the 15 member states of the EU (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom). Total apparel imports are for the EU countries.

    Source: World Trade Analyzer, based on United Nations data for SITC 84 (“Article of apparel and clothing accessories”).


    Table 4 (SITC 84), 1985-2001Top 10 Suppliers of Apparel to the European Union -- 1989, 1994, 2000(% of total EU apparel imports)


    Table 5 (SITC 84), 1985-2001Major Apparel Trading Partners in East-Central Europe and the European Union, 2000(% of total apparel exports to EU)


    The Impact of Quota (SITC 84), 1985-2001

    Phase Out in 2005


    Figure 4 shifts in the regional structure of japanese apparel imports from 1990 to 2001
    Figure 4: Shifts in the Regional Structure of Japanese Apparel Imports from 1990 to 2001

    5

    Taiwan

    Europe

    Northeast Asia

    France

    4

    3

    United Kingdom

    Italy

    2

    Hong Kong

    South Korea

    1

    China

    Indonesia

    Thailand

    USA

    North America

    Vietnam

    The rings indicate the share of total Japanese imports in U.S. dollars by partner country:

    1. 25% +2. 10.0% - 24.9%3. 4.0% - 9.9%4. 2.0% - 3.9%5. 1.0% - 1.9%

    Total value of Japanese clothing imports was $8.6 billion in 1990 and $19.9 billion in 2001.

    Southeast Asia

    N.B.: From 1990 to 2001, South Korea’s share of Japan’s apparel imports fell from 29 percent to 4.3 percent, while China’s import share of the Japanese apparel market grew from 19.3 percent to 66.6 percent.Source: World Trade Analyzer, based on United Nations data for SITC 84 (“Articles of apparel and clothing accessories”).


    In 2005 multi fiber agreement ends

    In 2005, Multi-Fiber Agreement Ends Apparel Imports from 1990 to 2001

    Quota Abolition

    from 2005

    MFA

    (1974 – 1994)

    ATC

    (1995 – 2004)

    Jan. 1, 1998

    Another 17% Integration

    Jan. 1, 2002

    Another 18% Integration

    Jan. 1, 2005

    100% Integration

    Jan. 1, 1995

    16% Integration

    Source: World Trade Organization.


    U s integration schedule established by cita committee for the implementation of textile agreements
    U.S. Integration Schedule Established by CITA Apparel Imports from 1990 to 2001(Committee for the Implementation of Textile Agreements)


    Table 6
    Table 6 Apparel Imports from 1990 to 2001

    Source: Financial Times, July 19, 2004, p. 11.


    Table 7
    Table 7 Apparel Imports from 1990 to 2001

    Source: Financial Times, July 19, 2004, p. 11.


    Major trends in the post quota world
    MAJOR TRENDS IN THE POST-QUOTA WORLD Apparel Imports from 1990 to 2001

    China will benefit most from end of MFA

    Consolidation is likely to accelerate

    • More mega-factories will emerge post-2005

    • Retailers will cut down on the number of sourcing countries

      Remaining factories will have to provide higher level services (logistics, customs clearance, and product design)

      Time to market considerations will allow regional producers to maintain a role in apparel sourcing

      Pressures for “ethical sourcing,” corporate codes of conduct, independent monitoring and labor standards will grow


    What Is Europe’s Future Role Apparel Imports from 1990 to 2001

    in Global Apparel Sourcing?


    Research questions
    Research Questions Apparel Imports from 1990 to 2001

    • What are the distinctive features of full-package production in Eastern and Central Europe?

    • Does full-package apparel production constitute upgrading or downgrading for ECE economies?

    • How extensive are the benefits to local workers and firms of OPT and full-package production within the ECE region?


    Policy issues
    Policy Issues Apparel Imports from 1990 to 2001

    • How will the major apparel exporting countries adjust to quota phase outs?

    • What can governments and EU authorities do to promote upgrading within the apparel value chain of Eastern & Central Europe?

    • What policies and institutional conditions foster industrial diversification and inter-chain upgrading beyond textiles & apparel?


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