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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?
slide3
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 ofUS 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.

slide9

The Emergence of

Central and Eastern Europe

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

Other Europe

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”).

slide14
Table 4Top 10 Suppliers of Apparel to the European Union -- 1989, 1994, 2000(% of total EU apparel imports)
slide15
Table 5Major Apparel Trading Partners in East-Central Europe and the European Union, 2000(% of total apparel exports to EU)
slide16
The Impact of Quota

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

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(Committee for the Implementation of Textile Agreements)
table 6
Table 6

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

table 7
Table 7

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

major trends in the post quota world
MAJOR TRENDS IN THE POST-QUOTA WORLD

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

slide23
What Is Europe’s Future Role

in Global Apparel Sourcing?

research questions
Research Questions
  • 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
  • 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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