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Apparel Industry: China “The Sleeping Dragon”

Apparel Industry: China “The Sleeping Dragon”. By: Amanda LaConte Kate McElroy Brian Morris. History of Multi-fiber Agreement (MFA). 1974: Replaced Long Term Agreement (LTA) Extended coverage to wool & manmade fibers and imposed a growth rate on quotas 1994: MFA Expired

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Apparel Industry: China “The Sleeping Dragon”

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  1. Apparel Industry: China“The Sleeping Dragon” By: Amanda LaConte Kate McElroy Brian Morris

  2. History of Multi-fiber Agreement (MFA) • 1974: Replaced Long Term Agreement (LTA) • Extended coverage to wool & manmade fibers and imposed a growth rate on quotas • 1994: MFA Expired • US imposed quotas on developing country exports • 1995: MFA replaced by Agreement on Textiles and Clothing (ATC) • Increased quota growth rates so remaining quotas would be phased out by 2005 • 2004: US imposed a higher number of binding quotas on China • China: 31/87 binding quota restrictions • Thailand: 1/46 binding quota restrictions

  3. Trends in U.S. Imports from China, 1990-2005 The effects of China joining the WTO with the removal several quotas Restrictions placed on Chinese exports

  4. Impacts of Quota phase-out in 2005 • Consumers in importing countries “benefit” • Cheaper prices and more choices • Producers in importing countries “lose” • Can not compete with the cheaper prices • Globalization increases trade worldwide with integration of apparel textiles trade • Foreign Investment flows out of previously-unrestricted countries to previously-restricted ones • Smaller developing countries suffer

  5. U.S. Trade with China over the Years What will the Future hold for the US? Figures are in millions of US dollars

  6. 15 Wool Apparel PRICE OF CHINESE APPAREL IMPORTS 10 US $ Cotton Apparel 5 Apparel Man-made Fiber Apparel 2004 2005 2006 YEAR

  7. United States is China’s #1 Customer

  8. United States is China’s #1 Customer

  9. China’s Manufacturing Industry • Four Main Categories in China’s Manufacturing Industry • Ratio of Employees per Corporation is significantly higher for the Apparel Industry • However, this table does NOT display the number of Establishments per Corporation • One of China’s main focus in manufacturing involves more workers and corporations in the Apparel Industry

  10. Revenue of Industrial Corporations Electricity, Gas and Water Supply and Production Mining andQuarrying • The Manufacturing Industry generates the greatest amount of revenue from sales and customer activities. Manufacturing 13% Food and Agriculture 20% Apparel Breakdown of the Manufacturing Industry 19% Industrial Goods : 48% Equipment

  11. Employees

  12. China’s Competitive Advantage • Large, highly productive, low cost labor force • Price competitiveness • Efficient port facilities • China’s shipping time to the US “12-18 days”

  13. “With Quotas gone and Chinese goods setting the market’s price floor, those who cannot compete on price are marching to a familiar anthem…” • Quality • Quick Return • need a steady delivery of finished goods • focus on supply chain management • Customer Service

  14. Globalization has altered the Dynamics of the Apparel Industry. IT’S TIME WE TAKE NOTICE Made in China

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