Making the Cut?

Cornelia Staritz

Description

The clothing sector has traditionally been a gateway to export diversification and industrial development for low-income countries (LICs) due to its low fix costs, relatively simple technology, and labor-intensive nature. It has served to absorb large numbers of unskilled, and mostly female, workers and build capital and know-how for more technologically advanced activities within and across sectors. But the environment for global clothing trade has changed significantly which may condition the role the sector can play in promoting export diversification and industrial development in LICs today. Main drivers have been the rise of global buyers and their global sourcing strategies, the phase out of quotas in the Multi-Fiber Arrangement (MFA), and, more recently, the global economic crisis.
In the context of these changes, this study analyzes how the clothing sector can still provide a gateway to export diversification and industrial development for LICs today. The key objectives of this study are to assess main developments in the global clothing sector associated with the Multi-Fiber Arrangement (MFA) phase out, global buyers and their sourcing strategies, and the global economic crisis; analyze challenges that LICs are facing in the post-quota and post-crisis world in entering and upgrading within global clothing value chains; and identify policy recommendations to increase the competitiveness of LIC clothing exporters as well as to further their integration into and improve their positions within global clothing value chains. For the study interviews with buyers in the US, the EU and South Africa as well as case studies in Sub-Saharan African LICs (Kenya, Lesotho and Swaziland), Cambodia and Bangladesh were conducted.
The study finds that global consolidation in the clothing sector has increased entry barriers at the country and firm level. This has created new challenges to LIC suppliers as low labor costs and preferential market access are not enough to be competitive in the clothing sector today. Suppliers with broad capabilities have been able to develop strategic relationships with global buyers. Marginal or new suppliers are entering the global value chains through intermediaries, but face limited upgrading opportunities. FDI plays an important role in integrated LICs into global clothing value chains, yet it needs to be used in a way that promotes and upgrades local clothing industries. Overall, the clothing sector still provides opportunities for export diversification and industrial development. However, this requires pro-active policies to increase the competitiveness and local embeddedness of LIC clothing exporters.

Sujets

• Crisis
• Sub-Saharan Africa
• Industry
• Private sector development

Informations

• Publié par: world-bank-publications
• Publié le: 14 décembre 2010
• Nombre de lectures: 56
• EAN13: 9780821386422
• Langue: English
• Poids de l'ouvrage: 3 Mo

Extrait

A WORLD BANK STUDY
Making the Cut?
LOW-INCOME COUNTRIES AND THE
GLOBAL CLOTHING VALUE CHAIN IN A
POST-QUOTA AND POST-CRISIS WORLD
Cornelia StaritzWORLD BANK STUDY
Making the Cut?
Low-Income Countries and the
Global Clothing Value Chain in a
Post-Quota and Post-Crisis World
Cornelia Stari
5Copyright © 2011
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ISBN: 978-0-8213-8636-1
eISBN: 978-0-8213-8642-2
DOI: 10.1596/978-0-8213-8636-1
Library of Congress Cataloging-in-Publication Data
Stari , Cornelia.
Making the cut? : low-income countries and the global clothing value chain in a post-quota and post-
crisis world / Cornelia Stari .
p. cm.
ISBN 978-0-8213-8636-1 –– ISBN 978-0-8213-8642-2
1. Clothing trade--Developing countries--Case studies. 2. Exports--Developing countries--Case studies.
3. Global Financial Crisis, 2008-2009. I. Title.
HD9940.D462S73 2011
338.8’87870091724--dc22 2010043472
545Contents
Acknowledgments .................................................................................................................. vii
Executive Summary ..................................................................................................................ix
Acronyms and Abbreviations ................................................................................................xv
1. Introduction ............................................................................................................................ 1
2. The Global Clothing Value Chain: Global Buyers, the MFA Phaseout, and
the Global Economic Crisis .............................................................................................. 6
Introduction ......................................................................................................................... 6
Changing Regulations: The MFA Phaseout, Tariff s, and Preferential Market
Access ............................................................................................................................ 8
The Global Economic Crisis: Reduced Demand and Trade Finance ......................... 14
Global Clothing Trade Pa erns: MFA Phaseout and the Global Economic Crisis .... 15
Changing Sourcing Strategies of Global Buyers: Supply Chain Consolidation ....... 26
Structural Challenges: Global Demand, Supply, and Asymmetric Market
Structures .................................................................................................................... 38
First Conclusions on Entry and Upgrading in Global Clothing Value Chains ........ 41
3. Clothing Exports in Low-Income Countries in Sub-Saharan Africa:
From Footloose to Regional Integration? ..................................................................... 47
Introduction ........................................................................................................................ 47
Recent Development of Clothing Exports in SSA: Five Phases .................................. 48
SSA LICs and the Global Clothing Value Chain: Quota Hopping, Preferences,
and Foreign Ownership ............................................................................................ 57
Main Challenges of SSA LIC Clothing Exporters ......................................................... 66
Regional Integration: Regional End Markets and Production Networks ................. 83
Conclusions ........................................................................................................................ 99
4. Cambodia’s Clothing Exports: From Assembly to Full-Package Supplier? ........... 104
Introduction ...................................................................................................................... 104
Overview of Cambodia’s Clothing Industry ............................................................... 105
Main Challenges of Cambodia’s Clothing Exporters ................................................. 114... 130
5. Bangladesh’s Clothing Exports: From Lowest Cost to Broader Capabilities? ........ 133.... 133
Overview of Bangladesh’s Clothing Industry ............................................................. 134
Main Challenges of Bangladesh’s Clothing Exporters .............................................. 142
Conclusions ...................................................................................................................... 157
iii
4iv Contents
6. Conclusions: How to Compete in the Post-Quota and Post-Crisis World? ............ 159
Global Dynamics: Consolidation, Increased Entry Barriers, and Heightened
Competition .............................................................................................................. 159
Country Diff erences: Type of Integration and Role of Ownership .......................... 162
Common Challenges of and Policy Recommendations for LIC Clothing
Exporters ................................................................................................................... 165
Conclusions ..................................................................................................................... 170
7. References ............................................................................................................................ 171
1. Tables
Table 2.1. U.S. Tari ff Rates for Selected Clothing Products .................................................10
Table 2.2. Tari ff Di ff erences: Men’s or Boys’ Overcoats, Cloaks, Anoraks, Etc.
(HS 610120) (Percent) ........................................................................................................13
Table 2.3. Top 15 Clothing Importer Countries ....................................................................16
Table 2.4. Top 15 Clothing Exporter Countries .....................................................................17
Table 2.5. Top 15 U.S. Clothing Importer Countries ............................................................20
Table 2.6. Top 15 EU-15 Clothing Importer Countries ........................................................23
Table 2.7. Main Firm- and Country-Specifi c Sourcing Criteria of Global Buyers ............33
Table 3.1. SSA’s Clothing Exports ...........................................................................................50
Table 3.2. SSA’s Main Clothing Exporters .............................................................................51
Table 3.3. SSA’s Clothing Exports to the United States .......................................................52
Table 3.4. SSA’s Clothing Exports to the EU-15 ....................................................................53
Table 3.5. China-U.S. Quota Costs, July 2003 ........................................................................59
Table 3.6. Eff ective Rates of Subsidy in Two Swaziland Clothing Factories ....................60
Table 3.7. AGOA Countries’ Top Five Clothing Exports to the United States, 2008 .......72
Table 3.8. Top Five Clothing Exports from SSA to the EU, 2008 ........................................73
Table 3.9. SSA Textile Imports: Top 10 Importers in 2008 ...................................................74
Table 3.10. Average Clothing Manufacturing Labor