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Is Price and Cost Competitiveness Enough for Apparel Firms to Gain Market Share in the World after Quotas? A Review

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  • Tewari Meenu

    () (University of North Carolina at Chapel Hill)

Abstract

This paper challenges the frequently held position that price, volumes and cost-competitiveness will be enough for export success among apparel producers in supplier countries post-MFA. Based on a review of the growing literature on the changing organization of production and trade regimes in the global textiles and apparel industry, the paper argues that while cost-competitiveness is important, several additional, non-price and institutional factors are key to the competitiveness of textile and apparel producers going forward. In an environment of volatility and intensified competition where buyers increasingly demand variety, quality, and timely delivery in addition to price, competing on the basis of low wages and large volumes can lock producers at the lowest end of the value chain where price competition is the harshest and where opportunities to cultivate the skills needed to sustain competitiveness are limited. The paper illustrates this with examples from China, India and Latin America. Specifically, it makes the point that the attribution of China's remarkable export performance in textiles and apparel to its low labor costs and large production scales is, in part, a misreading of the China story. China's unit costs are low, and its production scales enormous, but they are embedded within crucial abilities, key investments by the state, and access to world class distribution networks organized by locally rooted Hong Kong, Taiwanese and South Korean companies that have helped lower the "costs" of large scales of operation (i.e., of rigidity) in the context of uncertain markets. The end of quotas, and the ongoing churning in the global division of labor can be an opportunity for apparel firms to chart an alternative growth path based on deeper skills, innovation, design and quality upgrading, in addition to low unit costs.

Suggested Citation

  • Tewari Meenu, 2006. "Is Price and Cost Competitiveness Enough for Apparel Firms to Gain Market Share in the World after Quotas? A Review," Global Economy Journal, De Gruyter, vol. 6(4), pages 1-48, November.
  • Handle: RePEc:bpj:glecon:v:6:y:2006:i:4:n:5
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    Citations

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    Cited by:

    1. Jennifer Bair & Gary Gereffi, 2013. "Better Work in Central America: assessing the opportunities for upgrading in Nicaragua’s apparel sector," Brooks World Poverty Institute Working Paper Series ctg-2013-17, BWPI, The University of Manchester.
    2. repec:ilo:ilowps:483478 is not listed on IDEAS
    3. Cornelia Staritz, 2011. "Making the Cut? Low-Income Countries and the Global Clothing Value Chain in a Post-Quota and Post-Crisis World," World Bank Publications, The World Bank, number 2547.
    4. Ratnakar Adhikari & Yumiko Yamamoto, 2008. "Textile and clothing industry - Adjusting to the post-quota world," STUDIES IN TRADE AND INVESTMENT,in: Unveiling Protectionism: Regional Responses to Remaining Barriers in the Textiles and Clothing Trade, pages 3-48 page United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    5. Suparna Karmakar & Meenu Tewari, 2014. "Using IPRs to Protect Niches? Evidence from the Indian Textile and Apparel Industry," Working Papers id:5688, eSocialSciences.
    6. repec:bla:worlde:v:40:y:2017:i:7:p:1473-1493 is not listed on IDEAS
    7. Micheline Goedhuys & Norbert Janz & Pierre Mohnen, 2014. "Knowledge-based productivity in "low-tech" industries: evidence from firms in developing countries," Industrial and Corporate Change, Oxford University Press, vol. 23(1), pages 1-23, February.
    8. Alvaro Martín Parada Gómez, 2009. "La fuerza motriz en el desarrollo económico de las Micros, Pequeñas y Medianas Empresas (Mipymes) en la Cadena Global de Ropa," Revista Iberoamericana de Economía Ecológica, Red Iberoamericana de Economía Ecológica, vol. 10, pages 15-28, Mayo.
    9. Kelkar, Govind., 2013. "At the threshold of economic empowerment : women, work and gender regimes in Asia," ILO Working Papers 994834783402676, International Labour Organization.
    10. Chowdhury, Md. Maruf Hossan & Quaddus, Mohammed A., 2015. "A multiple objective optimization based QFD approach for efficient resilient strategies to mitigate supply chain vulnerabilities: The case of garment industry of Bangladesh☆,☆☆☆This manuscript was pro," Omega, Elsevier, vol. 57(PA), pages 5-21.
    11. Satyaki, Roy, 2009. "Garments Industry in India: Lessons from Two Clusters," MPRA Paper 23469, University Library of Munich, Germany.
    12. Suparna Karmakar, 2014. "Protecting indigenous knowledge through geographical indications: a case study of the textile industry in India," Chapters,in: Intellectual Property for Economic Development, chapter 5, pages 120-138 Edward Elgar Publishing.

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