|Title:||United States annual textile and apparel imports by country of origin in dollars for 2007 to 2010, and percent change and share of U.S. imports in percentages for the period 2009 to 2010|
|Source:||SAM Advanced Management Journal|
Start of full article - but without data
United States Textile and Apparel Imports by Country of
Origin (millions of U.S. dollars)
January-October 2007 2008 2008 2009
All Textile and XXX,XXX XXX,XXX XX,XXX XX,XXX Apparel U.S. Canada X,XXX X,XXX X,XXX X,XXX Mexico X,XXX X,XXX X,XXX X,XXX India X,XXX X,XXX X,XXX X,XXX Pakistan X,XXX X,XXX X,XXX X,XXX China XX,XXX XX,XXX XX,XXX XX,XXX Korea, South X,XXX XXX X,XXX XXX Hong Kong X,XXX X,XXX X,XXX XXX Taiwan X,XXX X,XXX X,XXX XXX Japan XXX XXX XXX XXX EUXX (European Union) X,XXX X,XXX X,XXX X,XXX ASEAN (Countries) XX,XXX XX,XXX XX,XXX XX,XXX CBI (Caribbean) X,XXX X,XXX X,XXX X,XXX LDDC exc. Haiti X,XXX X,XXX X,XXX X,XXX (Least Developed Countries)
Percent change YTD Percent XX/XX- of U.S. YTD Market XX/XX XX/XX
All Textile and XXX.XX Apparel U.S. Canada -XX.XX X.XX% Mexico -XX.XX X.XX% India -XX.XX X.XX% Pakistan -XX.XX X.XX% China -X.XX XX.XX% Korea, South -XX.XX X.XX% Hong Kong -XX.XX X.XX% Taiwan -XX.XX X.XX% Japan -XX.XX X.XX% EUXX (European Union) -XX.XX X.XX% ASEAN (Countries) -XX.XX XX.XX% CBI (Caribbean) -XX.XX X.XX% LDDC exc. Haiti -X.XX X.XX% (Least Developed Countries)
Source: Textile & Apparel Trade Balance Report XX/XX/XX OTEXCA;
China's textile and apparel industry, the world's largest exporter in 2009, is a formidable competitor. Neverless, as production costs rise in China, some low-cost developing countries are making inroads in this export market. By analyzing this sector using Porter's five factors framework- threat of entrants and the determinats of rivalry, buyer power, supplier power, and substitution threats--the article assesses its outlook. The industry's "partnership" with the Chinese Government is key to maintaining this industry sector' s competitive position.
The anticipated boost from the progressive elimination of U.S. and European Union (E.U.) trade quotas over the past years has not materialized for the Chinese textile and apparel industry. Although, China's textile and apparel industry gained market share in the U.S. and E.U., it did not make significant gains in the rest of the world in 2009. China's share of the global market jumped from XX.X% in 2001 to XX.X% in 2005, but has not risen since that period. In fact, in markets other than the U.S. and E.U., its share actually declined from XX.X% in 2006 to XX.X% in 2008. China's share of the U.S. apparel import market rose from XX.X% in 2003 up to an expected XX.X% share in 2009, and its share of the E.U. import market rose from XX.X% in 2001 to XX.X% in 2008. Competition for global market share from emerging countries is increasing, as a reduction in prices in 2009 benefited low-cost countries like Bangladesh and Vietnam at the expense of the Chinese textile and apparel industry (China's textile comparative advantage, 2009; Report of Chinese apparel, 2009).
Clearly, it is important to understand the environment of the Chinese textile and apparel industry to establish strategy that will achieve further success in the global economy.
This research analyzes the Chinese textile and apparel industry through Porter's industrial competitive framework because it not only offers insights into the environment, but also influences the industry's strategy and competitive position in the global economy. After discussing the theoretical framework, the framework is applied to the Chinese textile and apparel industry in terms of the global economy. Finally, the competitive positions of the world's major textile and apparel exporting countries are compared.
The competitive advantage of a company or country reflects offensive or defensive actions to create a sustainable position in an industry or the global economy. According to Porter (1990), this requires the ability to maintain above-average performance within an industry. Strategy is the creation of a unique and valuable position, involving various activities (Porter, 1998). The success of a competitive strategy is a function of the attractiveness of the industries in which the firm competes and of the firm's relative position in those industries (Porter, 1980). According to Porter, competition in an industry depends on five forces, which ultimately determine profit potential:
X. Threat of potential entrants
X. Rivalry determinants (contending forces)
X. Determinants of buyer power
X. Determinants of supplier power
X. Determinants of substitution threats
There are two basic ways to create competitive advantage: cost leadership and differentiation. Either can be utilized in a broad or narrow approach, resulting in a focused competitive strategy.
Cost leadership is when a firm or country decides to become the low-cost producer in its industry or market. The cost leader usually achieves this competitive advantage by economies of scale. Differentiation is the decision by the firm or country to be unique in some factors valued by its customers. Differentiation factors include product, distribution, sales, marketing, service, or image and cost position. In a focused competitive strategy the firm or country sets out to be the best in market segment or group of segments. Two variables in this strategy are cost and differentiation focus.
The strategy of the Chinese government has been to create a textile and apparel sector that no other nation can compete in. This research will analyze the environment of the Chinese textile and apparel industry through Porter's five forces framework for industry analysis and business strategy development.
Strategy and Country Rivalry
The context for strategy and rivalry relates to the Chinese government's policy regarding the textile and apparel industry. According to Qiu (2005), this industry has been a driving force in the nation's exports since the open door policy and economic reforms began in 1979. The textile and apparel industry is the most market-oriented in China, experiences the most competition, and is closest to the market and end-users. As a pillar of the national economy, it is labor-intensive with comparative advantages in the world market (The eleventh five-year plan, 2006).
According to Sebastian (2009), two features of China's trade patterns suggest that elements beyond factor abundance explain its export performance. Its high penetration in the global markets of labor-intensive products has been accompanied by a large share in exports of highly productive foreign-invested enterprises (FIEs), and the high penetration of FIEs in labor-intensive sectors. China's natural comparative advantage in labor-intensive products is enhanced by capital accumulation, productivity growth, rural-urban migration, incentives for foreign investment, and distortions in financial markets.
Since China adopted a reform policy and opened up to the outside world, its textile industry has been growing rapidly. It has transitioned from a primary industry into a mature one and has established a vertically integrated industrial system comprised of cotton, wool, silk, chemical fiber, apparel, and textile machinery sectors with constantly improved competitiveness and a more and more important position in the global textile supply chain (The eleventh five-year plan, 2006; Report of Chinese apparel, 2009).
The Eleventh Five-Year Plan for National Economy and Social Development, the State Development and Reform Commission (SDRC), together with the China National Textile and Apparel Council (CNTAC), mapped out the five-year plan for the textile and apparel industry. The initiatives focused on scientific and technological progress, indigenous innovation for a new growth model, an upgraded and optimized industrial structure, and complete, coordinated, and sustained development (The eleventh five-year plan, 2006).
China joined the World Trade Organization (WTO) in late 2001. It is the largest clothing producer in the world and has the largest capacity for products made of cotton, man-made fibers, and silk. The textile and clothing industry is the largest manufacturing industry in China. According, to Lu (2009), the Chinese government is not likely to compromise on any major trade restrictions now or in the future as it did in 2005 with the "transitional safe-guard," that restricted Chinese product imports in the United States. In addition, the Chinese Ministry of Commerce declared that it would not place licensing requirements on textile and apparel exports anymore beginning in 2009, despite E.U. pressure to self-manage exports. The elimination of U.S. limits on imports from China is a threat for competitors. It should result in lower prices for Chinese imports, as was experienced with European imports in 2008. After the E.U.'s quotas were removed in January, 2008, Chinese prices fell in line with the elimination of the costs associated with quotas.
In an attempt to augment economic recovery, the Chinese government has raised the export tax rebate for textiles and apparels from XX% at the beginning of 2008 to XX% in December 2009, the highest in many years. These measures were taken as a result of rising production costs and slowing overseas demand that resulted in many apparel manufacturers in China shutting down in 2008, causing hundreds of thousands of workers to lose their jobs (Lu, 2009; China facing, 2008). According to the "Report of Chinese apparel," (2009), industry adjustments, government action, and product innovation kept the Chinese textile and apparel industry solvent in the first half of 2009. The Chinese government increased the ratio of tax refunds on exported textiles and apparel by three times and introduced a series of structural adjustments and revitalization plans for the textile industries.
"China to take advantage," (2009), recommended alternative strategies for the recovery of the industry. One strategy was to upgrade machinery, which could allow the industry to offer more innovative products, improve quality, and even position itself as a leader in fashion and brand apparel. As the global market for exports of textiles and apparels weakened, a booming domestic market could be exploited. In fact, domestic clothing sales at retail stores in China are increasing. An additional strategy was to focus on markets outside the Big Three (E.U., U.S., Japan). In neighboring markets like Russia, Kazakhstan, Kyrgyzstan, Saudi Arabia, and UAE sales have been successful. Finally, to address the problem of labor, some Chinese companies have imported cheaper labor (China facing, 2009).
The competition for China in the global textile and apparel markets comes from a variety of countries that compete for business globally and in each of three primary markets. These primary markets--the United States, European Union, and Japan--account for XX% of import volumes of textiles and apparel in the world (Report of Chinese Apparel, 2009).