Prior to the removal of the ATC quota restrictions in January 2005, the sour- cing of clothing was mainly influenced by quotas held in the sourcing coun- try and availability of raw materials was a secondary consideration. Now that quotas are removed the availability of raw materials and a country’s capac- ity to process and transform them into product will become more important. Vertical integrated production of textiles and clothing will provide an import- ant comparative advantage to clothing exporting companies and countries. The vertical integration will have to be either real or ‘virtual’ if the country or enterprise concerned is to be able to develop national or international part- nerships to increase supply chain efficiency and satisfy the quick response requirement. Rapidly expanding ‘full package’ sourcing solutions deliver speed to market. They usually involve all stages from initial concept, prod- uct development ending with the delivery of finished products. New global supply networks are being established by many of the larger savvy supply organizations with full packaged sourcing in mind. These global organizations want to manage all operations in the very way that Li and Fung pioneered. Essentially the retail buyer goes to the full package operator who determines appropriate suppliers (raw materials, components, manufacture, logistics, quality services, pre-retail services including labelling and packaging) accord- ing to price, quality and capacity. For the retail buyer they only have to deal with one organization and the full package sourcing organization deals with the co-ordination problems of the various suppliers.
Age and price positioning womenswear
0 10 20 30 40 50 60 70 0 0.5 1 1.5 2 2.5 3
Average price index
M&S Debenhams John Lewis House of Fraser High Low Next Bhs
Top Shop River Island H&M Primark Matalan ASDA Bon Marche Sainsbury Tesco New Look TK Max D Perkins A ver ag e ag e
Globalization: global markets and global supplies 25
As a consequence of this trend some major retailers and brand names have already announced a drastic reduction in the number of their supplying coun- tries and partners. For example, Gap, which sources in 50 countries, have also indicated that in the future they will be able to choose their suppliers more freely and more carefully and to develop partnerships with them, focusing in particular on the improvement of labour practices (ILO, 2005).
Summary
This chapter has given the reader an overview of some of the complexities and insights into the interconnectedness of your local high street retail stores with the global economy. It began by defining fashion markets and fashion market- ing. It discussed the relative importance of textile and clothing manufacture in the context of the world economy. Importance measured by size of regional and country trade flows, employment and individual country earnings from exports and the cost of imports. It moved on to examine the impact of China with its phenomenal capacity to produce textiles and clothing. China’s growth rate as the leading exporter is a cause for concern for many other manufactur- ing countries that were previously protected under quotas but now the gloves are off, in the battle for markets worldwide. India too is of great importance in this market place. The demise of the controlled market under WTO rules was discussed in some detail and an example was given to illustrate how rules, in any case, are often circumvented. Globalization as a phenomenon was dis- cussed in detail and illustrated the different perspectives that various com- mentators have towards a concept of globalization. Interconnectedness of the global to the local domestic economy of the UK retail sector was then exam- ined. Particular trends were discernable which have come into being since the first edition of the book such as the rise of supermarket fashion and its growing importance. Finally the connection was made to global sourcing and the trend towards developing global production networks. Importantly these networks are increasingly managed by ‘full package sourcing’ organizations external to the purchasing organization (it is an outsourced function). The next chapter moves on to discuss supply chain strategies, structures and rela- tionships in this connected world.
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