Trade with EU and Japan is good for the US and Trade with China is bad?

Yesterday in class, we’ve discussed how differently people see the impact of international trade. Here is one more example showing the controversy of the topic: according to a survey conducted by PewResearch in late 2010, 58% of sampled Americans said more trade with European nations would be good for the United States, 60% said increased trade with Japan would be good for the U.S. but only 45% favored increased trade with China. However, statistical data shows that US exports to China outpaced nearly all of the top ten export markets (including Japan and EU) from 2003 to 2012(source: USCBC).  

Why would the general public favor a particular trading partner but disfavor another? Should they? By which standard the general public may assume more trade with a particular trading partner would be good or bad for the United States? In your view, is trade beneficial for the US overall? Can we use any trade theories learnt from the class to explain the above phenomenon? Look forward to hearing your thoughts!

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Re-shoring, Jobs and Globalization–Perspectives from David Cameron

 

  • How to make a success of globalization and ensure our businesses, our peoples and our societies can benefit from the next phases of globalization?
  • What are the opportunities of re-shoring for the West and how to seize them?
  • How to secure sustainable and well-paid jobs and give people pride in using their skills?
  • Is re-shoring going to bring back all the jobs that were off-shored in the first place?
  • What are the factors that are driving re-shoring?
  • Does reshoring mean the West wins and the East loses?
  • Is there a chance for Britain and US to become the “Re-shore Nations”?

If you care about the questions above, please enjoy the speech given by David Cameron, Prime Minister of the United Kingdom at the 2014 World Economic Forum in Davos. The speech is a great supplement to our discussions this week on globalization.

Apparel Issues to Watch in 2014

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In the year ahead, the following issues are suggested to watch for the apparel industry according to the latest just style management briefing:

Responsible sourcing: a variety of different themes inclusive of sustainability, compliance, chemical safety and product safety. In the past, the apparel industry has been very reactive in these areas, and efforts have accelerated to move to a more proactive model in 2014.

Demand for greater supply chain visibility: a higher level focus and a lot more time will be required to look at the supply chains from end to end, especially for tier 2 and 3 component suppliers. Apparel industry needs to be focused on preparing to be more transparent on what goes into making its products and the carbon and water footprint it leaves behind. There will also be a stronger emphasis on quality, and more intelligence and agility in the supply chain, including how to achieve global flexibility in supply to maximize advantages and benefits offered by different regions.

Adjust to the industry “new normal”: speed, efficiency and cost management. ‘Quick response’ or ‘fast fashion’ is no longer a catch phrase, it’s a business reality. Speed is king. Retailers have learned to manage with smaller inventories and to quickly react to consumer needs. Additionally, there are no more low cost countries (with capability and capacity) to tap into, which requires more efficient cost control through supply chain design and management.

Internet and omni-channel retailing. The internet continues to upend the apparel industry. Brick and mortar companies are still struggling to figure out how to harness the power of the internet – and struggling to figure out how big of a threat pure-play internet companies are. Meanwhile, the proliferation of internet-only companies continues, increasing the competitive pressure on everyone (including the older internet-only companies!). All of this will end up resulting in a much stronger industry overall – but in the meantime there will be a lot of hand-wringing and heartache.

Economic outlook. Overall, 2014 will be a year better off than 2013. The US economy continues to improve, the Eurozone recession has stabilised and there is the huge opportunity Asia offers.

Country risk. Whatever happens in the real economy, political tensions throughout developing countries (except possibly China and Vietnam) are growing. They are about more than working conditions in garment factories – and we cannot expect the garment industry to remain immune from them.

International market expansion. Global vertical retailers and brands need to balance the efficiency of global assortments with being able to cater to a broad range of consumer purchasing preferences across cultural groups. Winners manage to preserve their brand identity while offering attractive choices to this diverse customer group.

Trade policy and trade politics. 2014 is an election year for US Congress. It will only be tougher to find bipartisan consensus. Things to watch include whether the Obama Administration is going to finalize the Trans-Pacific Partnership (TPP) during 2014, whether the Trade Promotion Authority (TPA) can get passed as well as the renewal of the Generalized system of Preferences (GSP) and African Growth and Opportunity Act (AGOA).

China’s role in the global apparel supply chain. China’s productivity miracle has been the single major influence on global sourcing over the past five years. While this cannot go on forever it is hard to see a significant change in its share in 2014. China’s dominance of upstream textile production (spinning, weaving and knitting) is under greater threat. Its main operators are making substantial overseas investment, and while the timing of major upstream projects means this will have little impact on fabric and yarn manufacture in 2014, the subject will preoccupy observers. Onshore garment development in Japan, Germany, the UK and US will continue to create much publicity, but limited amounts of garments. Nearshoring continued to lose market share in the EU and US during 2013, though many buyers express growing interest, and there are signs of growth in some categories. It will be surprising if it shows any significant increase in 2014.

The international aspect of the US economic policy: why and how we are all connected?


From 0:24′: Please enjoy an enlightening and inspiring dialogue with Penny Pritzker, US Secretary of Commerce and Michael Froman, US Trade Representative, on the international aspect of the US economic policy at the 2014 World Economic Forum in Davos.  The dialogue covers many interesting topics closely connected with our class lectures this & next week, for example:

  • Do we need more globalization? What is the impact of globalization on jobs and income inequality?
  • Why export matters to the US economy?
  • What will free trade agreements such as the Trans-Pacific Partnership (TPP) bring to the US?
  • Why foreign investment in the US is good for the US economy and job creation?
  • What is the connection between “global supply chain” and “made in USA”?

The Global Apparel Retail Market: An Update

[Note: Updated data from 2014 to 2018 is now available, please click HERE

According to a consulting report released by the Marketline, with the gradual recovery of the world economy, the global apparel retail industry generated a total $1,249.3 billion revenue in 2012, up 3.1% from 2011 and representing a compound annual growth rate (CAGR) of 2.8% between 2008 and 2012.

Womenswear remained the industry’s most lucrative segment in 2012, contributing $429.7 billion revenue (or 50.7% of the industry’s total value). Menswear achieved $403.6 billion revenue (or 32.3% of the industry’s total value).  

In terms of the regions, America (including North and South America) accounted for 35.3% of the global apparel retail revenue in 2012, followed by Europe (34.4%) and the Asia-Pacific region (27.1%). However, Asia-Pacific (3.9%) outpaced America (3.5%) and Europe (2.1%) in terms of growth rate, reflecting a shift in global apparel retail market after the 2008 financial crisis.

According to the MarketLine, the global apparel retail industry is forecast to have a value of $1,562.6 billion in 2017, an increase of 25.1% since 2012.The compound annual growth rate of the industry in the period 2012–17 is predicted to be 4.6%.

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