Regional production-trade network (RPTN) refers to a vertical industry collaboration system between countries that are geographically close to each other. Within a RPTN, each country specialized in certain portions of supply chain activities based on its respective comparative advantages so as to maximize the efficiency of the whole supply chain.
There are three major textile and apparel (T&A) RPTNs in the world today:
- Asia: more economically advanced countries/regions such as Japan, South Korea, Taiwan, Hong Kong and China supply textiles to the less economically developed countries such as Vietnam, Bangladesh and Sri Lanka for apparel manufacturing, where the wage level was much lower. On the other hand, Japan is a leading apparel importer and consumption market in Asia.
- Europe: among EU members, textile inputs can be supplied by developed countries in Southern and Western Europe such as Italy and Germany. In terms of apparel manufacturing in the European Union, low and medium-priced products can be undertaken by developing countries in Southern and Eastern Europe such as Poland and Romania, whereas high-end luxury products can be produced by Southern and Western European countries such as Italy and France. Furthermore, finished apparel can be shipped to developed EU members such as UK, Germany, France and Italy.
- America: within the region, the United States as a developed country supplies textile materials to developing countries in North, Central and South America (such as Mexico and countries in the Caribbean region), which assemble imported textiles into apparel by taking advantage of the local low labor cost. The finished apparel articles are eventually exported to the United States for consumption.
Latest data from the World Trade Organization (WTO) shows that RPTN in the above three regions remain an important feature of today’s global T&A trade as the graphs shown below:
(Note: Data comes from the World Trade Organization)
Particularly, three specific trade flows are worth watching:
One is Asian countries’ growing dependence on textile supply from within the region, which rose to 90.2% in 2014 from 87.7% in 2000. This is a reflection of a growing integrated T&A supply-chain in Asia. As a result, apparel “Made in Asia” is becoming even more price-competitive in the world marketplace today and this has posted pressures on the operation of the T&A RPTNs in EU and America.
Second one is the stable intra-region trade pattern both for textile and apparel in EU. In 2014, 58.8% of EU’s (28 members) textile imports and 46.2% of apparel imports came from other EU members; at the same time, 68.8% of EU’s (28 members) textile exports and 74.7% of apparel exports also went to other EU members.
Additionally, developing countries in North, Central and South America still heavily rely on regional supply of textile inputs; at the same time, their finished apparel are also mostly consumed within the region. Data show that 80.3% of American countries’ textile imports still came from within the region in 2014; at the same time, 88.9% of American countries’ apparel exports were also shipped to the region, mostly the United States and Canada as the final consumption market.
- Generates 1.4 million tons of used clothing annually
- Exports 800,000 tons of used clothing annually
- 20% of used clothing sold domestically in thrift stores
- Non-wearable material of used clothing is reprocessed into fibers for upholstery, insulation, soundproofing, carpet padding, building and other materials.
Central and South America
- Very large used clothing market in most countries
- Imports of used clothing mostly come from the United States
- Cotton wipers made from used clothing are exported back to the United States
- Generates 1.5-2 million tons of used clothing annually
- Large used clothing sorting centers located in Western and Eastern Europe
- 10-12% used clothing (only those top quality) sold in local secondhand shops
- One of the largest used clothing markets in the world
- 80% of population wear secondhand clothes
- Most used clothing imported from the United States, Europe, India and Pakistan
- Most used clothing is collected in Japan, South Korea and Taiwan
- Countries in the region also import used clothing from the United States, Europe, India and Pakistan
- Some large used clothing sorting centers are located in Malaysia and Philippines.
India and Pakistan
- Residual used clothing are imported and sorted by grading companies
- Wearable used clothing is extracted from “mixed rags” and sold locally or shipped to Africa
- Recycled yarns are used to make new sweaters
- Cotton wipers made from used clothing are exported to the United States
- Used clothing is collected and sold through local shops and exported
Source: Planet Aid (http://www.planetaid.org); UNComtrade (2015)
On September 22, the U.S. Trade Representative Office (USTR) releases a detailed summary of its latest TPP negotiation objectives. Specifically for the textile and apparel chapter, compared with the negotiation objectives released in 2014, some wording changes are made this time:
Does the change imply that the U.S. side has agreed to allow more exceptions to the “yarn-forward” rules of origin in TPP, but in the format other than “short supply list”? For example, will it be “earned import allowance” or tariff preference level (TPL)?
On the other hand, does the change imply that the “short supply list” under TPP will be stricter than previously expected? (in the 2014 version of the negotiation objectives, it read like the “short supply list” may include those products that are not commercially available in the US but are commercially available in other TPP members. However, in the 2015 version, only those products that are absolutely not commercially available in the whole TPP region are eligible for the “short supply list”.)
This video provides a great summary of what we disused in class on trade and development. Please keep in mind that:
- Textile and apparel industry (T&A) plays a critical role in generating economic growth, reducing poverty and promoting human development both in history and today. This is why T&A remains a critical sector in the 21st global economy, even though people may think this is such a “simple” product.
- Apparel sourcing is far more about how to get the best quality product at the lowest price. Throughout the supply chain, sourcing decisions and practices are closely connected with many people’s destiny in the world, especially those living in the developing countries. As future professionals working in the fashion apparel industry, please think about your impact and responsibilities.
Welcome for any further comment and feedback on the topic.
(photo credit: WGSN)
Wearing 3D-printed apparel is no longer a dream (see the pictures above)! But what is the implication of 3D-printing technology on apparel sourcing? Here is my personal vision:
First, 3D printing may create brand new T&A supply chains and business models. 1) Because 3D printing is highly technology and capital intensive with little input from low-skilled labor, it implies that developed countries rather than developing countries may enjoy the comparative advantage in manufacturing 3D-printed apparel. 2) Because apparel will be directly printed by machines, cross-the-border transportation can be largely reduced in the 3D printing era, generating potential cost-saving opportunities both for manufacturers and consumers. 3) 3D printing will empower consumers to more directly involve in the product development process. Yet given consumers’ limited technical knowledge and equipment, many new types of customer services ranging from design assistance to on-site apparel printing may emerge in the 3D printing era.
Second, 3D printing may result in a more sustainable T&A supply chain. 1) Because 3D printing is digital-based, it may help reduce waste during the product development process. 2) Because 3D printing is highly customized and can produce on-demand, it may result in less overproduction in the textile and apparel (T&A) industry. 3) 3D printing has the potential to be made by recycled material. 3D printed apparel itself may be recycled as well, resulting in almost zero carbon emission in the whole product life-cycle.
However, 3D printing my create new challenges for apparel sourcing. 1) When 3D printed apparel substitute traditionally-made apparel among ordinary consumers, demand for apparel sewing workers will be substantially reduced. Millions of unskilled or low-skilled workers currently employed in the T&A sector may have to find new jobs. 2) Workforce in the T&A industry may have to substantially update their knowledge structure in the 3D printing era. The T&A industry may even be short of talents for certain positions such as 3D printing designers and engineers. 3) The application of 3D printing will require an update of the current legal system to better address issues such as intellectual property right protection, consumer privacy protection and data security in a digital-based context.
What is your vision for the future of apparel sourcing in the 3D-printing era?