The Future of Asia-Pacific and Implications for the U.S. Textile and Apparel Industry

Asia Pacific

The following discussion questions are proposed by students enrolled in FASH455 (Global Apparel & Textile Trade and Sourcing) Fall 2015 after learning the unit on textile and apparel industry & market in the Asia-Pacific region. Please feel free to leave your comment and engage in our online discussion.

  1. We’ve heard so much about China’s superior involvement in the textile & apparel sectors globally, but how are these industries contributing to the local economy?
  2. As rules on working conditions and minimum wage have been enforced in Mainland China many business people have moved their operations to Southeast Asia, do you think the Southeast Asia will eventually become like mainland China forcing businessmen to seek low wages elsewhere?
  3. Will Vietnam shift its sourcing of yarns and fabrics from China to US after TPP? What are some setbacks associated with this? What are some potential opportunities?
  4. While Vietnam is currently one of the primary exporters of apparel to the United States, what should be the actions taken by the United States if they continue to “refuse” to cut out Chinese Textiles? Or, should the United States continue their trading patterns with Vietnam despite their reliance on Chinese Textiles?
  5. The Asia pacific region is made up of a variety of countries with different strengths and political infrastructure. How does the variety of policies and governments affect how we do business abroad, and is there a way to set standards that are not individualized to each country?
  6. China and the US can be seen as a threat to one another. However the president of China said the “Pacific Ocean has enough space for the two large countries”. Do you think they are threats to each other, or are they ultimately helping each other’s economies grow?
  7. What will happen as more and more countries that used to produce apparel move into producing more capital intensive production?
  8. What are the advantages or disadvantages of excluding China from international trade agreements such as TPP?
  9. If the T&A industry in China is envisioned by policymakers as beginning to focus more on technical textiles, how will the textile industry in China compete with the industry in the United States?
  10. Why has East Asia become one of the most economically interconnected regions in the world?
  11. What are some of the reasons that China still remains one of most price competitive export markets in the World? Also, does China face challenges in losing their top spot as leader in price competitiveness? If so, what are some of the reasons they are in danger of competition?
  12. How is the discussion about yarn forward rules of origin different in regards to TPP countries than the same discussion between the NAFTA/CAFTA-DR countries?

 [Discussion for this post is closed].

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Author: Sheng Lu

Professor @ University of Delaware

18 thoughts on “The Future of Asia-Pacific and Implications for the U.S. Textile and Apparel Industry”

  1. In response to question 11: China remains one of the most price competitive export markets in the world because the government has capital that they are pouring into the infrastructure and the economy so that they can have this competitive advantage. We also see that countries like Bangladesh might have very cheap labor but production in China has this capital which makes them extremely efficient, well structured and reliable. I believe these benefits will keep China as a leader in price competitiveness however there are always new countries emerging and moving up the “flying geese model”.

  2. To question #12: In the context of NAFTA & CAFTA-DR, yarn-forward rules of origin can help the U.S. textile industry capture the export market in Mexico and Central American countries. This can happen largely because 1) the United States is the only leading textile supplier in the region; 2) other NAFTA & CAFTA-DR members are not eager to develop its own textile industry (this is a two-edge sword though). However, in the context of TPP, personally I doubt yarn-forward rules of origin will work effectively, also because of two reasons: 1) United States is NOT the only textile supplier in the TPP region. One example is Japan, which is both a leading textile manufacturer in the world and the 4th largest textile supplier to Vietnam. 2) Different from countries like Mexico and those in Central America, Vietnam has the ambition to develop its own textile industry. Foreign direct investment (including from the United States) is also pouring into Vietnam and helping building new textile factories there. So overall, it doesn’t seem very likely that Vietnam will use U.S.-made yarns and fabrics because of TPP.

  3. 7. As the countries that produce apparel start to move into the production of more capital intensive products, smaller, less developed countries will take over the production of apparel products. This relates back to the “flying geese model”. One country starts producing apparel, then after many years of this production, the country starts to gain capital and is able to move into a more capital intensive product, like textiles. Since there is now an opportunity, another less developed country will start to produce apparel. Once this country starts gaining capital, it would produce textiles, and the first country will move into something even more capital intensive. I do not think we ever have to worry about no country wanting to product apparel. It is a very appealing sector that can help small economies grow.

  4. In response to question #2: It could be very likely, given that China reached the point it did, that the migration to Southeast Asia will have a similar impact. Knowing that there are already some, it would be interesting to see if specific rules/regulations would be put in to place in this specific case to ensure that Southeast Asia does not experience similar issues.

  5. In response to question #8: China is a huge influence in the fashion industry as many companies source and have their products made there. If China is a TPP member, it can reduce a lot of the tariffs and costs surrounding importing from there, increasing trade growth with the United States and helping many companies save money, thus keeping money within the U.S. economy. On the other hand, if China is involved in the TPP, this means that countries such as Vietnam that are producing garments can get their fabrics from China rather than the U.S. because they are included in the TPP. For example, even if the United States follows a “yarn-forward” rule of origin, other countries within the TPP can get products weaved or knitted in China instead of the U.S. due to the fact that they are part of the agreement.

    1. great comments! Should China join TPP, “yarn-forward” will be less effective in protecting the US textile manufacturing for sure. Vietnam probably will have a mixed feeling as well–being able to continue using textile inputs from China will be good, but losing the advantages over China will be bad… Anyhow, this won’t happen too quickly, but somehow I believe it will happen one day. TPP is a “big game”…

  6. Responding to question #10, I think that Asia has becoming so strongly interconnected economically because of both geographical proximity and the fact that Asian countries fall within many different stages of economic development. It makes a lot of sense to connect with other countries that are located close by, as it cuts down on time, transportation costs, and overall ease of business. In terms of economic development, some countries in Asia are highly developed with strong economies and GDP figures while others are much less developed. These economic differences manifest themselves in the industries that these countries specialize in, and more specifically, what steps in the t&a development process they focus on. As we have seen with the Flying Geese Model, this makes various countries have comparative advantages in different areas and gives each country a different role in the overall economic interconnectedness.

  7. In response to question #6: I really don’t see China and the US as threats to each other. Both of them being such large countries, I believe they can both help each other grow and benefit. Both countries have so much to offer so if they have that in mind, they can work together to help each other prosper. The economies of both countries can benefit from some healthy competition, without hurting either nation.

  8. In response to question 6: “China and the US can be seen as a threat to one another. However the president of China said the “Pacific Ocean has enough space for the two large countries”. Do you think they are threats to each other, or are they ultimately helping each other’s economies grow?”

    I do agree China and the US are both a huge threat to one another. Both countries are two of the most powerful in the world, especially regarding the T&A industry and the power both countries have in exports and imports. Although both countries are powerful, I would not consider us as legitimate threats. While we both compete in exports and imports, both countries aid the rest of the world in global trade and mass amounts of business. Of course, the countries might dispute or butt heads regarding trade, but that is inevitable due to the ultimate power of both regions. Ultimately, I believe China and the US might be helping each other out by being two of the biggest contributors to global exports and imports. Both countries support globalization, and in the end I believe that is the most important thing to focus on.

  9. In response to #5 the way we do business with companies in different countries is heavily dependent on policies within the country as well as between our country and theirs. Different tariffs and quotas can greatly affect the cost of doing business with a country. I don’t think it will be possible to create a standardized set of regulations. The regulations and policies are set in place in an attempt to create a more even and fair playing field for different countries. Due to the variety of strengths, resources, and level of development of different countries it would not be possible to maintain an even playing field by having standardized regulations. That being said there is also the question of whether the government should be that involved in evening the playing field or whether governments should allow countries to compete based on their development, strengths, and resources.

  10. In response to question number seven, as more and more countries move into more capital intensive production, then it could cause them to develop further technology. If countries such as Vietnam begin allocating resources to more intense manufacturing then they could develop the technology and business strategy to compete with the strong textile market in the U.S. The more money that they can get for exporting apparel to the U.S., then the more of a chance they have at advancing their global trading position and power.

  11. In response to question number 5, it is very difficult to work with other countries because of barriers such as language and cultural norms. Some countries operate in more low context and collectivist cultures than Americans for instance. Even basic government styles are different in these countries and impact the way our legal systems work and the level of ambiguity the countries’ governments have with their people. I do not think there is really a way to set these standards aside from a written document outlining every single policy, as we cannot completely change the culture of each country.

  12. In response to question 6, I don’t think that the US and China are threats to each other. In the grand scheme of production I believe that the US and China have largely different scopes of what they can offer to the international markets. China has cheap labor, lenient rules, and large quantities of willing laborers. The US while abundant with people willing to work these wills come with a different set of standards, one under which can not produce apparel and textile the way china can. Thus the US can focus on more capital intense products and China can focus on labor abundant products. Ultimately I think China and the US can both thrive in production if they continue to produce what they’re best at, however they do have the potential to be large threats to one another. Hopefully it doesn’t come to that.

  13. I have chosen to respond to question 11, what are some of the reasons that China still remains one of the most price competitive export markets in the world? This is because China created a competitive advantage by the government is putting capital into infrastructure and economy. China also offers cheap labor and end up beating out other countries that offer the same thing by producing goods more efficiently. With these competitive advantages, unless another country does the same thing but better, or someone else creates a competitive advantage, and then China will remain the most price competitive export makers in the world.

  14. 10. East Asia has become one of the most interconnected regions of the world due to the “Flying Geese Model”, which has not only shaped the growth of the region as, but describes the trends that we have seen in the past from this region and will likely continue to do the same as time continues. Within this model we see that as different countries within the region further their development economically, there are strategic plans in place that enable other countries to automatically pick up their “slack”. Not only does this help development the region through the continually growing amount of technology and innovation occurring, but also continues to keep the area in whole in front the trend in all methods to lower prices or increase productivity. I believe it will be very interesting to monitor what occurs in terms of this model once TPP goes into effect. Will we soon see a slowing in the growth or a lowering of the interconnectedness? And if so, what will this mean for the global T&A industry as a whole?

  15. In response to question 6: I think the U.S. should allow China to join the Trans Pacific Partnership because it will have big impacts on trade and investment patterns in the Asia-Pacific region. In order for China to join, supply chains will need to adjust to “take advantage of preferential access to TPP markets, and production and manufacturing will be reformed to meet TPP standards on the environment, labor, and food safety,” as mentioned in one of our articles we read. China must establish a pathway for joining the TTP, or it’s own high standard trade agreement for the Asia-Pacific region that the U.S. can also envelop. In my research, I came across a statement that says, “should China join the TPP (along with South Korea, Indonesia, the Philippines, and Thailand)…gains for the United States would increase five-fold to nearly $330 billion.” Therefore, I do believe that the U.S. should allow China to become a TPP member because it will help the U.S. economy, as well as China itself, allowing the two countries’ economies to grow together.

  16. In response to question 7: What will happen as more and more countries that used to produce apparel move into producing more capital intensive production?
    I believe that if more countries move into capital intensive production that means that countries are becoming more successful and wealthy as a whole. Currently there are many third world countries where individuals survive on around one dollar a day. These countries strive to improve their economic stance and are interested in the global market to improve their financial situation. The more globalized production becomes, the more money is generated around the world and the more opportunities will arise. If countries become more capital oriented, they have the opportunity to potentially use robots for production just as the article on Levi Strauss discussed. Although this creates fear for people who worked in these factories, this also creates opportunity for people to work in more advanced fields such as technology, engineering, and computers. Additionally, there are other growing industries such as the service industry that people are able to work in in China for this specific example. Just as the US used to be dominated by the manufacturing industry and then progressed to a more capital based economy, other countries are able to do the same. This growth cycle allows for production to move elsewhere to increase the global production even further.

  17. #7 As more and more countries start to produce more capital intensive production they will rely more heavily on the less developed countries to supply the labor for apparel industry. Less developed countries are more labor intensive then the more developed countries. These less developed countries have the people and lower skill workers to work hard to try to make any penny possible. They are working in awful conditions and are not treated well. The more developed countries trade with these countries to get the apparel they need and the cheaper prices. Practices need to be put into place to make sure these workers are being treated right and not in such harmful conditions. Because the people of the more developed countries focusing on capital intensive products like airplanes are not paying full attention to what is going on overseas.

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