|Dimensions of Globalization
to Peter Dicken's Global Shift, the textile and apparel sectors
were "the first manufacturing industries to take on a global
dimension." Although the industries are geographically dispersed
throughout the world, China dominates the scene with respect to
both textiles and apparel; however, intra-regional trade is also
very important. For example, 40% of North American textile exports
go to Latin America, while 60% of Latin America's textile exports
go to North America. Furthermore, almost 66% of North America's
apparel exports go to LatinAmerica, while Latin America exports
almost 100% of its garments within the Americas.
to the United States International Trade Commission's January, 2004,
and Apparel: Assessment of the Competitiveness of Certain Foreign
Suppliers to the U.S. Market, China has a population of 1,271,900,000
and a GDP per capita of $878. While world exports of apparel rose
by 7 percent between 1997-2001 (to $199 billion), China's apparel
exports rose by over 15 percent (to $36 billion), making it the
world's largest apparel exporter with 18 percent of the world total.
China supplies a wide variety of apparel, ranging from standard-
to medium-quality goods to high-quality apparel.
China is the world's largest producer and exporter of textiles
and apparel and it has invested in more spinning and weaving equipment
than any other country during the last 5 years.
In November 1999, the United States signed a market access agreement
with China that became part of China's WTO accession package; it
obligates the United States to eliminate quotas on imports of Chinese
textiles and apparel as of January 1, 2005, the same date as for
other WTO countries. However, the agreement allows the United States
to apply selective safeguards (quotas) on import on imports of textiles
and apparel from China for an additional four years. The agreement
also states that no safeguards during the 4-year period will remain
in effect beyond one year, without reallocation, unless both countries
agree. The country is likely to be a supplier of choice for most
large U.S. apparel companies and retailers; however, uncertainty
regarding these textile-specific safeguards may temper export growth.
Over the long term competitiveness may diminish as strong economic
growth leads to greater domestic demand for textiles and apparel,
and for the labor and capital to make these goods. China showed
tremendous growth in export of goods for which it became eligible
for quota-free entry in 2002.
According to the United States International Trade Commission's
1998 report on Textiles and Apparel, the labor per-unit cost is
very low due to both low wages and as well as high productivity.
In the textile industry a workers in China earn between $0.41 to
$0.69 per hour, depending on the region. In the apparel industry
a worker earns between $0.68 to $0.88 an hour, depending on the
quality of the goods. Although wage rates are higher in China than
in suck countries as Bangladesh, India, and Vietnam, productivity
is considered much higher in China, making its overall labor cost
China produces fabrics, trim, packaging, and most other components
used to make apparel and made-up textile articles. The availability
of fabric, trim, and findings (e.g. zippers and buttons) is considered
one of the many advantages of sourcing from China, because almost
all the raw materials needed to make a garment are produced there.
The Chinese products are considered by the industry the best in
making most garments and made-up textile articles at any quality
or price level. The country is the world's largest producer and
exporter of textiles and apparel, notwithstanding tight quotas in
major world import markets.
Mexico controlled nearly all of America's outsourcing business in
the textiles and apparel sectors due to its low wage workers and
proximity to the U.S. market.
Currently, U.S. quotas are being phased out for Mexico under the
North American Free-Trade Agreement. Imports from Mexico grew by
43 percent from 1997 to 2002. Mexico's shipments have grown more
slowly in recent years, following rapid growth during the early
years of NAFTA.
Mexico's hourly wage for the textile industry is $2.30 an hour
and $2.45 for the apparel industry. After the quotas are eliminated
in 2005 Mexico's share of the US apparel imports is likely to decline
further, even with NAFTA preferences. The country may continue to
be niche suppliers for some basic apparel, particularly goods that
are needed on a short turnaround basis. Mexico's labor costs are
relatively high and product quality and production have reliability
problems. Middle management that is responsible for running the
factories is considered weak and product design expertise is limited.
Bangladesh: The country specializes in mass-produced and low-end
apparel, including knit cotton tops and woven cotton pants. Workers
receive low wages while the government is working to improve labor
standards. Bangladesh's overall productivity is improving, but still
lags behind China.
India: Many American firms consider India to be the primary alternative
supplier to China. The labor force is huge, relatively inexperienced
and skilled. India is among the world's largest producers of yarns
and fabrics; however, personal safety and security of shipments
between factories and ports leads US firms to use agents in stead
of dealing directly with producers.
Pakistan: Due to access to local supplies of large cotton and a
large, relatively inexpensive labor supply, Pakistan is a competitive
alternative to China. The country is especially competitive for
Peru: The country's overall share of US apparel imports may decline
due to the 2005 quota removals, but it is expected to continue to
be a niche supplier of high-end knit shirts. Peru domestically produces
yarns and fabrics.