Journal of the Asia Pacific EconomyWord文件下载.docx

Journal of the Asia Pacific EconomyWord文件下载.docx

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Thereislittleevidencethatthesuppliersarepursuingfunctionalupgradingstrategies

besidesthefactthattheyareflexibleservingseveralcustomersatdifferentmarkets.

Keywords:

garments;

export;

globalvaluechains;

Vietnam

JELclassifications:

L67,O19,O24,O33

Introduction

Economictheorysuggeststhatanexportorientationstrategycanprovidecountrieswith

highereconomicgrowth.Integrationintotheworldeconomyseemstobenecessaryfor

developingcountrieswantingtheireconomytogrow.SinceitseconomicDoiMoireforms

in1986,Vietnamhasconsideredexportthekeytoeconomicdevelopmentinordertonarrow

theincomegaptothedevelopedcountries.Vietnampossessescomparativeadvantagesin

labour-intensiveindustriessuchasgarment,footwear,furnitureandsoon.Amongthese

industries,garmentexporthasreportedthelargestexportturnover,aboutUS$7.8billionin

2007,andisnowthecountry’ssecondlargestexportitemaftercrudeoil.

However,internationaltradeingarmenthashardlyeverbeencharacterisedbyfree

tradearrangementswherecomparativeadvantageswouldalonebethemaindriverforthe

locationofproductionanddistributionofexports.TheMultiFibreAgreement（MFA）put

barrierstofreetradeingarmentsbutunderWTO’sAgreementonTextileandClothing

（ATC）,allquotasontheimportationoftextileandgarmentwereeliminatedamongWTO

membersfromthebeginningof2005.Theabolitiondrasticallychangedtheglobalcontext

ofthegarmentindustry.AlthoughVietnambecameaWTOmemberonlyin2007,itwould

beaffectedbythechangeinthecompetitiveconditionattheglobalmarket.

Whatwouldbetheeffectsofthechangefortheglobalgarmentsuppliercountries?

The

overalldemandforgarmentscontinuedtoincreasein2005andbroughtaboutanincrease

intheoverallglobalgarmentexport.Withtheremovalofquotas,garmentexportwillnot

berestraint,andsoeverycountrywouldhaveanopportunitytoenhanceitscompetitive

.Email:

hsm.ikl@cbs.dk

ISSN:

1354-7860print/1469-9648online

C_

2009Taylor&

Francis

DOI:

10.1080/135********785997

JournaloftheAsiaPacificEconomy163

advantageandincreaseexport.ThissituationalsoappliedtoVietnamalthoughitwas

notaWTOmemberthen.However,althoughVietnamhasabundantcheaplabour,canit

alsounderthemoreintensecompetitiveconditionsmanifestitscomparativeadvantage

whenmanyotherdevelopingcountriesarealsoproducingrelyingonsimilarcheaplabour

conditions?

InthenewsituationaftertheterminationoftheMFAin2005,weexpectVietnam’s

garmentproducerstoreviewtheirstrategiesandenhancetheircapabilitiestoparticipatein

theglobalvaluechains（GVCs）underthemorecompetitiveconditionsintheinternational

tradeenvironment.Thesechallengesleadustoraisethefollowingquestion:

Howhas

Vietnam’sgarmentexportperformedafter2005andhavethegarmentsupplierschanged

theirstrategies?

Thefollowingsectiondiscussesthetheoreticalargumentsfortheimplicationsofglobal

tradeliberalisationandhowcompetitivefactorsworkforsuppliersembeddedinglobal

garmentvaluechains.Thisleadstoadiscussionoftheexpectedconsequencesofthe

terminationofthequotasystemsunderATC.Thethirdsectionanalyseskeyfeaturesand

operationalmodesoftheVietnamesegarmentindustry.Inthefourthsectionweanalyseon

thebasisofindustryexportandperformancedatathechangesthathavetakenplaceafter

2004.Thefifthsectionpresentsamicro-levelanalysisofsupplierfirms’strategicreactions

tothechangesbasedonprimarycollectedcompanydata.Inthefinalsectionweconclude

bysummarisingthefindingstotheposedresearchquestions.

Perspectivesonliberalisationandcompetition

Movingfromaquota-regulatedtraderegimetoaliberalisedoneshouldaccordingtosimple

neo-classicaltradeeconomicsceterisparibusleadtoachangeintradeflowsfromcountries

withlessprice-competitiveproducerstocountrieshavingmoreofthem.Sincethequota

systemsforgarmentimportstotheUSandEUinparticularwerequiteelaborate,i.e.

allocatingquotastoalargenumberofexportingcountrieswithsignificantvariationsin

pricecompetitiveness,itcouldbeexpectedthattheremovalofquotaswouldleadtoa

majorreorganisationofthetradeflowsandshiftsinthegarmentexportcompositionamong

theexportingcountries.Thewidespreadexpectationwasthatwell-establishedlowcost

andefficientexportingcountrieswithlargecapacities,suchasChinaandIndia,wouldgain

whilemanysmallerdevelopingcountriesthathadmainlycomeintotheglobalgarmentvalue

chainsbecauseofthequotasystemswouldlose（Proksch2004,A.T.Kearney2005,Tewari

2006）.Furthermore,thetheoreticalpredictionwouldbethatfreetradewouldleadbuyers

topressurepricesdownward.Suchshiftswouldhaverepercussionsonexportearningsand

employmentintheconcernedcountries.

Inanticipationofthesechanges,alotofinterestandconcernswereraisedaboutwho

wouldlikelywinandwhowouldlose?

2Theoutcomefromthesediscussionsrevealsa

morevariedpicturethantheabovetradetheoryargument.Inthegarmentvaluechains,

competitionisnotonlyaboutpricebutalsoaboutawholerangeofothercompetitive

factorssuchasquality,deliveryspeedandcertainty,productioncapacityandflexibilityand

transporttimeandcosts（GereffiandMemedovic2003,Palpaceuretal.2005）.Development

ofvariouscapabilities,suchasskills,managementpractices,andnetworking,thatare

importantatthefirmlevelappearstovarynotonlybetweenregionsbutalsoamongfirms

withinthesamecountry（Tewari2006）.Thesefactorstogetherwithotherriskelementsmay

beaccommodatedinneo-classicaltheorybutitcertainlymakestheinternationalbuyers’

sourcingstrategiesmorecomplicatedandtradestreamsmaynotnecessarilybedivertedto

themostprice-competitivesuppliers.Inadditiontothecompetitivefactors,arangeofother

164H.Schaumburg-M¨

uller

strategicconsiderationsaremadebythebuyers.First,locationconsiderationswillmake

largebuyersinparticulartoassesscountryrisksandspreadorderstodifferentcountries

toavoidasituationwhereunexpecteddevelopmentsinonecountrycanharmtheirentire

supply.Secondly,therecanbesubstantialexitandshiftingcostsfromabandoningsuppliers

inonecountryandshiftingtonewonesinothercountries.

Whenitcomestowhowinsandwholoses,theoverallassessmenthasbeenthatChina

willtakeitall.Chinahasalreadybecomeagloballeaderingarmentexportinmostproduct

categoriesbecauseitsproducersonaveragearethemostcompetitivewithrespecttoboth

priceandquality.However,ifwealsotakeothercompetitiveparametersandstrategic

considerationsintoaccount,thepicturemaybelessobvious.Buyersmaynotwanttoputall

theirordersinChina.InfrastructureproblemsinChinaarerising,wagesarerisingandthe

garmentsectorisnotpoliticallyaprioritysectorforChina.Buyersmayalsoseeacountry

riskinplacingalltheireggsintheChinabasket.Therefore,thebroaderpicturesaysthat

therearestillsubstantialopportunitiesforeffectivegarmentproducersoutsideChina.

However,institutionaltradearrangementswillcontinuetodiverttheglobalgarment

marketfromacompletelyfreemarketsituation.Importingcountrieswillcontinuetoprotect

theirlessefficientproducers.SoonaftertheATCwasterminatedon1January2005,

politicalconcernswereraisedaboutthehugeimportsurgefromChinaintotheUSand

EU,resultingintheintroductionofexportrestraintsagreementswithChinaforgarment

exports.Furthermore,preferentialtradearrangementsforspecificdevelopingcountries

werestillallowed,forexample,creationofpreferentialaccesstotheEUmarketorthe

AfricanGrowthandOpportunityAct（AGOA）forproducersinAfricancountriestotheUS

market.

Garmentmanufacturingandfirmstrategies

Textilegarmentisafast-growingindustryinVietnam,constitutingaround15%ofthe

country’stotalmanufacturingproduction.Thegarmentexportshaveoverseveralyears

showndouble-digitannualgrowthrates.Inthelastcoupleofyears,exportfigureshave

explodedandreachedUS$4.8billionin2005,upfromUS$1.9billionin2001.Theincrease

hasmainlybeenaresultoftheopeningoftheUSmarketafterthebilateraltradeagreement

（BTA）enteringintoforcein2001,butbecauseofthesteepgrowththeUSintroduced

quotasfortheimportfromVietnamfromearly2003.MainmarketsforVietnam’sgarment

exportshadearlierbeenJapanwithoutquotasandtheEUwithquotas.

Boththetextileandthegarmentsubsectorshaveexpandedproductionsignificantlyover

thelast15years.Togethertheycurrentlyemploymorethan1.6millionpeople.Thetextile

sectorwasearlierlargerthanthegarmentsect