The Global Apparel Value Chain, Trade, and the Crisis
195
Table 5A.2 continued
Country
Labor pay ratea
Strengths
Weaknesses/threats
• Low cost, flexibility, and speed: strengths when compared to China. Flexibility: can cater to buyers’ requirements for small, customized orders as well as large orders. Intricate, high-quality garments with flexibility and speed. • Domestic market: growing number of firms switching to supply domestic market
• Lack of scale economies: 80 percent of T&C units are small, cottage-like, typically employing fewer than 11 workers; only 6 percent have more than 49 employees • Currency fluctuation percent • Inflation in raw material costs compared to competitors • Manufacturing costs: power, operating, and transaction costs are higher compared to competitors
Vietnam
• Alternative to China: FDI and sourcing • Growing textile industries: Taiwanese and Korean investors are setting up operations • Growing exports to Japan and domestic market; ASEAN trade pacts • Relatively stable business environment
• Skilled workers: Lack of skilled workers with experience in technology, fashion, and management • Imported textiles: Dependent on imported textiles • Private capital: Ability to allow private capital to operate freely
$0.38/ hour
Indonesia
• Large domestic market • Large installed production capacity • Low labor costs and relatively low turnover rates • Long, refined textile tradition (batik techniques, embroidery)
• High energy costs Outdated machinery Inconsistency • General business climate: unfavorable bureaucracy, taxes, corruption, security, cooperation
$0.44/ hour
Mexico
• NAFTA • Proximity to the United States
• High labor cost
$2.17/ hour
Pakistan
• Low labor cost • Government support and liberal FDI policies with incentives have been essential to development • Currency depreciation against the U.S. dollar and other Western currencies. This has helped exports, but has also raised the cost of imported inputs.
• Energy access and reliability • Political instability: security and safety issues • Mediocre quality and color consistency of textiles and clothing • Labor: low productivity • Lack design skills and global market knowledge as well as supporting resources (research and training centers)
$0.56/ hour
(continued next page)