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World Bank Study
Figure 2.9. Types of Lead Firms in Clothing Value Chains Research & development
Inputs
Design
Logistics
Production
Textiles
Final products
Licensee
Fiber
Yam
Fabric
Finish
Marketing
Value-adding activities
Distribution & sales Brand marketer
National brand mfg.
Retailer: mass merchandiser
Department Discount
Fullpackage mfg.
Cut/sew (contract mfg)
Services
Sourcing intermediary
Retailer: specialty store
Network provider Agent Jobber Distributor Direct importer
Source: Gereffi and Frederick (2010, 15).
Intermediaries such as importers, exporters, agents, and trading houses play a central role in global clothing value chains and have provided key links between buyers and suppliers. They are generally responsible for coordinating production, including input sourcing and logistics, but increasingly also for providing services in areas such as design, product development, and marketing (Gereffi and Frederick 2010). In the 1990s, a new type of intermediary has evolved. Large full-package manufacturers, in particular in East Asia, have developed from producers to intermediaries organizing far-flung transnational production and sourcing networks (Appelbaum 2008). This trend has been closely related to the MFA and quota hopping, and to changing sourcing strategies of global buyers. Faced with high demands on price, quality, and lead time as well as with large and changing volume demands and technical requirements from global buyers, more capable suppliers have tried to position themselves as globally operating production transnational corporations (TNCs) that coordinate networks with a global supply base. Asian producers headquartered in the ‘Big Three’ (Hong Kong SAR, China, Taiwan, China, and Korea) are the prototypes in this respect (Appelbaum 2005). These firms gathered experience in coordinating production networks in the Asian region when faced with raising labor costs and quota restrictions in their countries. Although this model was more or less limited to the Asian rim during the 1970s and 1980s (with the exception of Mauritius), in the 1990s it was extended to other continents, in particular to Latin America and the Caribbean and to SSA, mostly driven by quota restrictions and preferential market access. The Asian producers, especially in Hong Kong SAR, China and Taiwan, China, coordinated triangular manufacturing networks (Appelbaum and Gereffi 1994; Gereffi 1999), which usually involved production in a developing country