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World Bank Study
10. The HHI can range between 1/n2*10,000, that is, all countries have the same share, and 10,000, that is, one country exports all, where n designates the total number of countries exporting this product. 11. Cambodia and Pakistan however lost market share in the context of the global economic crisis. 12. In Europe also mail order companies such as O o Versand, Quelle, Great Universals Stores, and Pinault Printemps Redoute are important in clothing sales but their market share has stagnated. 13. Inditex (Zara) can be classified as a specialty clothing retailer or as a branded manufacturer. It originally disposed of significant in-house manufacturing capacities which have been reduced, however, and today only a small part of quick turnaround and fast fashion products are manufactured in-house. 14. U.S. buyers have developed closer links with global Asian manufacturers than European buyers which have predominantly used the service of domestic and global Asian trading houses (Palpacuer et al. 2005). 15. For example, the trading house Li & Fung, based in Hong Kong SAR, China, is the world’s second largest clothing supplier after China (just-style 2009a, 23). Li & Fung is the largest company in Hong Kong SAR, China but there are others in the same league. Korea and Taiwan, China are home to the vast majority of the world’s 50 largest clothing exporters (just-style 2009a). Unfortunately, no interviews were conducted with these large global trading houses and transnational producers, although they are importantly involved in sourcing decisions. 16. Large retailers in the United States and in Europe from the discount and the mid-market segment, involving general retailers as well as specialized clothing retailers, were interviewed. In the United States also one branded marketer and one branded manufacturer were interviewed. Mailorder houses and super/hypermarkets were not part of the sample. The interview guidelines and topics were elaborated based on previous studies, in particular Palpacuer et al. (2005), Gibbon (2002a), and Palpacuer (2004). 17. However, direct sourcing involves significant investment in overseas offices. Consequently, resorting to intermediaries may occur to reduce overhead costs and minimize the risks involved with direct sourcing. 18. There are also differences with regard to sourcing countries. For instance the use of overseas agents is particularly common in sourcing from India which Palpacuer et al. (2005) explains by the smaller average size of firms in India compared to most developing countries. Intermediaries are also often used in sourcing from CEE due to the lack of financial depth and thus input sourcing capabilities of most firms there. 19. Although Walmart is using Li & Fund for a large share of its intake Walmart still plans to become more direct in the next years. 20. In European countries there are different regional focuses with regard to regional supplier countries due to different historic, cultural, and language contexts: French buyers focus on Maghreb countries, U.K. buyers on Turkey, and German buyers on CEE countries 21. Production costs consist of different factors, in particular the wage rate, which, together with working days, working hours, and productivity, results in unit labor costs. However, the costs of utilities (such as electricity and water), inputs (in particular fabrics), and transport are also central. 22. Buying departments produce technical specification sheets for each product they purchase. These ‘tech sheets’ specify the size of the order, the size breakdown, delivery date, fabric, trims, seam measurements, tolerance measurements, printing, embroidery, washing, packaging, and other data (Salm et al. 2002). 23. Some buyers and intermediaries offered financial support to their suppliers. For example, Kohl’s provided a ‘Supply Chain Finance’ program, Wal-Mart launched a ‘Supplier Alliance Program,’ and Li & Fung became a lender of last resort to factories and small importers (Gereffi and Frederick 2010). But others—in contrast to supporting suppliers—demanded longer payment periods or delayed payments during the crisis due to their own financing problems. 24. Other infrastructural areas (besides transport and logistics) such as electricity and water are seen as ‘the business of the suppliers’ but buyers see the large effect they have on operational costs and their centrality in suppliers’ competitiveness. 25. It has to be taken into account that this is an aggregate analysis which masks product and country specific variations.