This paper analyzes the global apparel industry, focusing on trade and investment flows and Global production network (GPN) configuration. By examining available data, the paper gives an understanding of the main features of the industry and its international context, shedding light on the potential threats and opportunities for stakeholders in this dynamic sector.
Global Industry Context
The apparel industry operates within a complex global value chain involving interconnected activities across different countries. Apparel production entails complex, multiple global value chain operations interlinked by activities across respective countries’ borders. A whole supply of goods and services takes manufacturing, distribution, and eventually retailing (Ontwerpia 2021). This industry entails strong product trading and flow investment for intermediate and final products.
Trade and Investment Flows
The information on the trade flows of the apparel industry needs to include how deeply the industry is integrated into global markets. The world average of apparel had an outcome of approximately $1.7 trillion as of 2023, according to the 2023, according to the World Trade Organization (WTO). China, the number one exporter, has 30% of the whole market for global apparel exports and is followed by important exporting countries such as Bangladesh, Vietnam, and India (Global Industry Forecast 2023). These countries have been competitive in keeping up with the firms in developed countries, keeping the prices low and the quality better for the customers.
The United States is the top importer, followed by the European Union (EU) member states regarding the destination of imports. First-tiered markets with high importation of apparel from developing countries include Germany, the United Kingdom, and France in the EU, with most of the growth seen as being transferred from the UK to Italy (Gladek and Roemers 2020). If comparisons are made on the flows, Western apparel markets import most products to their markets.
Regarding investment flows, multinational corporations (MNCs) have significantly shaped and will continue to shape the entire apparel global market as we know it. MNCs consistently have their centers of production, distribution networks, and retail outlets run in other countries apart from their motherland. For example, MNCs like H&M, Inditex, Nike, and Adidas have headquartered and retail locations in developed markets around the world, coupled with their production units in low-labor-cost countries like China, Bangladesh, and Vietnam (Ontwerpia 2021).
GPN Configuration
The apparel Global Production Network (GPN) configuration captures interdependence and linkages among the value chain’s various actors. Given that apparel is a labour-intensive commodity, it is produced in numerous developing nations on Earth, mostly for the minimum cost possible. The developing nations involving such activities constitute the first nodal points of activities in the GPN. Clothing production involves varied activities such as sourcing raw materials, textiles, garment manufacturing, and distribution.
Power configuration in GPNs tends to be mainly hierarchical, with the lead firms sitting at the top and playing a big role in coordinating and controlling activities involving various value chain scales (Global Industry Forecast 2023). The said lead firms enjoy big power that enables them to take a major chunk of sales. Hence, suppliers are dominant and often located in other countries. In response, the suppliers subcontract most of the production work to several smaller manufacturers or artisans with different areas of specialization.
Conclusion
In conclusion, the active flow of trading and investing is the general context in the world that is related to the apparel industry. Leading apparel product-exporting countries like China, Bangladesh, Vietnam, and India were moving into the world’s key apparel export market, and the United States and the EU remained import hubs. These trade and investment dynamics in GPNs are drawn into a hierarchical structure with a strategic role played by multinational corporations in controlling and coordinating activities up and down the value chain. This is key to grasping the configuration of the trade and investment dynamics of GPNs; only then will possible threats and opportunities for different stakeholders within the apparel industry be brought to light.
Reference list
Gladek, E. and Roemers, G. (2020). The Global Food System: analysing the trends, impacts and solutions. [online] Metabolic. Available at: https://www.metabolic.nl/publication/global-food-system-an-analysis/.
Global Industry Forecast (2023). Global Agri Food Market Growth | 2024-2030. [online] www.linkedin.com. Available at: https://www.linkedin.com/pulse/global-agri-food-market-growth-2024-2030-global-industry-forecast-b1smf/ [Accessed 17 Mar. 2024].
Ontwerpia, S. (2021). The response of the agro-food sector to a fast changing world. [online] Creax. Available at: https://creax.com/sector-papers/the-agro-food-sector/ [Accessed 17 Mar. 2024].
write