International Sourcing 3

Australia and New Zealand

democracies, communists, kings, sheiks and sultans

China and India

• Asia-Pacific Economics Cooperation was established to facilitate economic growth, cooperation, trade, and investment in the Asia-Pacific region
• 21 countries
• also called the Pacific Rim
• heavy in apparel and textile trade
• 47% of all global trade
• do not make treaty obligations or binding commitments
• attempt to reach a consensus and make commitments on a voluntary basis
• Goals: free and open trade, encourage investment and create jobs

Japan and Australia

• largest country in size and largest population
• 2nd largest economy and 4th largest trading nation

• Industry makes up 4% of India's GDP
• India went from agriculture to service based industries
• China went from agriculture to manufacturing based industries

• East Asia (China, South Korea, Taiwan, Japan)
• Southeast Asia (Hong Kong, the 8 ASEAN countries)
• South Asia (India, Pakistan, Bangladesh)
• Oceania (Australia, New Zealand)

2nd largest in Asia with relatively small population

3rd largest with the 2nd largest population

• Three countries are developed (Japan, Hong Kong, and Taiwan)
• Two are nearly developed (Macao and South Korea)
• One is developing (China)

• One country is developed (Singapore)
• Six countries are newly developed (Cambodia, Indonesia, Malaysia, Philippines, Thailand & Vietnam)
• The rest of countries are newly developing (Bangladesh, India, Pakistan, Sri Lanka)
• No least developed countries

• Tariffs schedules
• Social Responsibility
• Security of shipments
• The country's business climate
• Infrastructure
• Proximity and access to major markets
• Availability of low-cost, skilled labor
• Effective management
• Product quality
• Access to competitive suppliers
• Reliable delivery
• Service

• Association of Southeast Asian Nations
• Members: Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam
• Goal: to enhance the trade of its members by establishing ASEAN as a single market and production base with open trade among its members by 2020

• One of the wealthier nations ($23,700 GNP)
• Low unemployment
• High literacy rate
• After HK became a part of China, they have seen an increase in financial and marketing activities
• Limited free trade with the US

• Improving productivity with technology, developing skilled labor and encouraging better quality
• Working toward providing product development and branded merchandise
• 195K employed in the T/A complex
• They deal with illegal immigrants
• Has been declining T & A industries in recent yrs and will probably continue due to higher rising labor costs

• Has had problems with economic growth
• Textile production remains small
• Apparel employs 400K workers
• Avg manufacturing costs $6.60/hr as compared to China with $3.00/hr
• No domestic raw materials
• TUKAweb.com - receive emarkers, print them and distribute through FEDEX to the Asian producers

• Group of islands about 3X the size of Texas
• 3rd largest democracy between the US and India
• Political and social responsibility
• Have had problems with intellectual property
• Largest producer of T&A in SE Asia
• 1.2 Mil work in TA complex

• Democracy
• Several border issues
• Illegal drug distribution
• Well development textiles industry
• Apparel seems to be of better quality with short lead times than many other SE Asian countries
• Infrastructure is poor
• Negotiations are underway with the US for a free trade agreement

• Has developed a large apparel industry
• Began with lesser quality products, today has developed a better quality environment
• Free trade agreement with the US
• Three types of organizations in TA industries:
• -All state owned (Vinatex)
• -Private and family owned
• -Foreign owned

• Growth as an apparel producer in the last few yrs
• 75% of their exports are apparel
• Highly vulnerable to china

• Textiles and apparel are the largest employer of manufacturing jobs
• India, Pakistan, Bangladesh have productivity of 20-25% less than China
• Problem is distance from major markets
• EU therefore is their biggest marketplace

• One of the poorest in the world
• Prolonged civil war
• Apparel industry has been driving force to increase their economy particularly lingerie and accessories
• 300K employment
• Little textile industry which causes longer lead times
• Free trade India and Pakistan

• Population increasing at 2% per year, may soon become the largest population in world
• Strength in trade is competency in English (British Rule)
• Major cotton producer
• 30% of exports are textiles (3rd largest cotton producer)
• Textiles is the 2nd largest employer
• Fashion culture - produce looks that are not ethnic but different
• 70% of the apparel is made for domestic consumption
• Increasing middle class
• High import duties (15-35%)
• Infrastructure problems
• Rigid labor laws regarding layoffs and government bureaucracy
• Well educated workforce including management
• Apparel is focused on higher-value goods
• Desire to capitalize on design, accessories, embroidery, and details

• Like India, high cotton producer especially in home furnishing markets
• 4th largest cotton producer
• Doing business can be more difficult than India
• Drug issues

• Poor infrastructure
• Low productivity
• Low communications
• Child labor issues
• 62% of exports are apparel-decreasing -to China
• 40% unemployment-lowest per capita GNP in Asia

• Rate of productivity
• Cultural work habits
• Availability of production equipment
• Availability of cost- competitive, high-quality fabrics and trimming
• Lever of service

• Highest GDP in the southern hemisphere or Asia
• Moved from production to consumption
• FTA with the US in 2004
• Produces larger quantities of wool fiber and fabric
• Apparel is small and focused on fashion goods
• Most apparel is imported

• Limited domestic production
• What is produced is high value, high quality primarily for their domestic market
• Like other developed countries - consumption vs production of apparel
• Retail markets like to operate a season behind the US and Europe - Purchase end-of-season goods
• Heavy internet users, but hesitant with buying apparel online

• Have developed economies and therefore outsource most of their apparel production
• Have no domestic supply of natural fibers
• Focus has been on R&D of synthetic materials

• Imports 90% of their apparel consumption
• Imported $19.5Bil apparel products in 2003
• Consumers look for high quality and fashion goods
• European luxury brands do well there
• They consume 41% of the worlds luxury brands

• After the Korean war, SK used a government business approach to growing their economy
• Government regularly intervenes in the marketplace - more than most countries
• Outsources most apparel except for the high-end, high-value
• They like to own the factories where they outsource

• Like SK, major supplier of man-made fiber and fabric
• Consider the leader in synthetics
• Like other developed countries, what they do make is high-end fashion
• China does not recognize them as a sovereign country but one their territories
• US now does not recognize them as a separate nation either, but treats them as separate

• 3rd largest exporter of textiles and apparel (UK and China)
• After the MFA and the return to China, HK's quota advantage disappeared and began to compete with China
• Use of brokers - outside vendors who can coordinate product development to shipping

• Source products in over 40 countries
• $5.5B annually
• Using over 6,000 factories worldwide

• Late 70's, China began moving toawrds a socialist-capitalist economy
• Today, 100 mil people are considered middle class - at a fraction of the cost of a US middle class family
• From 1976 to 1996, urban area's population grew from 19% to 30%
• 100 cities have more than 1 mil people
• Chongquing - Largest city in world (31 mil)
• 11 mil apparel employment
• Issues they are having to deal with; infrastructure problems, rising raw material costs, rising labor rates and land
• 3rd largest importer of textiles (after the EU and US) reflecting both apparel for export and domestic consumption
• Import cotton but have abundance of other raw materials for soft goods
• Today, the largest producer of man-made fibers and competitive in yarns, fabrics and trimmings
• More than 110K apparel factories with 10% employing more than 5K people
• 40% of produce is recognized as high quality
• Self-contained cities - living accommodations, with service industries
• Unemployment rate - 10%- migration of people from rural areas to the cities
• 23% of all global trade in textiles and apparel $79B
• Concern: threat of saturating the world with manufactured products
• -69% of Australian apparel market
• -77% of Japanese apparel market
• WTO in 2001 - meant elimination of quotas

• 2004 restrictions of retail foreign investment were lifted
• Up-scale retailers opened
• Mass-market retailers also such as WalMart - 1% of the country's GDP
• Increasing in product development including technical and creative design
• Enrollment in university level apparel programs is growing to meet that demand

• Held as a percentage of the US dollar
• Considering some deregulation which would increase the costs of China's exports

• A crucial element of international efforts to foster sustainable and equitable development worldwide
• Two-faced capitalism
• Corporate Fads

• Family
• Friends
• Religion
• Education
• TV
• Internet

Corporate response to include social responsibility in the business decision-making process

A code of morals or a person, group or profession and its application to decisions and issues of conduct

Degree of conformity with generally accepted or prescribed standards of goodness, fairness, or rightness in character or conduct

• Physiological: very basic needs such as air, water, food, sleep, sex
• Safety: establishing stability and consistency in a chaotic world
• Love and Belongingness
• Esteem: self-esteem which results from competence or mastery of a task and the attention and recognition that comes from others
• Self-actualization: the desire to become more and more what one is, to become everything that one is capable of becoming

• Men get paid about 20% more than women
• Less women in executive roles
• 38% of companies are owned by women
• Women are more likely to develop power and influence through relationships, teams etc.
• Men are more self-confident than women

• 211 mil children worldwide from the ages 5-14 work
• Most countries have laws to protect children

• Statement of the values and goals of their firm
• Must be top down
• Clearly communicated to all employees
• Industry-wide should be developed to lessen confusion and used as a model for smaller organizations

• Labor Unions - AFL-CIO
• Social Activists
• Trade Associations - AAFA