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Oceania is made up of:
Australia and New Zealand
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Political systems:
democracies, communists, kings, sheiks and sultans
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most populated countries
China and India
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APEC
- 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
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most developed countries
Japan and Australia
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China
- largest country in size and largest population
- 2nd largest economy and 4th largest trading nation
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India & China
- Industry makes up 4% of India's GDP
- India went from agriculture to service based industries
- China went from agriculture to manufacturing based industries
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Four Groups
- East Asia (China, South Korea, Taiwan, Japan)
- Southeast Asia (Hong Kong, the 8 ASEAN countries)
- South Asia (India, Pakistan, Bangladesh)
- Oceania (Australia, New Zealand)
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Australia
2nd largest in Asia with relatively small population
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India
3rd largest with the 2nd largest population
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East Asia
- Three countries are developed (Japan, Hong Kong, and Taiwan)
- Two are nearly developed (Macao and South Korea)
- One is developing (China)
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Southeast Asia
- 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
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With the MFA eliminated, countries compete for sourcing with other factors:
- 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
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ASEAN
- 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
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Singapore
- 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
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Malaysia
- 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
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Philippines
- 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
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Indonesia
- 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
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Thailand
- 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
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Vietnam
- 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
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Cambodia
- Growth as an apparel producer in the last few yrs
- 75% of their exports are apparel
- Highly vulnerable to china
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India, Bangladesh, Pakistan, Nepal, Sri Lanka
- 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
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Sri Lanka
- 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
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India
- 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
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Pakistan
- Like India, high cotton producer especially in home furnishing markets
- 4th largest cotton producer
- Doing business can be more difficult than India
- Drug issues
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Bangladesh
- 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
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Low wages are not the only consideration to sourcing to Asia - Others to consider:
- Rate of productivity
- Cultural work habits
- Availability of production equipment
- Availability of cost- competitive, high-quality fabrics and trimming
- Lever of service
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Australia
- 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
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New Zealand
- 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
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Japan, South Korea, Taiwan
- 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
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Japan
- 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
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South Korea
- 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
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Taiwan
- 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
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Hong Kong
- 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
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Li and Fung (Top broker in world)
- Source products in over 40 countries
- $5.5B annually
- Using over 6,000 factories worldwide
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China
- 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
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China Retail
- 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
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China Currency exchange
- Held as a percentage of the US dollar
- Considering some deregulation which would increase the costs of China's exports
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Social Responsibilty
- A crucial element of international efforts to foster sustainable and equitable development worldwide
- Two-faced capitalism
- Corporate Fads
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Social Responsibility:
Influences on morals and ethics
- Family
- Friends
- Religion
- Education
- TV
- Internet
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Social Responsibility:
Codes of Conduct
Corporate response to include social responsibility in the business decision-making process
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Social Responsibility:
Ethics
A code of morals or a person, group or profession and its application to decisions and issues of conduct
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Social Responsibility:
Morals
Degree of conformity with generally accepted or prescribed standards of goodness, fairness, or rightness in character or conduct
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Social Responsibility:
Maslow's Hierarchy of Needs
- 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
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Social Responsibility:
Labor Exploitation
Gender
- 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
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Social Responsibility:
Labor Exploitation
Age
- 211 mil children worldwide from the ages 5-14 work
- Most countries have laws to protect children
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Social Responsibility:
Recommendations for companies to use as Codes of Conduct
- 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
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Social Responsibility:
Human Rights Organizations
- Labor Unions - AFL-CIO
- Social Activists
- Trade Associations - AAFA
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