TJD International Holding Company (TJD) will perform an industry analysis on the apparel manufacturing industry. China is the largest exporter of this $480 billion market and the EU, Japan, and the U.S. are top importers of apparel. These three import nations account for 90% of all imported apparel. Demand is driven by consumer preference and a combination of costs of manufactures in the U.S. and overseas. “The profitability of individual companies depends on efficient operations and the ability to secure contracts with clothing marketers. Small companies can compete effectively with large ones by specializing in a particular type of apparel manufacture.” 1 U.S. imports account for ninety percent of the U.S. market. The largest suppliers …show more content…
Small forms can compete effectively with larger firms by specializing in a particular type of apparel manufacture.” 1 U.S. imports account for ninety percent of the U.S. market. The largest suppliers to the U.S. are Bangladesh, China, Indonesia, Mexico, and Vietnam. International companies do not report their data globally on a macro level, which doesn’t allow competitors to benchmark sustainable progress. Therefore, TJD has identified the top three firms in the market by asset size. According to Bloomberg.com, Meisheng Cultural & Creative Corp Ltd (China), Nagaileben Co Ltd (Japan), and Virat Industries Ltd (India) are the top apparel manufacturing leaders as it relates to published revenue reports (bloomberg.com). The apparel manufacturing industry includes the production of yarn, and cloth and the subsequent design or manufacture of clothing and their distribution. The raw material may be natural or synthetic using products of the chemical industry. The Industrial processes included cotton manufacturing, synthetic fibers- rayon nylons and polyesters, and Natural fibers- sheep, goat, rabbit, silk-worm flax, Hemp, Jute sisal. The diagram below and Appendix B shows Porter’s Five Competitive Force model for the apparel manufacture industry. Entry barriers exist due to high economies of scale. Large purchases of raw materials for production allow for an average cost reduction of the end product. Thus, smaller producers have more barriers to
In 2004, Gap had a supplier base of 1,000, with 3,000 factories in more the 50 countries (www.proquest.umi.com). Products are made in the Americas, Europe, Africa/Middle East, East Asia and Southeast Asia. Gap Inc. has garment factories around the world from Sri Lanka to Lesotho; from the United States to El Salvador (www.gapinc.com/public/social responsibility).
Manufacturing. The manufacturing process is labor-intensive. The manufacturing process is relatively simple, and firms source their apparel from Asia, which has low wages.
The Apparel industry in general and particularly the Sweater industry is facing problems of declining sales and increased overheads. Steinhouse operates in the higher price band and this sector is dominated by named brands such as Polo and others and departmental stores and the customers prefer such brands over the lesser-known brands such as Steinhouse. Large retailers such as Walmart, prefer to buy directly in bulk from low wage countries such as Bangladesh, China and others. The US market has a very high potential and trade barriers are not present meaning that the company can sell their products freely in the market. They are also allowed to sell in Europe and sales would depend on their quality, brand and price.
Esquel, one of the leading cotton-shirt-manufacturers in the world came from China and it supplies lots of clothing brand such as Banana Republic, Tommy Hilfiger, Hugo Boss, Brooks Brothers, Abercrombie and Fitch, Nike, Nordstrom and Lands’ End, in addition to private companies (Plunkett Research, Ltd.). However, due to the high demand of the US apparel stores for Chinese products, the low cost, which was the main reason why raw materials are being purchased from China, have increased. China’s competition is huge, with Vietnam, the Philippines, Malaysia and Sri Lanka also producing material at cheap prices (Plunkett Research, Ltd.). The US apparel stores can instead purchase from these other Asian countries. It is hard to determine the exact number of suppliers in this industry; but, in general, majority of them are in Asian countries that can provide low-cost raw materials to US-based apparel stores. Therefore, the US apparel stores may acquire higher net profi
Although the Chinese apparel manufacturers would lose profitability due to rising cotton prices and competition from emerging countries, they stand to gain the most from the removal of U.S. quotas and tariffs. According to the author, in 2007, 95% of the 20 billion garments Americans made were purchased overseas. Due to U.S. trade barriers, China’s share of the U.S. apparel import was only 30%. Once these barriers were removed, Chinese apparel would flood the American market due to their low cost and dominance in garment manufacturing. Experts predict that China could eventually supply 85% of U.S. apparel. As they increase their market share in the
First, MIT’s Observatory of Economic Complexity 2015 China export visualization also shows that garments account for 16% of the goods imported by Americans.
The clothing industry in the US entails more than 100,000 stores with combined revenues of over 150 billions dollars a year. The giants within this industry include Abercrombie & Fitch, GAP, Urban Outfitters, and TJX Companies, which I shall be concentrating on
There are segmented clothing and retail industries around the world. Therefore, there are provisions for a smaller number of firms in the industry. Although Creación has direct competitors like Jovian and
The research of the external environment for American Apparel should have notes about each one of these factors political, economic, social, and technological. These factors will have influence over the
SUPPLIER POWER – MEDIUM: Many producers of textiles, raw materials for apparel, large apparel companies would catch their attention. However some apparel in this industry is
Rivalry among existing competitors: The apparel industry is highly competitive with a great number of both local and global competitors. As the market is mature, its growth is small. Accelerated growth and expansion to new markets are not easy goals to achieve. The barrier to get out of the industry is quite low for distributors, but high for producers. Most fashion manufacturers moved their production base to low-cost countries like China as wage and raw materials in developed markets like Western Europe are high. Besides, there is no great discrepancy in terms of quality of products, so customers make their purchase choices based on price and brand recognition.
In order to have higher profit margin, one of the most effective ways is to cut down production costs. In view of the low labor cost in developing countries, global sourcing seems to be a good choice to reduce costs. With the development of global production networks and the increasing competition, fast all fashion clothing firms have shifted their manufacturing operations to low lost locations over the past decades.
The clothing industry in South Africa has always been an industry where there is intense rivalry between the companies. There are main companies in the industry namely Edgars, Woolworths Truworths, but there are smaller retail companies that enter the market that can satisfy the demand of the consumer’s better.
Faruqui, M. (2014, July). Nobody can beat Bangladesh in price and quality. Retrieved from http://www.textiletoday.com.bd/magazine/873