Introduction
Aussie textiles are a medium sized organization which produces quality garments located at Queensland. As there was a huge competition for imported goods at a cheaper price, the organization had decided to establish a manufacturing plant and import goods from one of the three countries namely Bangladesh, Indonesia and Vietnam. This report will be focusing on how Vietnam could be a potential country for setting up an entirely new manufacturing plant to produce quality textiles and export back to Queensland. Further adding on to the report, it attempts to analyze the pros and cons, followed by the industry overview and analysis. In the next paragraphs, the market for the textile industry will be analyzed using the industry data. In addition to this, tools such as porter five forces model will be used to analyzing the potential as a host market for manufacturing. And finally the recommendation declaring if the market in Vietnam is feasible for manufacturing or not.
Industry Overview
Over the course of little more than a decade, Vietnam has become a significant exporter of garments to the EU and Japan, and now to the Australia too. Textiles are a vital component of Vietnam, presently accounting for nearly half of the country’s manufactured exports. As clothing is some of the most synchronized operated sectors in the world, it accounted for 16.5% of the total earnings in the year 2002(Nadvi et al. 2004). The apparel industry in Vietnam has been incorporated into
The Indian textiles chart showed how India used machines to produce greater yarn and cloth amounts in 1914 as compared to the production in 1884. As well it demonstrated how the amount of people using machine made textiles had greatly increased opposed to hand made textiles (Doc 1). In 1916 Radhakamal Mukerjee, an Indian economist, explains how that handwoven textiles cannot keep up with the machine made textiles, and therefore is on a decline (Doc 6). This identifies how India is moving towards
The relevance of this book can be measured by its ability to speak to the everyday individual, who may or may not know anything about economics, and plant the seed toward global economic education. It provides a keen social awareness to people who may or may not ordinarily care about international economics and can have an eye-opening effect toward what really happens in the textile industry.
b. Does the issue of branded vs. private label enter into this consideration? Why or why not?
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
In 1789 a young man came to America from England with a plan in his head. The plan was a detailed layout for a water-powered spinning machine and the man was Samuel Slater. The introduction of this technology sparked the start of the, eventually, massive textile industry. The textile industry in America was slow moving at first, with failures along the way. However, President Jefferson’s embargo in 1807 allowed the industry to pick up; during the War of 1812 textiles exploded onto the scene. However, these textiles often had poor working conditions, workers led difficult lives, and the technology was still developing. Textile mills would continue to change and grow from their boom in the early 1800s and throughout the 1900s.
The introductory of the documentary examines the fabric mills of Bangladesh. It is very competitive in the international market place to find low cost labor; when merchandise manufactured in another country is imported these country put on a duty rate. Apparel companies contemplating low cost labor,
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
After the Civil War and the reconstruction era, textile mills become one of the main labor sources in the New South. Textile mills were brought from New England and were preserved for whites. The mills were a hit down south because southerners were known to take what they were handed, and were less likely to rebel when compared to union workers from the North. The health conditions in the mills were horrible and the employees were underpaid, but the people that the cotton mills attracted were poor and needed work so they continued to work in the mills because it meant being able to provide for one's family.
This trait can be leveraged to build systems on par with the new technologies. An addition of 25% of personnel, expert in modern technologies and equipments would enhance the ability of the firm to start an e-business system that would enable LBS Textiles make a global presence, capture the national and international markets. Increase in the number of clients that LBS Textiles can reach out to will increase the volume of trade. The increase in trade brings in direct returns to the company. The expansion of markets and increase in clients indirectly increases the volume of sales and aid in boosting the returns to LBS Textiles. The company needs to evaluate the demand of the various demographics across the globe and develop newer attractive designs. The Research of newer technologies or designs to attract newer markets and wider demographics will incur expenses but the successful outcomes when channelized through the development teams produce the actual product for direct revenue generation.
2. Richard M. Johns (2006). The Apparel Industry. 2nd ed. UK, London: Blackwell Publishing Ltd.. 1-124.
As stated by Weller (2007) Australia's textile industry has seen a steady growth from 1970s to date, which makes it one of the major contributors to the economic development of the nation and a greater source of employment opportunity. The industry is unique from other markets around the world specifically from European and U.S. markets. This unique arrangement of the Australian space economy frequently contributes to several barriers for many clothing firms which has intention to establish in Australia. However, Australia's population within most urban centers is very less density which creates a lot of obstacles for any firm investing in Australia to make a nationwide market.
According to the data, the total volume of textiles exported from China has started a continuous rapid growth since 2001 (the year of China’s accession to the WTO) as shown in the first graph above, which roughly
In comparison with the number in developed countries, €9 per hour in the UK for example, no wonder why big multinational companies all over the world have been trying to outsource to Vietnam. There are many factories along the country which are manufacturing final products for world top multinational companies. Nike, Adidas, Panasonic, Toyota, etc., all place their factories in Vietnam. In fact, when one goes shopping in Europe, it is no surprised to see a product of a famous brand with the “Made in Vietnam” label printed on it . Moreover, according to some latest research, Vietnam has a young population. It can lead to a more effective working force, compared to countries which have an old population, such as Finland and Japan. In the last decades, the literacy rate of Vietnam has been increasing steadily, from 88% in 1989, 90% in 1999 to 93,5% in 2009. More people get a bachelor’s degree nowadays, which leads to the improvement in the worker’s skill. Offering not only a strong flow but an efficient working force, Vietnam has been attracting more investors every year.
According to the WTO‘s Trade Profiles 2015, China is the leading merchandise exporter in the world and second largest importer just after United States in 2014 (Wto.org, 2015). China being a lucrative destination attracted a very high inflow of investment (foreign direct investment). Thus once very predominant part of Chinese foreign trade the Textile and Apparel industry is being gradually replaced by sectors like machinery and transport equipment, which are relatively capital intensive.
Faruqui, M. (2014, July). Nobody can beat Bangladesh in price and quality. Retrieved from http://www.textiletoday.com.bd/magazine/873