he first sports shoe companies originated from around 1900 and sales boosted with the marketing of sports personalities from the 1970s onwards. Nowadays, the market is dominated by about eleven international sports brands, including Adidas, ASICS, FILA, Kappa, Lotto, Mizuno, New Balance, Nike, Puma, Speedo and Umbro. Most companies focus not only on footwear, but increasingly also on related markets like apparel, fashion and sports accessories. In the 1980s and 1990s marketers like Nike and Reebok took the branding concept one step further by staying clear of both factories and actual stores; their profitability derived solely from promotional schemes based on carefully crafted ‘‘lifestyle brands’’ associated with their products. Nowadays, every brand name corporation involved in the sportswear sector uses outsourcing. Nike CEO, Phil Knight, stated: There is no value in making things anymore. The value is added by careful research, by innovation, and by marketing. Still, it is a public secret that the net profits of the biggest shoe manufacturer, Yue Yuen, and the biggest apparel agent, Li Fung, exceed those of many brands. The total global sports market size was estimated to be $235 billion in 2005, with $103 for the sports apparel segment (NPD Survey, 2006). North America accounted for the largest portion of sales, with 45 percent share of the global market. While Asia was the largest market based on population, the continent only registered 19 percent of global sports sales, behind Europe at 30 percent. This market volume was generated over the entire value chain of the sportswear market. According to Appelbaum and Gereffi this value chain generally consists of the following sequence: consumers, retail outlets, trade companies (in and outbound logistics), brands (R&D, designing, marketing), agents, manufacturers (spinning, weaving, knitting, cutting, sewing, buttonholing, ironing, finishing) and raw material networks. The outsourcing resulted in a situation where nowadays 95 percent of US athletic footwear is imported from low-wage countries and 60 percent of sports apparel for the US market comes from East Asia. It is important to differentiate between the supply chain for athletic footwear and garments. Over 90 percent of all athletic footwear is produced in three countries: China, Indonesia and Vietnam. Production takes place by subcontractors employing usually between 5,000 to 10,000 employees. The big exception is the Yue Yuen company, originally based in Taiwan, with about 250,000 employees with sales standing at US$35 billion in 2005 – more than any of the brand companies. Production in the supply chain for apparel is often closer to its core market because of shorter lead times. Production for the European market takes place mainly in Eastern Europe, Turkey and North Africa, while production for the US market is mainly in Central America and East Asia. For apparel the production is dispersed over a large area among many small suppliers – including many home workers – giving rise to agents who manage the production process. The biggest agent is Li & Fung Limited, a company originally based in China, with sales of US$8.7 billion in 2006, employing 12,000 people acting as agents to coordinate the production of about one million workers. All in all, both the demand and supply side of the sportswear market is becoming more and more global. Although the production is integrated locally, the choice of location and links with other parts in the value chain are truly global. Furthermore, it is no longer only brand companies who can function as a leading company in the supply chain. Also retailers and big manufacturers control access to major resources and generate a significant part of the profitable returns. In Table III the main characteristics of a globally-integrated enterprise are compared with the characteristics of the sportswear sector. analyse methods that the sportswear industry players can employ to ensure that they practice corporate social responsibility in their Multi national Companies
The first sports shoe companies originated from around 1900 and sales boosted with the marketing of sports personalities from the 1970s onwards. Nowadays, the market is dominated by about eleven international sports brands, including Adidas, ASICS, FILA, Kappa, Lotto, Mizuno, New Balance, Nike, Puma, Speedo and Umbro. Most companies focus not only on footwear, but increasingly also on related markets like apparel, fashion and sports accessories. In the 1980s and 1990s marketers like Nike and Reebok took the branding concept one step further by staying clear of both factories and actual stores; their profitability derived solely from promotional schemes based on carefully crafted ‘‘lifestyle brands’’ associated with their products. Nowadays, every brand name corporation involved in the sportswear sector uses outsourcing. Nike CEO, Phil Knight, stated:
There is no value in making things anymore. The value is added by careful research, by innovation, and by marketing. Still, it is a public secret that the net profits of the biggest shoe manufacturer, Yue Yuen, and the biggest apparel agent, Li Fung, exceed those of many brands. The total global sports market size was estimated to be $235 billion in 2005, with $103 for the sports apparel segment (NPD Survey, 2006). North America accounted for the largest portion of sales, with 45 percent share of the global market. While Asia was the largest market based on population, the continent only registered 19 percent of global sports sales, behind Europe at 30 percent. This market volume was generated over the entire value chain of the sportswear market. According to Appelbaum and Gereffi this value chain generally consists of the following sequence: consumers, retail outlets, trade companies (in and outbound logistics), brands (R&D, designing, marketing), agents, manufacturers (spinning, weaving, knitting, cutting, sewing, buttonholing, ironing, finishing) and raw material networks.
The outsourcing resulted in a situation where nowadays 95 percent of US athletic footwear is imported from low-wage countries and 60 percent of sports apparel for the US market comes from East Asia. It is important to differentiate between the supply chain for athletic footwear and garments. Over 90 percent of all athletic footwear is produced in three countries: China, Indonesia and Vietnam. Production takes place by subcontractors employing usually between 5,000 to 10,000 employees. The big exception is the Yue Yuen company, originally based in Taiwan, with about 250,000 employees with sales standing at US$35 billion in 2005 – more than any of the brand companies. Production in the supply chain for apparel is often closer to its core market because of shorter lead times. Production for the European market takes place mainly in Eastern Europe, Turkey and North Africa, while production for the US market is mainly in Central America and East Asia. For apparel the production is dispersed over a large area among many small suppliers – including many home workers – giving rise to agents who manage the production process. The biggest agent is Li & Fung Limited, a company originally based in China, with sales of US$8.7 billion in 2006, employing 12,000 people acting as agents to coordinate the production of about one million workers.
All in all, both the demand and supply side of the sportswear market is becoming more and more global. Although the production is integrated locally, the choice of location and links with other parts in the value chain are truly global. Furthermore, it is no longer only brand companies who can function as a leading company in the supply chain. Also retailers and big manufacturers control access to major resources and generate a significant part of the profitable returns. In Table III the main characteristics of a globally-integrated enterprise are compared with the characteristics of the sportswear sector.
analyse methods that the sportswear industry players can employ to ensure that they practice corporate social responsibility in their Multi national Companies
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