Problemi Ekonomiki (Jun 2020)
Integration of Clothing and Footwear Manufacturers into Global Value Chains: International Practices
Abstract
The article deals with studying the transformations in consumer-driven value chains, using the example of clothing and footwear manufacturers. It is noted that the production of ready-made clothes in the value chain includes several stages: pre-production, or production of fabrics and components (Original Equipment Manufacturer, or OEM); fabrication of clothes (Cut, Make and Trim, or CMT); design (Original Design Manufacturer, or ODM); supply, marketing and sales (Original Brand Manufacturer, or OBM). Each stage differs in terms of technological level and added value. The practices of Turkey, Pakistan, and Albania concerning the integration of textile enterprises, manufacturers of ready-made clothes and footwear into global value chains are analyzed. It is concluded that the entry into global value chains begins at the lowest stage (drafting, assemblage, fabrication). The process of integration into this chain is possible if the company is competitive in terms of delivery time, flexibility (the ability to produce small batches, quickly respond to market changes), and productivity. The need for state support (industry development strategy, formation of clusters and industrial parks, attraction of foreign direct investment) and participation in various international trade transactions is noted. Participating in the CMT stage in the short term is positive as regards offering jobs, and in the long term it can encourage enterprises to develop and sell final products in the domestic market. Market entry barriers are increasing with each next stage in the value chain. Moving up the stages in the value chain requires investing in technologies and human resources, establishing cooperation with educational and research institutions, building ties with enterprises of the industry they are engaged in and related ones.
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