Gereffi Move Apparel Presentation

The Changing Geography of Production and Upgrading Shifts in Apparel and

Other Labor-Intensive Industries

Gary Gereffi

Duke University Durham, NC / USA

[email protected]

International Conference on “Delocalisation of Labor Intensive Industries”

April 12-14, 2007Krakow, Poland

Topics covered

• The changing geography of the global apparel industry, pre- and post-2005

• How North Carolina, USA is adapting to job loss in the traditional textile sector

• Industrial upgrading trajectories across industries in Eastern & Central Europe, compared with Mexico, China and Turkey

• The newest challenge: upgrading in knowledge-intensive industries

• Implications for labor-intensive industries

Region/Country

1985 1990 1995 2000 2005

Northeast Asia China 1.9 9.7 24.2 36.2 74.3 Hong Kong 6.7 15.4 21.4 24.3 27.4 South Korea 4.4 8.0 5.0 5.0 2.6 Taiwanc 3.7 4.2 3.5 3.4

Southeast Asia Indonesia 0.3 1.7 3.5 4.8 5.2 Thailand 0.6 2.8 5.1 3.8 4.1 Viet Nam 0.0c 0.1c 0.9c 1.8 3.5b

Malaysia 0.3 1.3 2.3 2.3 2.5 Philippines 0.3 0.7 1.1 2.6 2.3 Cambodia 0.0c 0.0c 0.1c 1.0 2.0d

South Asia

India 0.9 2.5 4.1 6.2 9.2

Bangladesh 0.2 0.6 2.0 4.2 4.4d

Pakistan 0.3 1.0 1.7 2.2 3.6

Sri Lanka 0.3 0.6 1.1c 2.6c 2.9

Central and Eastern Europe Turkey 1.2 3.3 6.1 6.5 11.8

Romania 0.4c 0.4 1.4 2.3 4.6

Poland 0.3 0.4 2.3 1.9 2.1

Bulgaria 0.1c 0.1c 0.4c 0.7 1.7

Africa/Middle East Tunisia 0.3 1.1 2.3 2.2 3.1 Morocco 0.2 0.7 0.8 2.4 2.8 Jordan 0.0 0.0 0.0 0.1 1.1

Mexico & CBI Mexico 0.1 2.7 8.6 7.3 Dominican Rep. 0.2c 0.8c 0.7 2.5c

Guatemala 0.0 0.0 0.0 1.5

World Totals ($US B) 40.7 103.6 155.4 194.5 265.2

Apparel exports to the world market (US$ billions)

Source: UN Comtrade data.

Table 1: Patterns of Entry to World Market and Apparel Concentration Ratios for World's non-EU Top Apparel Exporters, 1985-2005

Region/CountryPopulation (millions)

GDP (US$ billions)

GNI/capita (US$)

Apparel exports to the world market

(US$ billions)

Hourly textile labor costs

2005a 2005a 2005a 2005b US$, 2004c

Northeast Asia China 1,305 2,229 1,740 74.3 0.38 Hong Kong 7 178 27,670 27.4 5.04 Rep. of Korea 48 788 15,830 2.6 6.23 Taiwan 23d 346d 15,676d 5.04

Southeast Asia Indonesia 221 287 1,280 5.2 0.43 Thailand 64 177 2,750 4.1 1.16 Viet Nam 83 52 620 3.5f 0.23 Malaysia 25 130 4,960 2.5 0.91 Cambodia 14 5 380 2.0g

South Asia India 1,095 785 720 9.2 0.44 Bangladesh 142 60 470 4.4g 0.25 Sri Lanka 20 23 1,160 2.9 0.33 Pakistan 156 111 690 3.6 0.27

Central and Eastern Europe Turkey 73 363 4,710 11.8 2.11 Romania 22 99 3,830 4.6 Poland 38 299 7,110 2.1 2.94 Bulgaria 8 27 3,450 1.7 1.10

Africa/Middle East Tunisia 10 29 2,890 3.1 1.60 Morocco 30 52 1,730 2.8 1.84

Caribbean/CA/SA Dominican Rep. 9 28 2,370 Guatemala 13 32 2,400 1.5 Mexico 103 768 7,310 7.3 1.54

World Totals ($US B)c 6,400 44,400 6,987 265.2 N/A

Table 2: National Income, Apparel Exports, and Hourly Wage Rates for World's Top Apparel Exporters, 2005

Exporting Country SITCa DescriptionUS$

billions% of total exports 1985 1995 2005

Northeast Asia China 75 Office Machines 110.7 14.5 3 1 4 Hong Kong 77 Electrical Machinery 59.5 20.4 1 1 4 South Korea 77 Electrical Machinery 42.9 15.1 2 7 19

Taiwanc 77 Electrical Machinery 48.3 26.4 2 11 15

Southeast Asia Indonesia 33 Petroleum 10.2 11.9 8 4 3 Thailand 77 Electrical Machinery 14.7 13.3 4 3 10

Viet Namc 33 Petroleum 4.0 19.7 10 2 2 Malaysia 77 Electrical Machinery 33.6 23.8 9 7 9

South Asia India 66 Non-metallic Mineral Mfg. 13.2 12.7 4 3 3

Bangladeshc 84 Apparel 6.3 76.2 2 1 1 Pakistan 65 Textile Yarn & Fabrics 7.1 44.2 4 2 2 Sri Lanka 84 Apparel 2.9 46.7 2 1 1

Central and Eastern Europe Turkey 84 Apparel 11.8 16.1 1 1 1 Romania 84 Apparel 4.6 16.7 4 1 1 Poland 78 Road Vehicles 11.5 12.8 11 1 14 Bulgaria 84 Apparel 1.7 14.7 10 3 1

Africa Tunisia 84 Apparel 3.1 29.8 2 1 1 Morocco 84 Apparel 2.8 26.4 5 1 1 Jordan 84 Apparel 1.1 24.8 6 15 1

Mexico & CBI Mexico 78 Road Vehicles 32.0 14.9 22 8 8

Dominican Rep.c 84 Apparel 2.2 40.7 1 1 1 Guatemala 84 Apparel 1.5 28.0 18 15 1

World Totals 78 Road Vehicles 886.1 9.2 12 9 12

Top export item, 2005 Apparel Rankb


Table 3: Position of Apparel Among Leading Export Items, 1985-2005

In 2005, the Multi-Fiber Arrangement ended

Jan. 1, 1995

16% Integration

Jan. 1, 1998

Another 17% Integration

Jan. 1, 2002

Another 18% Integration

Jan. 1, 2005

100% Integration

MFA(1974 – 1994)

ATC(1995 – 2004)

Quota Abolitionfrom 2005

Source: World Trade Organization.

The predictions and the surprises, post-MFA

• The phasing out of the quota regime corresponds with major changes in the organization and practices of the global apparel industry over the past twenty years

• These changes have enormous implications for employment and economic development in countries across the globe

Chart 1

Major clothing exporters' share of the US market 2004

Other24%

China16%

Rest of Americas16%

Mexico10%

Hong Kong9%

EU5%

Taiwan4%

Philippines4%

Indonesia4%

India4%

Bangladesh4%

Source: Financial Times, July 19, 2004, p. 11.

Chart 2

How U.S. market shares may rank after elimination of MFA quotas

Other12% Bangladesh

2%

Indonesia2%

Philippines2%

Thailand3%

India15%

China50%

Hong Kong6%

Rest of Americas5%

Mexico3%

Source: Financial Times, July 19, 2004, p. 11.

Table 4: Extensive outsourcing over the past 25 years and

deep links between industrial and industrializing countries: 1980-2005

Source: Adapted from Table 1 (UN Comtrade data).

1980 1985 1990 1995 2000 2005Number of LDC exporters with exports >USD 2 Billion

3 3 7 12 18 20

Top LDC share of total world apparel exports

45% 60% 58% 62% 66% 71%

World Totals ($US B) 34 41 104 155 195 265

Apparel exports to the world market(US$ billions)

CountryAverage Textile Hourly Wage in 2004 (US$)

Germany 18.04United States 12.21Rep. Korea 6.23Hong Kong, China 5.04South Africa 3.04Slovakia 2.39Turkey 2.11Mexico 1.54Peru 1.33Thailand 1.16Mauritius 1.13Malaysia 0.91China, Coastal 0.45India 0.44Indonesia 0.43Sri Lanka 0.33China, Mainland 0.31Pakistan 0.27Bangladesh 0.25Vietnam 0.23Source: Werner International - "Primary Textiles Labor Cost Comparisons Winter 2004/2005"

Low wages were a spur to global dispersion…

• Regulation and trade rules – e.g., the MFA

• Fragmented, volatile markets – search for price, quality, design, variability and short cycles

• Regionalization: regional trade agreements, proximity to major markets

• New forms of governance - power of retailers in global value chains; consolidation

• Technology, inventory risk and ‘lean retailing.’ stickiness of geography

But low wages are only one of several factors that have shaped the international division of labor in textiles and apparel

Table 5

Source: US International Trade Commission, Dataweb, 2007.

Source (predicted): Financial Times, July 19, 2004, p. 11

Top Apparel Suppliers to the US

Predicted and Actual Market Share

Actual Import Market SharePredicted Post-MFA

Country 2003 2004 2005 2006 (2008)

China 17 19 26 29 50

India 3 3 4 4 15

Hong Kong 6 5 5 4 6

Mexico 11 10 8 7 3

Vietnam 3 4 4 4 na

Honduras 4 4 4 3 na

Thailand 3 3 3 3 3

Indonesia 3 3 4 5 2

Bangladesh 3 3 3 4 2

Philippines 3 3 2 3 2

Cambodia 2 2 2 3 na

Table 6: Changes in Apparel Imports into the US Market post-MFA

Several smaller countries did surprisingly well

Value US$ BilApparel 2004-2005 2005-2006 2006China 47 16 23.1India 32 6 3.3Haiti 24 10 0.5Nicaragua 20 23 0.9Indonesia 20 27 3.8Bangladesh 20 23 2.9Cambodia 20 25 2.1Peru 18 5 0.8Pakistan 10 12 1.5Vietnam 7 18 3.2Sri Lanka 6 2 1.7Egypt 5 41 0.6TOTAL US Import Growth 5.6 3.6 79.2

Percent Change

Source: Calculated from US International Trade Commission data, 2007

Direction of Mexico's Clothing Exports, 1990-2005

0%

20%

40%

60%

80%

100%

US EU Rest of World

Pe

rce

nt

sh

are

of

ex

po

rts

1990

2005

Direction of China's Clothing Exports, 1990-2005

0%

10%

20%

30%

40%

50%

60%

US EU Japan HongKong

FormerUSSR

Rest ofWorld

Pe

rce

nt

sh

are

of

ex

po

rts

1990

2005

Chart 3: Export markets reflect changing trade agreements

Direction of Turkey's Clothing Exports, 1990-2005

0%

10%

20%

30%

40%

50%

60%

US EU (w/oGermany)

Germany Rest of World

Pe

rce

nt

sh

are

of

ex

po

rts

1990

2005

Direction of Romania's Clothing Exports, 1990-2005

0%

20%

40%

60%

80%

100%

US EU Former USSR Rest of World

Pe

rce

nt

sh

are

of

ex

po

rts

1990

2005

Chart 3 (cont’d)

North Carolina’s Textile and Apparel Industry Today

Using a Value Chains Approach to Map the Changing Structure of

Traditional and High-Tech Textiles

Table 7: What’s happening to jobs?

Traditional Textile and Apparel Industry

Three major categories:

• 313-Textile Mills (yarn and fabric)

• 314-Textile Product Mills (home)

• 315-Apparel (clothes)

NAICS codes (North American Industrial Classification System)

Source: Department of Labor

NAICS: 115111 325221 325222 325211 324191

NAICS: 313111 313113 314991 314992

NAICS: 313210 313221 326150 313230 313241 313249

NAICS: 313112 313311 313312 313320 323113 323119 314999 325132 325199 325998

NAICS: 314110 314121 314129 314911 314912 337121 337122 337910 333411 339113 all 315

NAICS:

115111325221325222

NAICS: 313111 313113 314991 314992

NAICS: 313210 313221 326150 313230 313241 313249

NAICS: 313112 313311 313312 313320 323113 323119 314999 325132 325199 325998

NAICS: 314110 314121 314129 314911 314912 337121 337122 337910 333411 339113 all 315

Textile Value Chain w/ NAICS

Industrial

Medical

Furniture

Automotive

Fiber YarnFabric & Finishing

Other Value

Chains

Apparel

Home & Interiors

RetailWholesale

AssociationsPackaging &

LabelingServices &

FinanceMachinery

Chemical Manufacturers

Supporting Industries

Design

313

314

313

315

115111

112410

111920

324110

423220424320424330

322291339113

337121

448110

448120

448150

448130

448190

333292325131

325132

Raw Material

After-Sale

325221

325222

812331

336360326211

North Carolina Textile Complex

From N.C. Dept. of Commerce

Nonwovens: Performance

Man-madefiber

Nonwoven

Home & Interior

Knit Woven

Yarn

Medical & Hygiene

TransportIndustrial & Construction

Apparel

Retail

Wholesale

Naturalfiber

Ecological &Geotextiles

Sports &Leisure

Finishing

Furniture

Source: Stacey Frederick, College of Textiles, North Carolina State University

Wages per employee, 2005

Mill Type NAICS Number of Mills EmploymentAnnual Wages

Wages Per Employee

Broadwoven 313210 87 12,869 397,876,443 $30,917Knit Fabric 31324 85 7,116 224,319,498 $31,523Nonwoven 313230 31 2591 121,845,813 $47,027

Chart 4

Comparing National and

Regional Upgrading

Trajectories

Types of Upgrading

• Product and Process Upgrading – focus on changes within specific value chains

• Functional Upgrading – deals with the shifts in economic roles or capabilities in value chains (e.g., assembly to OEM to OBM to ODM)

• Inter-Chain Upgrading – refers to the shift between different types of industries (e.g., resource-based, labor-, capital- and technology-intensive).

– This can be measured using international trade data and national & regional export profiles.

MexicoExports to World Market

21418816516115816613611711095.779.560.851.946.227.026.323.020.420.519.1

0

10

20

30

40

50

60

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

% E

xp

ort

Ma

rke

t

Primary Products

Resource Based Manufactures

Low Tech Manufactures

Medium Tech Manufactures

High Tech Manufactures

TotalExportsUS $B

Graph 1: Composition of Mexico’s Exports to the World Market, 1986-2005

Source: UN Comtrade.

ChinaExports to World Market

76259343832626624919518418315114912191.784.971.862.152.547.539.4

0

10

20

30

40

50

60

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t

Primary Products





TotalExportsUS $B

Graph 2: Composition of China’s Exports to the World Market, 1987-2005


TurkeyExports to World Market

73.563.147.335.831.327.526.626.926.223.021.618.115.314.713.613.011.611.710.27.58.0

0

5

10

15

20

25

30

35

40

45

50

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t

Primary Products





TotalExportsUS $B

Graph 3: Composition of Turkey’s Exports to the World Market, 1985-2005



Graph 4: Composition of Poland’s Exports to the World Market, 1995-2005

89.473.853.540.336.131.627.428.225.724.422.9

0

10

20

30

40

1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t

Primary ProductsResource Based ManufacturesLow Tech ManufacturesMedium Tech ManufacturesHigh Tech Manufactures

TotalExportsUS $B


Graph 5: Composition of Hungary’s Exports to the World Market, 1995-2005

63.255.543.034.330.528.125.023.019.112.612.5

0

5

10

15

20

25

30

35

40

45

1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t


TotalExportsUS $B


Graph 6: Composition of Czech Republic’s Exports to the World Market, 1995-2005

78.265.848.738.533.429.126.828.322.721.921.7

0

5

10

15

20

25

30

35

40

45

1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t

Primary Products





TotalExportsUS $B


Graph 7: Composition of Bulgaria’s Exports to the World Market, 1996-2005

11.79.97.55.75.14.83.94.34.94.9

0

5

10

15

20

25

30

35

40

1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t


TotalExportsUS $B


Graph 8: Composition of Romania’s Exports to the World Market, 1995-2005

27.723.517.613.911.410.48.58.38.48.17.9

0

10

20

30

40

50

60

1995 1997 1999 2001 2003 2005

% E

xp

ort

Ma

rke

t

Primary Products

Resource Based ManufacturesLow Tech Manufactures

Medium Tech ManufacturesHigh Tech Manufactures

TotalExportsUS $B

SITC categories

Poland Hungary Czech Rep Bulgaria Romania Turkey China Mexico

642 -Paper and paperboard, cut to size or shape 1.02

658 -Made-up articles, wholly/chiefly of textile materials 1.94

665 -Glassware 0.97

673 -Iron and steel bars, rods, angles & shapes 1.17 3.20

674 -Universals, plates and sheets, of iron or steel 0.47 0.32 1.01

691 -Structures & parts thereof; iron, steel, aluminum 1.22

699 -Manufactures of base metal, n.e.s. 1.69 0.66 2.03 3.32

821 -Furniture and parts thereof 5.60 0.92 1.95 1.13 16.66 4.56

842 -Outer garments, men's, of textile fabrics 0.43 1.16 2.41

843 -Outer garments, women's, of textile fabrics 0.36 0.49 1.84 2.85 17.34 1.74

845 -Outer garments and other articles, knitted 0.41 2.64 20.42

846 -Under garments, knitted or crocheted 0.26 3.39

851 -Footwear 1.18 18.43

893 -Articles of plastics, n.e.s. 1.59 0.77 1.21 2.49

894 -Baby carriages,toys,games and sporting goods 20.56

Total of Top 5 Low Tech Exports 11.11 3.18 7.33 1.91 6.31 14.02 93.41 14.53

Total Low Tech Exports 20.15 7.04 16.66 3.45 10.52 28.14 240.09 27.94

Top 5 as % of Total Low Tech Exports 55.2% 45.2% 44.0% 55.4% 60.0% 49.8% 38.9% 52.0%

Total Exports 89.38 63.24 78.21 11.73 27.73 73.48 761.95 214.21

Low Tech Exports as % of Total 22.5% 11.1% 21.3% 29.4% 37.9% 38.3% 31.5% 13.0%

Top 5 Low Tech Exports in 2005 ($US Bil)

Table 8: Low-Tech Exports in Eastern/Central Europe, Turkey, Mexico and China in 2005


SITC categories


583 -Polymerization and copolymerization products 0.15

653 -Fabrics, woven, of man-made fibres 1.25 8.36

672 -Ingots and other primary forms, of iron or steel 0.33 0.60

713 -Internal combustion piston engines & parts 3.80 6.02

741 -Heating & cooling equipment and parts 1.42

749 -Non-electric parts and accessories of machinery 0.14 0.44 7.27

763 -Gramophones, dictating, sound recorders, etc 20.43

772 -Elect.apparatus, such as switches, relays, fuses 1.57 2.07 0.15 11.17 5.58

773 -Equipment for distributing electricity 1.99 1.49 1.75 1.44 7.37

775 -Household type, elect.& non-electrical equipment 1.70 15.16

781 -Passenger motor cars 5.38 2.33 6.31 4.37 13.40

782 -Motor vehicles for transport of goods/materials 2.50 7.15

784 -Parts & accessories of 722, 781, 782, & 783 3.77 2.36 5.52 0.87 1.51 9.80

793 -Ships,boats and floating structures 3.00 0.24 0.55

Total of Top 5 Medium Tech Exports 17.94 13.77 17.07 1.02 3.89 11.33 62.38 43.30

Total Medium Tech Exports 34.79 23.96 33.15 2.30 8.37 23.33 167.91 78.23

Top 5 as % of Total Medium Tech Exports 51.6% 57.4% 51.5% 44.2% 46.5% 48.6% 37.2% 55.3%

Total Exports 89.38 63.24 78.21 11.73 27.73 73.48 761.95 214.21

Medium Tech Exports as % of Total 38.9% 37.9% 42.4% 19.6% 30.2% 31.7% 22.0% 36.5%

Top 5 Medium Tech Exports in 2005 ($US Bil)


Table 9: Medium-Tech Exports in Eastern/Central Europe, Turkey, Mexico and China in 2005

SITC categories


541 -Medicinal and pharmaceutical products 0.55 1.26 0.12 0.32

716 -Rotating electric plant and parts thereof 0.20 0.24

718 -Other power generating machinery and parts 0.09

752 -Automatic data processing machines & units 3.04 3.92 76.30 9.24

759 -Parts of and accessories suitable for 751 & 752 0.96 29.70

761 -Television receivers 1.79 1.78 1.21 0.11 2.93 10.32

764 -Telecommunications equipment and parts 1.01 7.53 1.09 0.05 0.27 62.19 11.98

771 -Electric power machinery and parts thereof 0.44 0.13 0.26

776 -Thermionic, cold & photo-cathode valves, tubes 20.41

778 -Electrical machinery and apparatus, n.e.s. 1.38 1.79 1.91 0.10 0.17 0.19 16.60 7.08

874 -Measuring, checking, analysing instruments 0.07 3.32

Total of Top 5 High Tech Exports 5.17 15.40 9.09 0.43 0.90 3.95 205.21 41.94

Total High Tech Exports 6.91 18.75 13.07 0.61 1.39 4.45 253.35 53.72

Top 5 as % of Total High Tech Exports 74.8% 82.1% 69.6% 70.6% 64.5% 88.8% 81.0% 78.1%

Total Exports 89.38 63.24 78.21 11.73 27.73 73.48 761.95 214.21

High Tech Exports as % of Total 7.7% 29.7% 16.7% 5.2% 5.0% 6.1% 33.2% 25.1%

Top 5 High Tech Exports in 2005 ($US Bil)


Table 10: High-Tech Exports in Eastern/Central Europe, Turkey, Mexico and China in 2005

SITC Categories

1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005

05 -Vegetables and fruit 2 3 4 5

33 -Petroleum & petroleum products 1 3 4 2

65 -Textile yarn, fabrics, made-up articles 4 2 2 3

67 -Iron and steel 3 4 3 4

75 -Office machines & automatic data processing equip. 9 6 5 5 33 8 5 1

76 -Telecommunications & sound recording apparatus 43 4 3 4 6 5 4 2

77 -Electrical machinery, apparatus & appliances 8 2 2 3 14 4 2 3

78 -Road vehicles 2 1 1 1 17 6 5 2

84 -Articles of apparel and clothing accessories 1 1 1 4 1 1 1 1

89 -Miscellaneous manufactured articles 5 3 3 5

Mexico China Turkey

Table 11

Rankings of Top Export Industries in Mexico, China, and Turkey, 1990-2005

SITC Categories

1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005 1990 1995 2000 2005

33 -Petroleum & petroleum products 2 3 1 3 3 2

67 -Iron and steel 1 5 5 4 4 2 2 2 4

68 -Non-ferrous metals 3 2

69 -Manufactures of metal,n.e.s. 8 9 6 5

71 -Power generating machinery and equipment 12 19 5 4 33 4 2

74 -General industrial machinery & equipment 8 4 3

75 -Office machines & automatic data processing equip. 39 1 5 29 18 4

76 -Telecommunications & sound recording apparatus 8 3 1

77 -Electrical machinery, apparatus & appliances, n.e.s. 5 8 3 2 1 2 3 3 2 2 7 5 14 12 7 3

78 -Road vehicles 9 6 1 1 3 5 4 2 1 1 3 16 17 5

82 -Furniture and parts thereof 22 5 2 3

84 -Articles of apparel and clothing accessories 1 1 4 1 1 1

RomaniaPoland Hungary Czech Republic Bulgaria

Table 12

Rankings of Top Export Industries in Eastern & Central Europe, 1990-2005

Newest Challenge: Knowledge-Intensive Upgrading

• White-collar outsourcing (started with simple service jobs like call centers & tele-marketing)

• Now includes more advanced business services, such as finance, accounting, software, medical services, engineering

• Newest areas: offshoring of design and innovation (e.g., China has 800 R&D centers)

• Requirements: high education; English language

MNC R&D Centers in China & India:How are engineers being used?

• What kinds of work are Chinese, Indian, and American engineers actually doing?– Answer: Not just product adaptation, but

cutting-edge research & commercialization

• China: More than 800 MNC R&D Centers– GE’s China Technology Center: Advanced

research in energy storage, environmental management

– Microsoft Research Asia: Cutting-edge graphics & multimedia research

• India: More than 150 of Fortune 500 firms have R&D centers – Oracle’s India Development Centre: Globally

oriented research on database and application development tools

Italy vs. China:The Hope of Design?

• Italy versus China (Manzano versus Anji)

• Italy is seeking new ways to build advantage, including utilizing a traditional strength: design.– Venice is seeking to marry

manufacturing and design, bringing together Italian artists, businessmen, and furniture makers in an effort to help rethink the role of design.

– Design is a higher link in the value chain than manufacturing – thus bringing higher value-added.

• Labor-intensive industries are globally mobile• Low-wage countries can take advantage of

proximity to major regional markets• The largest global producers (China and India)

will supply standardized or commodity items and continue to improve quality & design

• Traditional industries are being transformed by new technologies

• High value niches (R&D, design, branding, logistics) are being decentralized, and will be filled by new knowledge workers worldwide

Implications of Upgrading Shifts for Labor-Intensive Industries

Thank you

for your attention!

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Gereffi Move Apparel Presentation

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