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September 9, 2005
China goes upmarket in apparel
A standard assumption about the old form of globalization is the product-life cycle and the division of labor. New, higher value products are produced in the home country where the product was developed. As the product matures and standardizes, production is moved to cheaper locations. This model fits with the idea of formal versus tacit knowledge I discussed yesterday (Flat or spiky): production of a new product requires the communication of tacit knowledge ("no, its not quite supposed to be like that") whereas standardized products can rely more on formal and codified specifications.
But what happens when the producing country moves up-market into new product development. Then, a part of the supply chain becomes a new competitor and that production requiring tacit knowledge may move to a new location. This has been the history of economic development -- the movement of production to areas which have built creative capacity, not just the flight to low cost sites.
This phenomenon is now occurring in the Chinese apparel industry, according to a recent story in the New York Times, "Chinese Apparel Makers Increasingly Seek the Creative Work":
Even as the Bush administration moves to impose new limits on Chinese garment exports to the United States, textile industry executives here in Xiamen, a coastal city an hour's flight northeast of Hong Kong, say they are already looking a step ahead. They are trying to figure out how more of their workers can move beyond the simple cutting and sewing of garments into what is known as engineering and, someday, the initial sketching of new clothing.
The American competitive strategy right now implicitly relies on holding on to the upscale portions of the market. But there are lots of smart people out there who are shooting for that target as well.
In apparel, it might come down to controlling the local market:
An obstacle to entering foreign markets for most Chinese designers is that current Chinese tastes in clothing are different from those in international markets. China is undergoing a revolution in style and daring, as young people react to centuries of cultural conservatism before and during Communism.
In China, hemlines on fashionable women's skirts are decidedly shorter now than in the West. And the latest trend in wedding dresses is toward garments that are essentially bikinis with a thin gauze connecting the bra and bottom. "You only have enough clothes to cover the parts of the body that have to be covered," Ms. Cai said. "The brides say, 'As long as I'm brave enough to wear this, I'm able to do anything.' "
Liu Baofa, a fashion expert at Fuzhou University, said that China's vast population meant that the country was bound to eventually emerge as a global fashion center. "China has so many people that if you have a design, someone will buy it," she said. "You don't need to be afraid you'll be too creative."
In fashion (as in many industries), there is a tension between local tastes and cosmopolitan tastes. Everyone wants to know what is hot in Milan this season, but products tailored to the local market are what sell. Gaining that local requires local knowledge – the kind you only get from being on the ground. Thus, we may well see China emerge as a global fashion center. But that does not mean it will replace New York or Milan. It will become one more spike in Florida's spiky world (see yesterdays' post).
Posted by Ken Jarboe at September 9, 2005 8:47 AM
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