Country ProfileCountry Profile

Chapter 2Chapter 2

Global MarketplaceGlobal Marketplace

The Country Profile chapter will include:The Country Profile chapter will include:

• The dynamics of the global product industry.The dynamics of the global product industry.

• The definitions of social, political, cultural, economical The definitions of social, political, cultural, economical and geographical traits of nations.and geographical traits of nations.

• The importance of economic advancement among The importance of economic advancement among developed, developing and less developed countries.developed, developing and less developed countries.

• The state of the product industries in major countries.The state of the product industries in major countries.

• The role of international wholesale centers.The role of international wholesale centers.

Across BordersAcross Borders

Retailers are developing their own products on a Retailers are developing their own products on a consistent basis to maintain lower costs and higher consistent basis to maintain lower costs and higher profit margins.profit margins.

• More than 97 percent all textile and apparel products More than 97 percent all textile and apparel products are produced outside of the U.S.are produced outside of the U.S.

In comparing the costs of domestic manufacturing In comparing the costs of domestic manufacturing and offshore production you have decided that it is and offshore production you have decided that it is more cost-effective to produce in another countrymore cost-effective to produce in another country

Selecting a CountrySelecting a Country

Step 1 Step 1 • Profile the country selected to export denimProfile the country selected to export denim

The value system, communication levels, and time The value system, communication levels, and time zones are examples of thing you need to understand zones are examples of thing you need to understand to function as an industry professional in a foreign to function as an industry professional in a foreign country.country.

Create a country profile for your jeans import.Create a country profile for your jeans import.

Cost to Manufacture a Pair of Denim JeansCost to Manufacture a Pair of Denim Jeans

DomesticDomestic OffshoreOffshore

ProductionProduction ProductionProduction

FabricFabric $5.90$5.90 $2.25$2.25

Notions & TrimNotions & TrimButton, Thread, ZipperButton, Thread, Zipper

$1.19$1.19 $0.62$0.62

Packing & TaggingPacking & Tagging $0.75$0.75 $0.40$0.40

LaborLaborCutting, Sewing, Marking, GradingCutting, Sewing, Marking, Grading

$20.00$20.00 $1.00$1.00

Shipping - Shipping - FreightFreight $4.00$4.00 $1.00$1.00

DutyDuty 00 $3.00$3.00

CostCost $31.84$31.84 $9.02$9.02

Reducing Production CostsReducing Production Costs The textile and apparel industry employs more people The textile and apparel industry employs more people

worldwide than any other industry.worldwide than any other industry.

• Manufacturing has gone offshore for the purpose of Manufacturing has gone offshore for the purpose of reducing supply chain costs.reducing supply chain costs.

• As many as five countries can contribute to As many as five countries can contribute to manufacturing one product.manufacturing one product.

• Bottom line for a company is cost of production and Bottom line for a company is cost of production and lead time. lead time.

Maybe cost-effective to have item cut in one country, Maybe cost-effective to have item cut in one country, sewn in another, packed in another and shipped to the sewn in another, packed in another and shipped to the distribution center.distribution center.

Multiple Countries to Manufacture One GarmentMultiple Countries to Manufacture One Garment

United States Corporate Headquarters

ChinaFabric Source

PhilippinesNotions Source

HondurasCutting

Mexico Sewing and Shipped

United StatesPackaged, tagged, and shipped to the distribution center

Traits of NationsTraits of Nations Buyer must be aware of:Buyer must be aware of:

Social Traits-Social Traits-• Language, education, values and customsLanguage, education, values and customs

Geographical TraitsGeographical Traits• Natural resources-ports, waterways (landlocked)Natural resources-ports, waterways (landlocked)

Political TraitsPolitical Traits• Democratic – AutocraticDemocratic – Autocratic

Cultural TraitsCultural Traits• Mindset acquired over time – values – business etiquetteMindset acquired over time – values – business etiquette

Economic TraitsEconomic Traits• Refers to the amount of goods and services that a nation produces and Refers to the amount of goods and services that a nation produces and

consumes, as well as financial well-being.consumes, as well as financial well-being.

Global Economic DevelopmentGlobal Economic Development

Denationalization refers to a country’s boundaries Denationalization refers to a country’s boundaries becoming less important, thus, allowing more becoming less important, thus, allowing more freedom in trade among nations.freedom in trade among nations.

Countries are usually defined by their gross domestic product (DP) Countries are usually defined by their gross domestic product (DP) which is the amount of goods and services produced by a country which is the amount of goods and services produced by a country in a one-year period. in a one-year period.

• GDP does not include a nation’s exports and imports, but GDP does not include a nation’s exports and imports, but rather the output of merchandise produced in the nation. rather the output of merchandise produced in the nation.

• Gross national product (GNP) is the value of all goods and Gross national product (GNP) is the value of all goods and services produce by a nation during a one-year period, and services produce by a nation during a one-year period, and includes income generated by domestic and internationally includes income generated by domestic and internationally owned companies.owned companies.

Economic DevelopmentEconomic Development

Developed CountriesDeveloped Countries Have strong economies as a result of high levels of Have strong economies as a result of high levels of

industrialization.industrialization. Their technology is advanced and the people hae igh standards of Their technology is advanced and the people hae igh standards of

living.living.

Developing or Newly Industrialized CountriesDeveloping or Newly Industrialized Countries Are just becoming to become industrializedAre just becoming to become industrialized Educational and technological resources are inf a state of growthEducational and technological resources are inf a state of growth

Less-Developed CountriesLess-Developed Countries Less-developed countries have incomes that are at poverty level.Less-developed countries have incomes that are at poverty level. The nation has limited natural resources and high unemployment The nation has limited natural resources and high unemployment

rates.rates.

Education and technologicy Education and technologicy resources are in a stae of impresources are in a stae of imp

GeoHive

CIA

Factbook

Select

How textile and apparel is prevalent in How textile and apparel is prevalent in different countries…different countries…

United StatesUnited States East AsiaEast Asia ChinaChina JapanJapan Hong KongHong Kong Taiwan & S. KoreaTaiwan & S. Korea ASEANASEAN

Caribbean CountriesCaribbean Countries Andean CountriesAndean Countries Sub-Saharan AfricaSub-Saharan Africa Egypt, Jordan, TurkeyEgypt, Jordan, Turkey EuropeEurope

United StatesUnited States

U.S. apparel imports account for the majority U.S. apparel imports account for the majority of the U.S. apparel sold in 2003of the U.S. apparel sold in 2003• Imports making up 96.6%Imports making up 96.6%

Only 3.4% of textiles and apparel are Only 3.4% of textiles and apparel are produced produced in U.S.in U.S.

Demand is greater in U.S. than any part of Demand is greater in U.S. than any part of worldworld

East AsiaEast Asia

Includes China, Japan, Hong Kong, South Includes China, Japan, Hong Kong, South Korea, TaiwanKorea, Taiwan

Rank world’s highest suppliers for exports of Rank world’s highest suppliers for exports of textiles and appareltextiles and apparel

Accounted for one-fourth of the world’s Accounted for one-fourth of the world’s exports during 1997-2001exports during 1997-2001

ChinaChina

Made for manufacturingMade for manufacturing

Top producer of apparel based on quality of Top producer of apparel based on quality of production, lead time pricing, and quantityproduction, lead time pricing, and quantity

Economy is continuing to increase throughout Economy is continuing to increase throughout the hillsthe hills

Japan & Hong KongJapan & Hong Kong

JapanJapan• Tokyo is the principal Tokyo is the principal

site of productionsite of production

• Work on originals Work on originals designs and manufacture designs and manufacture for foreign companiesfor foreign companies

Hong KongHong Kong• Highly competitive free Highly competitive free

market economymarket economy

• Dependent upon Dependent upon international tradeinternational trade

• Apparel sector is the Apparel sector is the largest manufacturing largest manufacturing employeremployer

Taiwan & South KoreaTaiwan & South Korea

TaiwanTaiwan• One of the top 3 textile One of the top 3 textile

producing countiesproducing counties

South KoreaSouth Korea• Industrialization can be Industrialization can be

attributed to the growth attributed to the growth of textile and apparel of textile and apparel since the 1960’ssince the 1960’s

• Biggest problem-Biggest problem-inability to produce inability to produce goods quickergoods quicker

ASEANASEAN

The Association of Southeast Asian NationsThe Association of Southeast Asian Nations• Includes Bangladesh, India, Pakistan, Vietnam, Includes Bangladesh, India, Pakistan, Vietnam,

Cambodia, Indonesia, Laos, and Sri LankaCambodia, Indonesia, Laos, and Sri Lanka

• Benefit from low wagesBenefit from low wages• Vietnam and Cambodia- Vietnam and Cambodia-

two of the world’s fastest two of the world’s fastest

growing exportersgrowing exporters

Caribbean CountriesCaribbean Countries

Includes Costa Rica, Dominican Republic, Includes Costa Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, El Salvador, Guatemala, Haiti, Honduras, Jamaica, and NicaraguaJamaica, and Nicaragua

Has increased country production imports Has increased country production imports because of U.S. apparel quotasbecause of U.S. apparel quotas

Egypt, Jordan, and TurkeyEgypt, Jordan, and Turkey

EgyptEgypt• Third largest industryThird largest industry

JordanJordan• manufacturing is limited due to the scarce water manufacturing is limited due to the scarce water

supplysupply TurkeyTurkey

• Largest sectorLargest sector• Seventh largest exporter of apparelSeventh largest exporter of apparel• Fourteenth largest textile exporterFourteenth largest textile exporter

EuropeEurope(known for high fashion)(known for high fashion)

Paris, FranceParis, France• Most creative and innovative designersMost creative and innovative designers

London, EnglandLondon, England• Known for fine tailoring and ready to wear Known for fine tailoring and ready to wear

clothingclothing ItalyItaly

• Known for fabrics (leather)Known for fabrics (leather) GermanyGermany

• State-of-the-art manufacturingState-of-the-art manufacturing

Thank You!!!Thank You!!!

For more information about textiles, apparel For more information about textiles, apparel and fashion in different countries…visit…and fashion in different countries…visit…

www.cia.gov/publications/factbook/www.cia.gov/publications/factbook/