When some could believe that the dismantling of the MFA could have been a relief and a real opportunity for Southern countries, it appears that the situation is much more complex. There is one main reason for the difficulties facing the textile market within developing countries: competition. As the international market is now wide open, each developing countries wants to be part of this profitable business. However, not all of them can compete with giants like China. According to apublication from the OECD “A New World Map in Textiles and Clothing” when the MFA was still in place, smaller developing countries took advantage of the quotas because this system penalised the more competitive suppliers.
When the quotas from a country like China was reached, importers turned to less competitive suppliers located in countries that had spare export quotas and whose only advantage was low wage. Today, the less competitive developing countries re not called as back up because countries willing to import textile can only be supplied by one and only exporter, the most competitive: China. As we stated before, the main issue here is competition.
What separates China from other developing countries id not only the competitive advantages of low wages. In “China Shows the Way in a Quota-Free Market”, Linda Lim presents six competitive advantages that China has over the other developing countries: First, Chinese workers are much more productive, probably because they are better-educated, better-motivated, and have better health status, given the legacies of the socialist state. Second, Chinese factories benefit from economies of scale, given the large production base and domestic market afforded by the countrys huge population.
Third, Chinas large, diverse, and increasingly integrated industrial base means that many materials required to make clothing are locally available, avoiding the added costs, risks, and longer delivery lead-times that imported inputs impose on other countries. Fourth, Chinas geographical location, close to Japan, Korea, Taiwan, and Hong Kong, allows it to readily import advanced equipment and high-tech textiles for its finishing industries. Fifth, the predominantly Hong Kong- and Taiwan-based manufacturers in the global industry may have language and cultural advantages managing Chinese workers, and thus may be willing to invest more in China.
Sixth, China has also
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