T-Shirt Globalization: History reveals that almost all dominance in world markets is temporary and that even the most impressive stories of national industrial victories typically end sobering postscripts of shifting comparative advantage. Apparel production has moved from the American South to Southeast Asia to the Caribbean and back to Asia. For over 200 years, the United States has been the undisputed leader in the global cotton industry in almost any way measurable and other countries, particularly poor ones, had little chance of catching up. Travels of T Short focuses on Cotton production, Chinese manufacturing and the “snowflake” market of used clothes. Unlike other industries, “consumer electronics that shifted from UK to US to Japan to Hong Kong to Taiwan and to China”, the United States still maintains dominance in cotton industry along with China. Using Porter’s “5” forces, industry analysis reveals that the following factors influenced the T-Shirt globalization that drove value chain from country to country.
#1) Industrialization with creativity, entrepreneurship and cooperation.
• 18th century witnessed the exploding productivity of English cotton that dramatically lowered the prices and affordability of cotton products. Industrialization with the emerging technology benefitted the industry to reduce cost of production, a series of technical improvements in both spinning and weaving of yarns made large-scale production possible.
• British demand during industrialization spurred the American dominance in cotton – in 1971 US was producing 2M pound of cotton whereas Asiatic countries were producing 400M pounds, but in next 10 years US production increased by 25 times and meeting 70% of England’s demand.
• Movement in value chain - US achieved dominance due to mechanization (picking of cotton etc.), concentrating capital, labor and entrepreneurial energies along with government support in the form of funding, agricultural research, subsidies to farmers and business assistance.
• Slavery helped farmers in way to evade risk of labor market and produce enormous cotton.
#2) Innovation, adaptability leading to globalization and competition.
• Innovation increased productivity and in turn lowered prices. Adaptability of American farmers to new production methods, marketing, use of latest technology and entrepreneurial resourcefulness helped them surge ahead on UK and become leader in this industry.
• UK’s monopoly began to decline later 1800 and Japan took advantage of this situation with their low cost labor. US industry took advantage of the low-cost labor in other countries along with the impact of globalization.
• US concentrated on their core competency “VRIO analysis” and outsourced parts of apparel production to developing countries. This helped US to focus on their core competency and stay top in this industry.
#3) Quota systems, tariffs, regulations and politics involvement helped “New Entrance” into the market.
• Quota system, tariff’s and regulations implemented by US government was intended to help shield domestic industry however helped developing countries like Srilanka and Philippines to emerge.
• Globalization - free trade along with low cost labor, access to technology helped countries like China, India etc., consolidate their position in this Industry – “Race to the Bottom”.
#4) Economic Rivalry in the industry
• Economy played a major role in the movement of cotton industry. Apparel production movement to developing countries spurred their economic development that helped improving their society and industry alike. Ties back to CSR (Corporate social responsibility) and shared value creation.
• English woolen industry has no rivals until the cotton came as “substitute” and then dominated the industry – Threat of substitute.
#5) Bargaining power.
• Tariffs and restrictions allowed some garments into the US and kept some out. US being world leader in cotton industry gave them immense power to impose these regulations, policies.
• Tariff’s, regulations and policies served as a powerful tool by US to reward its friends, influenced the industry as a whole and a powerful negotiating weapon – 9/11 incident dealing with Musharraf.