A(sian) Race to the Bottom?

Produktionsnetzwerke im globalen Sportartikelmarkt

Ringvorlesung „Globale Güterketten", Wien und

Graz im SoS 2010

Wolfram ManzenreiterUniversität Wien

Institut für Ostasienwissenschaften

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[2/all]Global sports shoes

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[3/all]Apparel Commodity Chain

• global market for sport goods

• Asia in the global economy

• role of Asia for the global sporting goods production

• new variants of production networks

• developmental implications

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

Content [4/all]

79 USD billion

The Global Sports Market

international sport organisations

sponsorshipest. USD 20 billion

gate revenues

sporting goodsest. 126 USD billion

"… any income and expenditure circulating between private households, commercial sport clubs, sport centres and sport organisations, sports good manufacturers and retailers, sports media departments, and other private and public sector economic activity that either supplies goods and services to the sport sector."

est. 2 % of global GDP (2005)

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[5/all]

broadcastingest. USD 50 billion

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[6/all]Global Sporting Goods Market

Weltmarkt für Sportartikel 2005 (nach Produktsparten)

Quelle: Sporting Goods Intelligence Factbook, zit. nach Schmid/Kotulla 2007:2

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[7/all]Asia

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[8/all]Global Sporting Goods Market

Weltmarkt für Sportartikel 2005 (nach Regionen)

Quelle: Sporting Goods Intelligence Factbook, zit. nach Schmid/Kotulla 2007:2

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[9/all]Asia

Chain of Developmental States

1) Japan

2) NIEs: South Korea, Taiwan, Hong Kong, Singapore

3) South-East Asian Tigers: Malaysia, Thailand, Indonesia, Philippines

4) New Dragons and Tigers: China, India, Vietnam

5) Next Generation: Cambodia, Sri Lanka, Laos

home to 25% of world production

home to 1/3rd of global trade

since 1980• share of Asian developmental states tripled• share of China grew by 1,000 percent

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[10/all]Akamatsu Kaname

industrial change cuased by technological innovation and capital transfer – intra-industrial– inter-industrial– international

cyclical process– import substitution– foundation of competitive

domestic industries– support and protection of

domestic market– export of capital goods flying geese model of

economic development

(1935)

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[11/all]textile industry of Japan

cotton spinning

silk production

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[12/all]

flying geese model: Japan‘s textile industry

Intra-industrieller Aspekt des Fluggänse-Modells: Entwicklung der japanischen Textilindustrie

Diese Kurven beschreiben in etwa die Entwicklung von 1870 bis 1940 Import Produktion Export

Baumwollgarn

Baumwollstoffe Maschinen und Werkzeug

Spinn- und Webmaschinen

Wert

Wert

Wert

Wert

Wolfram ManzenreiterUniversity of Vienna, Dept. of East Asian Studies

[13/all]

Interindustrieller und Internationaler Aspekt des Fluggänse-Modells

Produktion/ Konsum

Produktion/ Konsum

Zeit

Zeit

Industrie A (Textil)

Industrie B (Chemie)

Industrie C (Stahl)

Industrie D (Automobil)

Land 1 Land 2 Land 3 Land 4

flying geese model: industrial upgrading

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[14/all]Sporting Goods Supply Chain

production networks:

• multiple relations between various production levels

• vertical, horizontal and multi-directional relations

• actors in multiple roles• binary model of buyer –

vs. producer-lead commodity chains is over-simplistic.

impact on development?

• capitalism: exploitation of labour in industrial sweatshops

• modernization: liberation from feudal dependencies

• industrial upgrading

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[15/all]Profits of Global Sport Brands

Gewinne der Sportbekleidungsindustrie vor Steuern in Million US-Dollar

Sources: MSN 2008:17; annual corporate reports

2004 2005 2006 2007 2008 Zuwachs 2004-08 in %

Nike 1,450.0 1,859.8 2,141.6 2,199.9 2,500.0 72.4

Adidas 646.8 849.3 877.6 1,088.4 1,265.6 95.7

Puma 448.4 524.0 454.0 510.9 457.9 9.5

ASICS 64.8 100.3 147.8 203.7 233.9 261.0

Mizuno 42.7 63.8 72.8 39.9 -2.8 -106.5

Li Ning 14.7 22.3 36.8 57.4 86.0 485.0

Li & Fung 207.8 249.0 304.3 424.8 344.0 99.2

Yue Yuen 300.0 307.6 375.6 386.6 515.4 65.5

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[16/all]

Nike Production Network (2008)

• contracting with Japan since 1960s

• sourcing from Korea, Taiwan, Thailand since 1970s

• shift towards Malaysia, Indonesia, Phillipines and Vietnam in 1990s

• today: more than 600 factories in 46 countries

Nike WorkforceWolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[17/all]

• 35,000 employees of Nike: most in merchandising, research, sales

• 800,000 workers in production, most in Asia, none in Niek‘ factories

• Nike is No 1 in sport shoes, vying for leadership in sports apparel; no 6 in sporting goods market

• increasing variety of goods

• best-ever turnover results in 2009

• consolidation: more contracted work to more workers at fewer companies of fewer countries

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[18/all]Adidas Production Network

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[19/all]Adidas World 2009

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[20/all]Li Ning 2008

• Founded in 1990

• 30% share of domestic market for sporting apparel, shoes, goods

• large regional spread, country-wide presence of shops and outlets

• production shifting from coastal areas towards own industrial park in central China

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[21/all]Li Ning 2008

China Chain MapWolfram ManzenreiterUniversity of Vienna, Dept. of East Asian Studies

[22/all]

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[23/all]Yue Yuen 2009

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[24/all]Li&Fung 2009

Wolfram ManzenreiterUniversity of Vienna, Dept. of East Asian Studies

[25/all]Supply Chain City

Dongguang, Luen Thai

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[26/all]Apparel Commodity Chain

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[27/all]Asia‘s world market share

1980 1990 1998 2008

total garment total garment total garment total garment

Northeast Asia

PRC 19 8.6% 65 15.7% 191 16.4% 1431 8.4%

Hong Kong 21 25.4% 84 18.7% 176 12.7% 370 7.5%

Japan 130 0.4% 287 0.2% 388 0.1% 781 0.1%

South Korea 18 17.0% 66 12.4% 140 3.4% 422 0.4%

Taipei China 21 12.3% 71 5.8% 135 2.5% 256 0.5%

Southeast Asia

Indonesia 24 2.4% 28 10.3% 52 8.6% 137 4.6%

Thailand 7 4.2% 24 12.2% 62 5.5% 176 2.4%

Malaysia 14 1.2% 31 4.5% 75 3.2% 199 2.0%

Philippines 6 4.9% 8 8.4% 30 8.0% 49 4.1%

Vietnam 0 7.3% 1 5.0% 9 14.7% 491 17.9%

South Asia

Bangladesh 1 10.0% 1 60.0% 5 78.0% 12 80.3%

India 8 7.5% 19 13.7% 41 11.7% 182 6.0%

Sri Lanka 1 10.0% 2 35.0% 4 57.5% 9 40.0%

Pakistan 3 3.3% 6 18.3% 9 22.2% 20 19.2%

(volumes in US$ billion; export share of apparel industries in %)

Sources: 1980-1998 Gereffi 2006; 2008 UN Comtrade Database

1 data for 2007

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[28/all]Asics 2009

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[29/all]Mizuno Network 2009

since 1990

since 1987

since 1982

since 1982

since 1991

since 2008

since 1970

since 1994

since 1992

Thai Sports

Garments since 1990

China Mizuno, since 2007

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[30/all]flying geese model

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[31/all]sweatshop critics

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[32/all]final

Baseball

consolidation in consumer goods industries

vertical integration; proprietary brand development, diversification of business (under „fast retailing“)

communication technologies, production standards, internet and virtual market places

unequal benefits? industrial upgrading but high degree of dependency from Northern markets as well as from large retailers

race to the bottom is slowing down

The China factor

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[33/all]Japan apparel import

Wolfram ManzenreiterUniversity of ViennaDept. of East Asian Studies

[34/all]China