The expansion of textile and clothing firms of China to Asian Least Developed Countries: The Case of Cambodia

Since the 1990s, the rapid expansion of China’s textiles and clothing enterprises to Cambodia has been closely linked to the phenomenon of industrial clustering of textiles and clothing firms at the Yangtze River Delta, Pearl River Delta and Bohai Rim. The report adopts the case study approach to examine the pattern and features of overseas foreign direct investment (OFDI) of textile and clothing firms in Zhejiang province and Jiangsu province of the Yangtze River Delta to the least developed countries (LDCs) in the Asian and Pacific region, particularly Cambodia, and make the corresponding policy suggestions on the sustainability of South-South investment and cooperation. The fieldwork in Zhejiang province for this study showed that the subsidiaries of Chinese textile and clothing firms in Cambodia had been gradually integrating into the vertically-integrated value chain of textile and clothing firms in China, thereby becoming an important node in global textile and clothing value chain. Interviews (see annex 1) by the authors in the Yiwu specialized wholesale market indicated that business linkages between the specialized wholesale market and the Asia-Pacific LDCs have been developing fast in the past decade, although the ratio of businessmen from the Asia-Pacific LDCs is relatively limited compared with those from the LDCs in Africa. The internationalization of specialized wholesale markets has promoted commercial activities between China and LDCs in the Asia-Pacific region and led to an increase of OFDI from Chinese textile and clothing firms to LDCs. The fieldwork in Jiangsu province has demonstrated that Chinese textile and clothing firms have started to change their investment behaviour from voluntary overseas expansion by individual firms to the establishment of overseas economic and trade cooperation zones, such as Sihanoukville Special Economic Zone (SSEZ) (see annex 2) in Cambodia, which facilitates the collective expansion of Chinese textile and clothing firms and improves the textile and clothing manufacturing capability in Cambodia. The OFDI from China to LDCs has not had a great impact on local employment. However, the global financial crisis has led to a rising number of unemployed textile and clothing workers in China. The factors constraining sustainable OFDI from China in Cambodia include poor infrastructure, relatively high labour costs compared with other LDCs, low efficiency of government assistance and inadequate financial services. The policy suggestions on facilitating sustainable investment from China to the LDCs from the perspective of Cambodia are to: (a) encourage OFDI by Chinese textile and clothing firms in overseas economic and trade cooperation zones in the Asia-Pacific LDCs; (b) forge the regional production network between China and the LDCs; (c) upgrade the financial package to support Chinese textile and clothing firms’ FDI; and (d) improve the infrastructure facilities and government efficiency in the LDCs.Textile and clothing, China, LDCs, Cambodia

What determines informal hiring? Evidence from the Turkish textile sector

Most studies about the shadow economy focus on the estimation of the aggregate size. However, this study aims to address the sectoral or micro aspects of this phenomenon using the data from the textile sector in Turkey. It uses discriminant analysis and ordered and logistic regression models to unveil the determinants of the informal hiring in Turkey. It concludes that high competition, the skill structure of the employees, perceived penalty scheme, and the size of the firms in the sector are important factors of the textile firms hiring informally.informal hiring in Turkish textile sector; discriminant analysis; logistic regression model; ordered regression

Multinational Strategies and Outward-Processing Trade between Italy and the CEECs: The Case of Textile-Clothing

The paper is focused on the internationalisation process of the Italian firms within the textile-clothing industry. According to the economic literature on this topics, the Italian industry, as well as the textile-clothing sector, seem to be a follower, as far as the internationalisation process is concerned. Only since the Nineties, the international pattern of growth of the textile-clothing sector is strictly linked to the delocalisation of production and the creation of foreign affiliates. Within this contest, the Outward-Processing Trade (OTP) played a major role: the increase of the OTP data from 1991 to 1998 is very strong, especially if the consider the geographical area of the Central and Eastern European Countries (CEECs). Among the CEECs, the Italian firms are mainly linked to Rumania. Our paper confirms the complementary existing among the different types of internationalisation tools.

Labour Cost and Export Behaviour of Firms in Indian Textile and Clothing Industry

The implementation of the Agreement on Textile and Clothing (ATC) of the World Trade Organization (WTO) renders both threats and opportunities to India’s Textile and Clothing (T&C) industry in the wake of liberal international trade in the sector. Firms acquire greater international competitiveness through various cost cutting and efficiency enhancing strategies. The question we try to ponder on is, what route does Indian firms take to join the international export market in T&C. Empirical analysis, using Tobit estimation techniques, supported the view that increasing the share of low cost labour was an important route through which export performance of the Indian firms in T&C was enhanced. Further, the use of this means to perform better in the international market aggravated in the period after the implementation of the ATC. On the other hand, capital and technology based factors did not have any perceptive effect on the export performance of Indian firms in the international market. This endorses the view that the Indian T&C firms by and large utilized the low road to competitiveness, rather than the other. Also the importance of the import intensity in export performance suggests that Indian T&C is increasingly getting integrated within the global value chain.Export performance; Textile and clothing industry; Labour cost; Tobit Model; Agreement on Textile and Clothing

Will Industrial Districts Exploit B2B? A local experience and a general assessment.

What are the prospects of B2B electronic commerce when production is carried out by a number of small firms specialized in single production phases? Prato, Italy, is home to thousands of textile firms as well as the locus of an early and innovative experience of a local Internet in the mid-1980s. This experience suggests that, since they fear to be imatated by their geographical proximates, geographically clustered firms may lag behind in the exploitation of information and communication technologies. Analysis of today's web sites of Pratese firms confiorms this intuition. A similar analysis of web sites is carried out for producers of fabrics worldwide. Contrary to Europe, in Asian countries geographically clustered firms exhibit little fear of information leakages. Differences in the organization of production may explain this puzzle.ICT, e-commerce, B2B, Textile Industry, Industrial Clusters, Industrial Districts, Prato.

Price Earning Ratio and Market to Book Ratio

This paper studies the effects of P/E ratio and M/B ratio on stock return of listed firms with Karachi Stock Exchange in the Textile sector of Pakistan. A total of 30 major firms out of 162 in the textile sector listed with the Karachi Stock Exchange for the period of 2001-2006 were selected on the basis of their size in terms of total assets. Firms which have larger size in terms of total assets among 162 firms were selected in this paper. The study reveals that the firms in an exclusive sector exhibit unique attributes that are sector specific and cannot be applied to or judged by combined analysis of the industry. The result shows that coefficients of independent variables are statistically insignificant. This means that stock return is not depending on any of the two independent variables. Besides insignificant coefficients, coefficients of determination are also very low in each case. This means that a very low percentage of change in stock return is explained by these two variables. The data was analyzed by running linear regression. Two independent variables i.e. P/E ratio and M/B ratio were selected to see their effects on stock return. Multiple regression models along with a measure of correlation were used to study the effect of the independent variables on the dependent variable. The results for the study revealed that stock return is independent of the two independent variables studied in this paper.P/E Ratio, M/B Ratio, Stock Return, Fundamental Analysis

Subcontracting dynamics and economic development: A study on textile and engineering industries

Recent studies on small and medium sized establishments emphasize the importance of networking and regional clusters for industrial development. This study is focused on an important form of cooperation between firms: subcontracting relationship. Our aim is to estimate the determinants of subcontracting in Turkish textile and engineering industries, and to derive policy implications of our estimates. We estimate subcontract offering and subcontract receiving models for both industries by using panel data on all establishments employing 25 or more workers in the period 1988-97. Our findings show that short-term/unequal relationship exists between parent firms and subcontractors in the textile industry whereas subcontracting relationships in the engineering industry are established between "similar", relatively advanced firms that have complementary assets and technologies.Subcontracting, firm cooperation, vertical integration

Intra-Firm Human Capital Externalities in Tunisia

In this case-study, we use matched worker-firm Tunisian data to elicit the roles of intra-firm human capital and modern firm features in worker remunerations. We show that the estimated return to education in wage equations is not modified when replacing in the list of regressors the firm dummies, representing observed and unobserved firm heterogeneity, by the first three factors of a Principal Component Analysis of the observed firm characteristics. These factors can be interpreted as: the activity sector, the intra-firm human capital density and the modernity of the firm. These results constitute an interesting argument in favour of the presence of intra-firm human capital externalities. Moreover, the estimated education coefficient does not change when the three factors are replaced by three surrogate variables, respectively: the textile industry dummy, the intra-firm mean education, and the firm’s age.economic development, rate of returns, human capital, wage differentials, intra-firm knowledge externalities, Tunisia.