I have just finished reading a fascinating book on international business which you may find highly relevant and thought-provoking. It’s be a US economist Pietra Rivoli, and called The travels of a t-shirt in the global economy: an economist examines the markets, power and politics. The book explores many issues of interest to readers of this Blog.
Rivoli explores the emergence of cheap t-shirts from China and elsewhere, and the companies, processes
and supply chains behind this story. She explores why the t-shirts are so cheap, why the US can no longer compete in the market, and how the politics of trade have shaped firm behaviour. Rivoli goes right back to the 18th and 19th century to explore how the US usurped Britain as the dominant player in this industry (and also how Britain wiped out India as a comptitor before that).
Rivoli explores the incredible technological innovations that have kept US cotton growers competitive, but argues that clothing manufacturing has been less successful in recent years, losing out first to Japan, then Hong Kong, Taiwan and now China.
She heads to China to see what the factories look like there, what work in the factory means to young Chinese women and to explore the entrpreneurialism involved in building relationships with the big buyers of these products. Rivoli argues that China does have huge advantages because of labour laws and because of the enormous population of available workers.
She also finds that China is limited in its success by very effective quotas that limit the amount of textiles that can be exported to the US. These quotas have lead to expansion of t-shirt manufacturing in a range of countries including Mauritius, Bangladesh, Honduras, Vietnam and Pakistan. Rivoli highlights the enormous bargaining power of US senators and congressmen in influencing the quota levels and the extent to which the US uses these quotas as a bargaining chip in negotiations with a wide range of countries. Only now in 2008 are some of these quotas finally being removed allowed freer trade in some clothes into the US.
A truly fascinating section near the end of the book looks at recycled t-shirts (and clothing more generally). Here the US is a net exporter and provides a huge amount of clothing to developing nations. The markets for these goods is much freer and the goods are highly idiosyncratic (she refers to them as snowflakes as new used t-shirt is the same). The stories of marketplaces in Tanzania showcase some fantastic entrepreneurship and innovativeness.
US National Public Radio provides some (print) excerpts from the book and some short (audio) interviews with participants:
If you want to get a nuanced, balanced insight into one startlingly complex industry and its international machinations, this is a great place to start. There is also a book about underpants out there which I haven’t yet read.