Abstract
This study empirically investigated how small and medium-sized Chinese apparel enterprises (SME) formed their strategy as a response to the characteristics of business environment in order to achieve competitive business performance. An environment-strategy-performance model was proposed and tested. Using primary data gathered by a questionnaire survey of the Chinese apparel industry, factor analysis and structural equation modeling (SEM) were conducted for measurement and structural model analysis and hypothesis testing. Results show the proposed model met parsimonious statistical criteria. The differences in strategy responses to environment between high- and low-performing firms were striking. Confronting an increasingly turbulent business environment, high performers emphasized differentiation strategy through higher quality, better delivery performance, and greater flexibility than cost reduction. In contrast, low performers prioritized low cost while quality and flexibility were given certain weights. The lack of clear focus on strategies could result in a relatively lower performance. While the process of government-led industrial upgrading continues, forward-looking firms have proactively shifted their strategic focus from solely or mainly cost reduction to a variety of differentiating factors which bring in added value and are less imitable by competitors.
Highlights
In the past three decades, the Chinese apparel industry has achieved spectacular growth, capturing a significant share of global production and trade
The continued advancement of managerial skills and knowledge among small and medium-sized enterprises (SMEs) plays a crucial role in achieving the national industry upgrading goal through transiting from originalequipment-manufacturer (OEM) which mainly competes on low cost to original-brand-manufacturer (OBM) and/or original-design-manufacturer (ODM) which focus on differentiation and added value
The first half of the responses were designated as relatively high performers and the second half were designated as relatively low performers
Summary
In the past three decades, the Chinese apparel industry has achieved spectacular growth, capturing a significant share of global production and trade. China has become the largest producer and supplier of fibers, yarns, fabrics, and apparel in both volume and value terms Today, it supplies approximately 33 percent of textiles and 40 percent of apparel by value in the global market [2]. In moving from a self-sufficiency-based, centrally-planned system towards a commercially-driven, export oriented sector, the Chinese apparel industry experienced far-reaching changes. These profoundly affected the consumer needs, the product mix and distribution channels, and firm strategy and skill development [3]. As a result of these changes, Chinese firms have faced a dramatic escalation in the level of turbulence within their business environment Against this backdrop, state-owned enterprises (SOEs), which were in the monopoly position, have radically declined. The continued advancement of managerial skills and knowledge among SMEs plays a crucial role in achieving the national industry upgrading goal through transiting from originalequipment-manufacturer (OEM) which mainly competes on low cost to original-brand-manufacturer (OBM) and/or original-design-manufacturer (ODM) which focus on differentiation and added value
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