Abstract
This study investigated the comparative advantages of the Bangladeshi andVietnamese apparel industries using Global Value Chain (GVC) framework. In thisstudy, the GVC framework was expanded to include social and environmentalsustainability issues. Secondary data, for the 2012 - 2013 period, were collected andanalyzed for each component of the apparel GVC. The findings indicated that whileboth countries have unique comparative advantages, Vietnam clearly emerged as aleader on many GVC components. Bangladesh’s comparative advantage lies in lowerwages, producing high volume orders, and lean manufacturing. In spite of Vietnam’shigher labor costs, it has comparative advantages in higher productivity, skilled andtrained workers, manufacturing of intricate styles of high quality, agility and flexiblemanufacturing, more developed infrastructure and logistic services as well as greatersocial and environmental compliances. This study contributes towards insight intobest sourcing fit for fashion brand business models. Based on the findings, fashiondriven companies offering more complex styles at a faster rate will benefit fromchoosing Vietnam. In contrast, Bangladesh might be a better choice for high volumedriven companies that offer basic apparel and better value for their consumers. Fromtheoretical perspective, the research makes an important contribution by expandingthe GVC framework.
Highlights
In today’s highly competitive retail landscape, fashion companies are striving to better their financial performance
The findings indicated that while both countries have unique comparative advantages, Vietnam clearly emerged as a leader on many Global Value Chain (GVC) components
This research investigated the comparative advantages of the Bangladesh and Vietnam’s apparel industries based on the GVC framework by comparing the two countries in terms of material supply, apparel manufacturing, transportation and logistics, and social and environmental sustainability
Summary
In today’s highly competitive retail landscape, fashion companies are striving to better their financial performance. To keep up with the escalating competition, fashion brands are constantly refining their global sourcing practices in an attempt to lower production costs and delivery time (Rollins, Porter, & Little, 2013). One of the solutions is to better match suppliers’ resources and capabilities with the company’s business model: value basic apparel vs fast delivery of fashionable styles (Ganesana, George, Jap, Palmatier, & Weitz, 2009). Rising production costs and tightening environmental regulations in China as well as consumer demand for fast fashion at lower prices has become major motivations for firms to re-evaluate their sourcing strategies (Berg, Berlemann, & Hedrich, 2013). Finding new locations to produce fashion products requires a suitable match between customer needs and business operations with the capabilities of the sourcing location. “A poor match will limit the company’s ability to respond to market changes and is likely to inhibit company growth” (Rollins et al, 2013, p. 141)
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