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The Organization of Buyer-Driven Global Commodity Chains: How U.S. Retailers Shape Overseas Production Networks
Abstract
Global industrialization is the result of an integrated system of production and trade. Open international trade has encouraged nations to specialize in different branches of manufacturing and even in different stages of production within a specific industry. This process, fueled by the explosion of new products and new technologies since World War II, has led to the emergence of a global manufacturing system in which production capacity is dispersed to an unprecedented number of developing as well as industrialized countries (Harris, 1987; Gereffi, 1989b). The revolution in transportation and communications technology has permitted manufacturers and retailers alike to establish international production and trade networks that cover vast geographical distances. While considerable attention has been given to the involvement of industrial capital in international contracting, the key role played by commercial capital (i.e., large retailers and brand-named companies that buy but don't make the goods they sell) in the expansion of manufactured exports from developing countries has been relatively ignored.
This chapter will show how these ‘big buyers’ have shaped the production networks established in the world's most dynamic exporting countries, especially the newly industrialized countries (NICs) of East Asia. The argument proceeds in several stages. First, a distinction is made between producer-driven and buyer-driven commodity chains, which represent alternative modes of organizing international industries. These commodity chains, though primarily controlled by private economic agents, are also influenced by state policies in both the producing (exporting) and consuming (importing) countries.
Second, the main organizational features of buyer-driven commodity chains are identified, using the apparel industry as a case study. The apparel commodity chain contains two very different segments. The companies that make and sell standardized clothing have production patterns and sourcing strategies that contrast with firms in the fashion segment of the industry, which has been the most actively committed to global sourcing. Recent changes within the retail sector of the United States are analyzed in this chapter to identify the emergence of new types of big buyers and to show why they have distinct strategies of global sourcing.
Third, the locational patterns of global sourcing in apparel are charted, with an emphasis on the production frontiers favored by different kinds of US buyers. Several of the primary mechanisms used by big buyers to source products from overseas are outlined in order to demonstrate how transnational production systems are sustained and altered by American retailers and branded apparel companies.
... To illustrate this argument, in the following, I briefly introduce the central ontological assumptions and conceptual tools of the GCC, the GVC and the GPN approach. The Global Commodity Chains (GCC) framework was introduced by the American sociologist Gary Gereffi (1994Gereffi ( , 1999 in the 1990s and subsequently found wide application within economic geography. The declared aim of the GCC framework was to provide a framework for analysing different modes of organising international "production systems that give rise to particular patterns of coordinated trade" (Gereffi 1994: 96). ...
... As the name suggests, the GCC framework is underpinned by a linear chain ontology that conceptualises international production systems through the lens of their sequential 'input-output structure', defined as "the set of products and services linked together in a sequence of value-adding activities" (Gereffi 1994: 97). As two other central dimensions for analysis, Gereffi (1994) has introduced 'territoriality', referring to the specific geographical distribution of the activities involved in the production, distribution and sales of a specific commodity, and 'governance structure', referring to the power relations between firms in a specific production chain that determine "how financial, material and human resources are allocated and flow within a chain" (Gereffi 1994). The most important conceptual contribution of the GCC framework has been in the dimension of governance with the distinction between buyer-driven and producer-driven commodity chains (Gereffi 1999: 41f.). ...
... As the name suggests, the GCC framework is underpinned by a linear chain ontology that conceptualises international production systems through the lens of their sequential 'input-output structure', defined as "the set of products and services linked together in a sequence of value-adding activities" (Gereffi 1994: 97). As two other central dimensions for analysis, Gereffi (1994) has introduced 'territoriality', referring to the specific geographical distribution of the activities involved in the production, distribution and sales of a specific commodity, and 'governance structure', referring to the power relations between firms in a specific production chain that determine "how financial, material and human resources are allocated and flow within a chain" (Gereffi 1994). The most important conceptual contribution of the GCC framework has been in the dimension of governance with the distinction between buyer-driven and producer-driven commodity chains (Gereffi 1999: 41f.). ...
This chapter reviews literature on labour in GVCs and GPNs. It argues that within the interdisciplinary literature on labour issues in GVCs/GPNs, two parallel research strands have emerged that are characterised by very different conceptual approaches: (1) a ‘Decent Work’ approach underpinned by the institutionalist perspective of the ILO Decent Work Agenda and (2) a ‘Marxist Political Economy’ approach, which is based on the assumption that the exploitation of labour is an inherent structural feature of capitalist production systems. Situating this study within the second research strand, this chapter then reviews the contributions and shortcomings of existing literature on labour control and labour agency in GVCs/GPNs. In doing so, the chapter highlights the limitations of existing scalar approaches for studying labour control and labour agency in GVCs/GPNs, which have not paid enough attention to how dynamics of labour control and labour agency at different levels influence each other. Against this background, this chapter argues that to gain a more nuanced understanding of the ‘architectures of labour control’ underpinning specific GPNs as well as of workers’ and unions’ networked agency strategies, a relational analytical approach can be beneficial.
... These retailers or branded manufacturers control the higher valueadded processes of research and development, design and retail, and outsource the lower value-added, labour-intensive manufacturing process to independent suppliers located predominantly in the Global South. For this reason, the garment GVC has also been labelled as the prototype of a buyer-driven GVC, in which retailers or branded manufacturers act as 'lead firms' (Gereffi 1994). ...
... As a result, suppliers acting as OEM producers became unattractive to department store retailers who compete mainly by price with other retailers as opposed to design or quality. Hence, department store retailers such as Walmart shifted their sourcing activities to countries where wages were still lower (Gereffi 1994). ...
This chapter introduces the Bangalore export-garment cluster as the main case of this study and situates it with the broader structural context of the garment GPN. To this end, the chapter first outlines the historical and geographical development of the garment GPN as well as the power relations structuring it. In this context, the chapter identifies three subsequent trends that have characterised the garment GPN since the early 2000s: (1) the geographical consolidation of garment retailers’ sourcing networks with a particularly strong growth of the industry in China and India during the 2000s; (2) thereafter, the emergence of new low-wage sourcing destinations in South and South-East Asia, and in Africa; and, most recently, (3) a selective shift towards ‘near sourcing’ by fast fashion retailers for higher value-added, time critical fashion garments. Thereafter, the chapter lays out the historical and geographical development of the export-garment industry in India and in Bangalore and gives an overview of the industrial relations in the cluster.
... One of the main representatives of conventional literature on GVC is Gereffi (1994 and1999), who argued that the formation of GVC is associated with the same factors that lead to productive fragmentation, including (i) technological advances in transport services and telecommunications systems that have dramatically reduced the cost to coordinate complex activities in companies and between companies located far apart in the world; and (ii) the liberalization of international trade and FDIs that have resulted in lower trade barriers, particularly tariff barriers, thus further diminishing production and commercialization costs and allowing companies to disperse their activities according to their strategies for gaining competitive edges and accessing new markets through the expansion of GVC. According to Sturgeon et al. (2013) and Baldwin and Robert-Nicoud (2014), developing countries can greatly benefit from the new production structures in the GVC because the trade, investments, and knowledge flux that sustain the value chain also stimulate fast learning, innovation, and upgrade for the industrial structure of these countries. ...
This paper analyzes the global value chains (GVC) of the coffee industry, particularly in the emerging economies of Vietnam, Colombia, and Brazil, which are the largest producers and exporters of unprocessed coffee in the world. However, value-added or processed coffee exports are equally dominated by advanced countries, such as Switzerland, Germany, and Italy. Thus, to upgrade the coffee sector and the GVC, the challenges for latecomers not only lie in strengthening their productive structures via technological upgrading but also in changing the governance structure, including the asymmetry in global value distribution and the tariffs and no-tariffs barriers, in international coffee trade. This paper discusses the structural and artificial barriers associated with monopoly in brand power and marketing channels as well as the protectionist tariff and non-tariff barriers in advanced country markets. Overcoming such barriers requires targeted interventions in the form of industrial policies, including capability building and export taxes against unprocessed coffee in emerging countries, countermeasures against trade barriers, and even M&A of foreign brand incumbents. Another radical option is to form a coffee cartel, similar to the OPEC for crude oil, that unites the top three or five coffee-producing countries. A precondition to form such cartel is consolidating the coffee industries of emerging countries into several large procuring companies in order to gain certain market power. Even without a cartel, imposing common and coordinated export taxes on unprocessed coffee would increase the amount of coffee beans remaining in the domestic market and processed by domestic firms in order to be exported as processed coffee.
... For newly industrialising countries worldwide, the global garment industry is considered a vehicle for economic and social development (Dicken 2015;Gereffi 1994Gereffi , 1999. Particularly in Asian countries, the emergence of export-garment industries producing for US and European retailers has propelled industrialisation processes and created jobs for millions of workers (ILO 2015). ...
For newly industrialising countries, the global garment industry is considered a vehicle for economic and social development, especially for increasing women’s participation in the labour market. At the same time, the garment industry has also been widely criticised for frequent labour rights violations, low wages and bad working conditions. Media and public discourses have focussed largely on private regulatory mechanisms and international labour standards as tools for promoting ‘decent work’ in the global garment industry. However, this chapter argues that lasting improvements for workers can only be achieved through the agency of strong local unions in garment producing countries. Against this background, this chapter introduces two central research questions that remain understudied in existing literature on labour in Global Value Chains (GVCs) and Global Production Networks (GPNs): (1) How do labour control regimes at specific nodes of the garment GPN shape and constrain the terrain for worker and union agency in garment producing countries? (2) Which relationships and interactions enable unionists and workers in garment producing countries to develop strategic capacities and power resources that allow them to shift the capital-labour power balance in favour of workers?
... El enfoque de la CVG (Gereffi y Korzeniewicz, 1994) analiza cómo se establecen globalmente los vínculos entre producción, distribución y consumo de los productos, a lo largo de una CV que da cuerpo a una red de actividades y actores. Gereffi (1994) identificó cuatro dimensiones principales en la CVG: ...
Este volumen es un estudio completo sobre el nuevo concepto de Responsabilidad Social de Género, (RSG) resultado de aunar la Responsabilidad Social Corporativa (RSC) de las empresas con la perspectiva de Género. Se estudia a varios niveles: interno de las empresas( gestión de recursos humanos, salud y seguridad laboral, gestión medioambiental), y externo de las empresas ( hacia proveedores, subcontratistas y consumidores, compromisos éticos y sociales). La RSG se propone como una herramienta muy valiosa, dentro del sistema económico-empresarial mundial , para promover la igualdad de género, los derechos humanos y el desarrollo sostenible. Anexo con ejemplos de buenas prácticas de las empresas en el marco de la RSG
... One of the first distinctions made of GVCs is between those that are "buyerdriven" and those that are "producer driven" [2]. The significance of this distinction is that it helps to explain the political and social relationships between participants in the chain. ...
Global value chain research has focused on the governance of diffuse modes of production and trade that travel in a single direction, however Circular Economy business models are by definition closed economic systems, where it is possible for two parties to act as both buyers and sellers. How then should Circular Business models be understood within the context of international trade systems? Based on an approach which explores the principles that businesses make decisions to set business strategy and the processes through which businesses establish and build external relationships, this chapter examines the case of MagProtein, a company based in Nigeria that produces protein for animal feed and fertilizer using black soldier flies. This chapter finds that although MagProtein’s business model centered on local production and distribution, improving operational efficiency and scale depended upon the activities and organizations participating in global value chains.
Forced labour persists in our global economy despite dedicated attention and eradication efforts from both the public and private sectors. Given the bounded reach and lack of enforcement by states and international organisations, the private sector has been the linchpin for eradication of forced labour globally. Utilising the brand-to-state boomerang model, this paper examines state-imposed forced labour in cotton production in China and Uzbekistan, and grapples with how interests – those of the states and the multinational corporations involved in forced labour – shape private governance outcomes. By investigating state-imposed forced labour in China (specifically, the Xinjiang Uyghur Autonomous Region) and Uzbekistan, we find that multinational corporations are reluctant to work towards eradicating forced labour when their net sales and profit are threatened by doing so. Building on the stream of international political economy research regarding how interests complicate governance effectiveness, we expose a gap in the literature on the impact of state-imposed forced labour on governance outcomes and illuminate global ramifications.
Transnational labour governance is in urgent need of a new paradigm of democratic participation, with those who are most affected - typically workers - placed at the centre. To achieve this, principles of industrial democracy and transnational governance must come together to inform institutions within global supply chains. This book traces the development of 'transnational industrial democracy', using responses to the 2013 Rana Plaza disaster as the empirical context. A particular focus is placed on the Bangladesh Accord and the JETI Workplace Social Dialogue programme. Drawing on longitudinal field research from 2013–2020, the authors argue that the reality of modern-day supply chain capitalism has neither optimal institutional frameworks nor effective structures of industrial relations. Informed by principles of industrial democracy, the book aims at enhancing emerging forms of private transnational governance as second-best institutions.
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