Introduction

The global landscape of the apparel industry is being profoundly transformed following the termination of the Multi-Fibre Arrangement (MFA) on 1 January 2005. International buyers are now free to source apparel from any country, subject only to the system of tariffs. Since they are no longer constrained by country-specific quotas, buyers can demand many more attributes of products from suppliers in addition to price. These would include things like product variety, quality and timely delivery. They have also started to aggressively restructure their sourcing patterns to procure from fewer efficient suppliers worldwide and to develop long-term strategic partnerships with core suppliers by setting up local sourcing offices, bypassing their erstwhile sourcing agents (Fung, Fung and Wind, 2007; USITC, 2012). The importance of these non-price factors in export success in the post-MFA era has been further elevated by the ongoing process of ‘lean retailing’, a business strategy that has become widespread in the apparel trade in developed countries since the mid-1990s (Abernathy et al., 1999, 2006; Evens and Harrigan, 2005; Harrigan and Barrows, 2009). Lean retailing involves replenishing the range of apparel on offer on the shop floor in very short cycles (rather than seasonally, as was traditionally done), while defraying the inventory risk by holding low stocks. In the process of lean retailing, ‘suppliers’ warehouses and distribution centres act in many ways as virtual warehouses and distribution centres for the retailer (Abernathy et al., 1999, 16). The buyers also increasingly require suppliers to undertake tasks such as labelling, packaging and barcoding, which were traditionally done in the buyer's warehouses or distribution centres (Abernathy et al., 2006; Fung et al., 2007).

In this context, the export success of apparel manufactures depend crucially on industrial upgrading, the ability to ‘climb the value chain from basic assembly activities to full-package supply and integrated manufacturing’ (Gereffi and Fernandez-Stark, 2016, 5). Understanding the processes and drivers of industrial upgrading is vital for crafting national policies for facilitating the required industrial adjustment. Much has been written about the impact of MFA on global trade patterns and the governance of the global apparel value chain, especially about the way in which lead firms organize their supply chain on a global scale. There is, however, a dearth of studies of the experiences of exporting countries in repositioning in the apparel value chain in the post-MFA era.