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International Cotton Trade- the Travels of a T-Shirt in the Global Economy

In: Business and Management

Submitted By j2palmer
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The Travels of a T-Shirt in the Global Economy

The opening of this story begins with an organized student protest at Georgetown University, where author Pietra Rivoli, who is a professor of finance and international business, is watching the students arguing statements. This immediately captures my attention as it begins to describe a common characteristic of a major University that I live near and attend many events at. The University’s organized peaceful protest allowed the public speaking through protesting on the topic of the evils of big corporations and the explanation of how these big corporations, Globalization, The World Trade Organization (WTO) and the international Monetary Fund (IMF) are exploiting workers all around the world. One speaker alluding to “sweat shops” particularly caught the attention of the author by exclaiming, “Who made your T-Shirt”? This statement sparked Rivoli’s intrigue that is a great use of foreshadowing for what the story will lead to. The traveling of thousands of miles and across multiple continents to find out “who” really did make these shirts. We all wear our everyday cotton “tee’s” without giving a second thought about the journey each T-Shirt had to go through in order to make it here to the United States. This sets the foundation for the rest of the book and explains its purpose.
The first stop in this journey isn’t on foreign soil where I expected the book to lead off, but rather here in the Continental United States at the Reinsch Cotton Farm in Smyer, Texas. Having served with many people from Texas, people often make claims about the greatness of this massive state; however, cotton production has never been one of the claims. This first stop along the T-Shirts journey came as a huge surprise to me and it was even more of a surprise when I discovered the Reinsch Cotton Farm competes with farmers from so many different countries. The farms vast 6000 acres can produce about 1,200 T-Shirts per acre, which can yield over one million T-Shirts a year! I was also unaware that most Cotton farms receive Government subsidies allowing them to pump out even more cotton without fear of losing profit. Although most large farming operations receive subsidies, these subsidies pose a threat to smaller developing countries whose main complaint is that it’s impossible to compete with U.S. cotton production because farmers are receiving government assistance. The foreign competitors national governments could never match the U.S. subsidies therefore effectively taking the foreign opposition out of the global cotton producing industry. Immediately I think of the reverse side of these economic conditions and how the United States was once a manufacturing powerhouse that has now scene operations move overseas. These unhappy countries reported this to the World Trade Organization claiming that the U.S. has an unfair advantage over the cotton industry. If the World Trade Organization would have been around at the time of U.S. manufacturing economic downturn, I imagine our country would have reacted the same way. The U.S. then defended its advantage by claiming that its cotton industry was dominant before government subsidies even a variable in the global economic equation. Also, according to Rivoli, “U.S. farmers have better production methods, marketing, technology and can respond to supply and demand,” showing that the argument posed to the World Trade Organization was valid in argument of subsidiaries but not in terms of their competitive advantage that has been gained over the course of hundreds of years. The big theme of discussion and controversy here lies in the subsidies farmers receive from U.S government. The whole set of quotas; tariffs and subsidies they receive are discussed as protectionist policies.
Globalization and free trade are controversial issues that cannot be seen from just one side. The author clearly states that globalization benefits the allocation of resources, world output, and creation of a variety of goods that is essentially beneficial to the consumer. Globalization and the economic factors that come with it are not the immediate response or salvation for the poor and less developed countries in the world. In my opinion, the globalization “outcry” from certain public groups has valid concerns and large companies that harbor poor working conditions are an area of concern. However, I recognize that under a globalized, free trade system, equality is hard to accomplish and the monetary share is not equally distributed. This means there are negative consequences such as human rights abuses and exploitation that almost inevitably come with globalization. I firmly believe that the advantages and benefits of international trade outweigh the negative effects of it, and that in time the break down of trade boarders will be beneficial to all.

The Travels of a T-Shirt in a Global Economy explained not only the supply chain of a cotton T-Shirt, but also explained the process of how globalization and free trade work. And of course, when writing about globalization, China and there their powerhouse of production capabilities comes into play. The book continues to go into detail of the journey of the Reinsches’ cotton from the ranch where it was grown to where almost everything it seems is produced or finalized, China. According to the author, textile factories in China take in more cotton than any other country in the world. It was also among the first developing countries to try the genetically engineered Bt seed. The book mentions its development by Tech or Monsanto, which has been a controversy in modern culture and has sparked a non-GMO movement in the food industry. Regardless, cotton farmers in China have used these seeds to stay ahead of progressive diseases and pests that destroy cotton and used this technology to progress their cotton production.

Continuing with the supply chain to the manufacturing process in China, when Texas cotton is hoisted from the delivery ship in Shanghai, it enters not only a new country but also a whole new global industry. The production of apparel in China is almost as old as agriculture according to Rivoli. Alluding to the working conditions of the country, Rivoli said that “Shanghai’s cotton textile industry bred the labor revolutionaries, it also generated the lavish wealth that transformed Shanghai into an X-rated Disneyland for the new industrialists.” I believe the author did a magnificent job explaining the culture of Chinese manufacturing in that sentence. He continues to elaborate on Chinese mills along with their working culture and conditions. The analogy that the book gives stating, “Today, China dominates the global textile and apparel industries as the United States dominates the world cotton markets,” is a fact that holds true with an entirely different set of circumstances.

The circumstances I speak of reference our economic race to the bottom in wages that destroys many ethical standards. High pollution and poor working standards lead to “sweatshop” stories that come out of China almost as fast as the T-Shirts do. The economic conditions of China right now are very much like America’s Industrial revolution. They both had/have horrible working conditions with few rules to protect the worker and both caused horrible environmental damages. Labor and Environmental activists say the race to the bottom of wages is simultaneously destroying working conditions and the environment. With the integration of globalization, technology, communication and transportation, the “race to the bottom” could continually change and become more competitive with new globalized economic factors. The United States, as a major consumer in all facets of the apparel industry, has always looked for ways to reduce costs by outsourcing their productions outside the U.S. As a result, some groups think that this has led to domestic unemployment. But globalization is not the only source of this; it is the advancement of production technology. Productivity has been continuously higher while using comparatively less in labor force. However, the labor force of China is that county’s competitive advantage. The Chinese supply and price of labor has lead to their dominance in light manufacturing. The book continues into Communist China’s policies and teaches us of the hukou system. The hukou specifies where you live, no matter where you actually are and was devised in the 1950s to the support the economic development of China. System is the beginning of the explanation of why and how China continues to have such a strong hold on low prices in labor supply and wages.

Although China has one of the strongest labor markets in the world, America has one of the largest consumer economies in the world, and a majority of Chinese products end up here in the U.S. just as the average cotton t-shirt does. The author continued with an explanation of the complexities the t-shirt goes though upon entering the U.S. marketplace by explaining the journey the t-shirt goes though with apparel import rules as well as the people hindering the ease of Chinese apparel trade. The politics involved and the associations and acronyms continue throughout this section of the book to a point of sheer frustration with the industry rules. The one thing that I have learned from this section is that the determination of the domestic clothing industry in America will not “go out” without a fight. The politics of the withering of America’s competitive position in these industries is part of an economic fight for monetary survival. The author continues his story following his American Sherpa of the textile and apparel industry, Auggie, to the top of the political chain to Washington D.C. It was when I started reading about all of the organizations that are being addressed in this section where I thought of my daily commute to work. I am a D.C. commuter and a majority of daily commuters listen to political talk radio in their car if that is one’s daily choice of transit. The books continues to outline politics of the apparel industry giving the case and history on the subject matter, and even references Regan once, (which everyone does now) but just like the book and my daily commute listening to talk radio, I thought the same thing… politics is about money. That is what it all boils down to. And whether some policy benefits a group of poor people, rich people, certain interest groups, or whomever, it’s always about the money. I’m aware that is a very broad and vague statement, but I can’t help but think of it when I’ve been living in the “D.C. economic bubble” for the past three years while economic policies that effect this area well, may have different effects elsewhere. Perverse effects aren’t intended, but as political rules don’t and can’t change as often as they should, the marketplace evolves leaving obsolescence. Although “it’s all about the money” is a broad an overused statement, I still find it valid and the author shows us this by progressing that statement from one chapter topic to next.

One of the final sections of this book surprisingly gave me an optimistic outlook towards the future of the industry in discussion. It especially stunned me when reading about all the energy and resources going into recycling. On another note, I was not very surprised to read about the large amount of clothing that is wasted in America. In a country as large as ours with a consumerism culture, this came as no surprise. However, learning that with new recycling efforts, the U.S. now sells most of its used t-shirts to Africa for about 25 cents a piece and the left overs are turned into rags gave me a new sense of hope that not all parts of apparel consumerism running rampant is bad.
I found it really fascinating reading about the second hand uses of clothing in America. The distribution of the second hand products all around the world truly amazes me. The company that stuck out while reading was based in New Jersey, and it sorted donated clothing where they decided whether the clothing can be considered vintage and sold at high prices, or is passed on to charity. The age of vintage apparel is everywhere in today’s “hipster” culture and I thoroughly enjoyed reading about where trendy original Nintendo T-Shirts come from. It was also nice to read the charitable things done by clothing organizations such as what was done in Tanzania. I found it a startling fact that used clothing was America’s third largest export to Tanzania in 2007 and exports had increased by 50% from 2006.

It was interesting to scrutinize whether used clothing was a good thing or a bad thing for Africa. In a continent that consistently seems to have troubles of poverty and war, I couldn’t believe there was even a debate at first glance. But when reading about what a “Mitumba” is, it made me look at the situation in a new light. “Mitumba” refers to clothing thrown out by Americans and Europeans. Mitumba has some advantages and creates jobs for some in Africa. But on a higher economic level, the following example makes me rethink my opinion by stating, “The swells on Mitumba not only shrink employment in the textile factories, they also keep Africa from putting its foot on the development ladder offered by textile manufacturing-a ladder, as we have seen, that has lifted China, the United States, Japan and countless other countries into the industrial age.” One of the most important aspects that I gathered about this market is the establishment of a “need.” That is, in a consumer-driven industry, how can African textiles get started when there is no demand, all the merchandise is free.

This book does an amazing job of taking one protesting student’s remarks and turning it into an amazing story, educating its readers on numerous complicated parts of globalization through the simplest of products. The fact I liked most about the book was the author really tried to educate the reader and the story cannot be generalized to broad sweeps about globalization. He took the story of a t-shirt’s journey through its current supply chain and showed us the intricacies of such a simple product. The author really took it home for me when he brings the story back to the beginning saying, “So, what do I say to the young woman on the steps at Georgetown University?” Well, I hate to paraphrase such a great rant from the first paragraph on page 258, but the line that stuck out the most to me was “the poor suffer more from exclusion from politics than from the perils of the market.” That is the most powerful, well-spoken statement I have heard in a long time.
Summary of “The Innovative Organization: Creating Value Through Outsourcing”
This article starts with the notion that outsourcing isn’t necessarily a good option by using an example of the failing company (Sears) outsourcing is suite of IT services. The article then goes on to detail the consulting parts of Deloitte study that came to the conclusion that outsourcing wasn’t encouraged due to unexpected complexity of operations, lack of flexibility and other unforeseen “hidden costs.” I feel the article did a poor job of explaining the problems faced with outsource stating the heart of the problem lies a conflict of interest that is present in the profit sharing of outsourcing relationships. It also states the obvious by explain the decision to outsource should start with a straightforward cost-benefit analysis. It follows these obvious statements by giving a poor metaphor using a carpenter and then continues to discuss the relative advantage of outsourcing compared to in-house production cost savings. I actually agree with most of the things being said in this article, I however feel it was a poor opening lacking any attention grabbing components and stating mildly boring facts followed by obvious observations about outsourcing.
I didn’t intend to sound smug or crass in the previous paragraph, I was simply trying voice my apprehension over what views this article was trying to state on outsourcing. When the author introduced “the sourcing problem” I found his explanation between the differences between outsourcing, offshoring, and backsourcing informative and interesting. I have never heard of “in-house” production referred to as backsourcing. The term is quite clever actually and in an economy where at least one facet of an organization (no matter what) seems to be outsourced, the term backsourcing seems to be the appropriate term for the new norm. The section titled “comparative analysis of sourcing methods,” goes into detail describing the differences in outsourcing and in-house production, which I found to lack substance. Outsourcing is the procurement of a necessary function from an outside vendor who manages production, whereas In-house production is procuring and managing the inputs directly to produce the desired function. While reading about the comparative analysis between the two options mentioned, I felt I was reading about very obvious reasons such as “the most common quoted reason for outsourcing activities is cost savings.” It then went on to describe how an outsourcing deal is done illustrating the use of everything from establishing contracts and RFP’s (request for proposals) to negotiation and contracts. This was not a beneficial part of the article in my opinion. It touched on basic concepts that aren’t in realm of business and implementation, but more in the realm of legal schematics. This could be my view because I deal with these same type situations in my everyday job and the information outlined isn’t helpful in learning the overarching “do’s and don’ts” of outsourcing. I feel the article should go into detail things that have worked in past outsourcing operations and things that have not. The pros and cons of outsourcing lists don’t do a good enough job I feel. It should have elaborated in some detail thing like Deloitte consulting did when critiquing an operation. The pro’s and con’s outlined in the articles graphs are nice basic views on conflicting views of outsourcing. However, I found the studies, such as the MIT report, in this article far more insightful.
In the final pages of the article the story details the challenges associated with outsourcing, such as geographical distance, language and cultural distance, regulatory, policy, and legal distance. Then concludes with helpful ways to outsource properly. This articles summation of the basic concepts of outsourcing was not very interesting nor very informative in my opinion and I found the examples and stories for this week’s book far more valuable and rich with lessons in outsourcing.

Discussion Response
What are the pitfalls to off-shore production? How can they be avoided?
Production organizations in any country can have issues with a number of things. These issues that are part of “doing business” in the production industry can be compounded exponentially when engaged in off-shore production. Besides the obvious language and cultural barriers that can exist with foreign production labor, geographical distance can prove to be a very difficult obstacle to overcome in the current speed of supply chain management. Along with logistical complications, production industries require a fair amount of machinery that needs maintenance that is not facilitated by a unified set of measurement tools, analytics, or even commonality through a standard metric system. All of these things are part of the physical risks where one thing that goes wrong can lead to another and another. The greatest risk however is the political or regulatory risk. Countries with less than stable governments or populations can easily put a well working facility out of business with change of a simple rule or the uprising of a new political party.
The easiest way to avoid this potential pitfalls is to make an informed, well-educated decision before deciding to off-shore production. There needs to be an extreme amount of due diligence done before off-shoring productions. The reasons for off-shoring need to align with the long-term viability of the company and the timing of the change in production location needs to be right. Having clear, concise contracts with the foreign host is necessary in this global working environment. The reading neglected to mention insurance, but insurance is also a necessary cost in today’s foreign global marketplace.…...

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...The Travel of T-Shirt “The Travels of a T-Shirt in a Global Economy” by Pietra Rivoli is a wonderfully creative book about protectionism and global trade. Pietra Rivoli is a professor at Georgetown University. One day she attends an on campus anti-globalization rally. A protester confirms the evils of globalization by asking “Who made your t-shirt?” Rivoli, a classically trained economist, is unsure of her t-shirts origins and she suspects that the protester is too. Soon thereafter, she purchases a t-shirt in Florida and decides to chronicle its life, from creation to destruction, and this book was born. She gave world trade a face by tracing the life of her t-shirt. The t-shirt begins as cotton grown in the US, then it is made to thread in Asia, woven into fabric in the US, sold in the US, and then recycled or sold again as second hand clothing in Africa. The t-shirt enters its first free market in third world countries as mitumba, or used clothing donated by people in wealthy countries. It was an interesting journey and Rivoli’s style makes the story entertaining. Through her discussion of the t-shirts life, I grew disgusted with the rampant protectionism surrounding the US textile industry. Rivoli describes how cotton is subsidized and tariffs are levied against imported raw cotton and imported textiles. In addition, there are quotas for textile imports. Although Rivoli maintains a balanced perspective on protectionism and globalization throughout her book,......

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The Traveling T-Shirt

...VALUE CHAIN: U.S. Cotton End Consumer Retailers Inbound logistics (Import) Farmers & Laborers Manufacture Outbound logistics (export) Over the last fifty years, the U.S. cotton industry has seen a great reduction in labor force, a significant feat in agriculture R&D and engineering, and the remarkable ability of farmers to unite and take ownership of cotton production. American cotton farmer’s ability to dominate is due to the combination of ingenuity, mechanization, agriculture research and command of the value chain. One must also not forget to factor in America’s history of free and cheap labor though slavery and sharecropping which gave the American cotton farmer a huge head start over foreign competition. Today, The U.S. government plays a major role in the farming industry. American cotton farmers have a large competitive advantage over their foreign counterpart due to government subsidies. Government subsidies guarantee US farmers a minimum of 72.24 cent per pound of cotton. This is almost double that of the global market for cotton, which in 2004, was at 38 cents per pound. The government also requires America based clothing factories to purchase a certain percent of their cotton from American farmers. In addition to subsidies, there are programs that ensure farmers against weather losses, specialized loans, and grants to help to farmers develop new technologies, all to ease the minds of farmers so they “don’t lose too much sleep”...

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Organic Cotton T-Shirts Advertising Plan

...Advertising Research 13 Effective Measurement 14 VI. References 14 I. Executive Summary The retail sales of t-shirts are a $150 billion a year industry in the United States with growth expected at a rate of 4% to 5% annually. The Company is bringing out a new line of organic cotton t-shirts printed with water-soluble ink available in white, black, chocolate, city green, independence red, light blue, natural, navy, silver, and smoke in sizes extra small to 2x large. Consumers in the United States are becoming more and more aware of issues, such as global warming, pollution, and environmental protection. Conventionally grown cotton consumes 10% of all agricultural chemicals on 1% of all agricultural land in the U.S. Research has shown that synthetic fertilizers pollute the soil, water, and air. Organic cotton in general still represents around 1% of the global cotton market (1.1 million U.S. bales), which represents a growth rate of 15% over 2010 production. The Company will use the product-quality leadership-pricing objective by producing a high quality, U.S. made, organic cotton t-shirt, which will be achieved by appealing to customers seeking quality, U.S. made, and an eco-friendly clothing option. The Company’s advertising should communicate that The Company makes the most comfortable and eco-friendly t-shirts on the planet. The Company Organic Cotton T-Shirts purchasers will identity themselves as socially responsible, organic, or environmental consumers. The......

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