Transnational Contractors in East Asia

Richard P. Appelbaum

in The Market Makers

Published in print February 2011 | ISBN: 9780199590179
Published online May 2011 | e-ISBN: 9780191724893 | DOI:
Transnational Contractors in East Asia

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In this chapter, Appelbaum examines a subset of these contract manufacturers in greater detail. The increase in global sourcing by large retailers and merchandisers has given rise to a few giant transnational contractors, based primarily in Hong Kong, Taiwan, South Korea, and China, that operate factories throughout the world. The emergence of these giant transnational contractors portends a dramatic shift in the organizational power within global supply chains, which may provide a counterweight to the growing power of large retailers. Global supply networks have typically been buyerdriven, with large retailers and branded manufacturers playing the central role in their creation and coordination. Most of the contractors have been small, reinforcing their vulnerability to big buyers. However, this situation is changing with the emergence of large contract manufacturers. This chapter examines several examples of these giant contract manufacturers, including Nien Hsing Textiles, Li & Fung, and Yue Yuen/Pou Chen. Increasingly, large contractors, and not the retailers, manage the supply chain. Their emergence, along with the pressure of lean retailing for cost cutting and quick response, is also compelling retailers to shift critical functions such as inventory management to these giant contract suppliers. China’s rise as an industrial power may further change global supply chain dynamics, with synergies arising from its supplier clusters, investment in the next generation of technologies, and the rapid growth of its domestic retail chains..

Keywords: transnational contractors; supply chain; supplier markets; Nien Hsien; Li & Fung; Pou Chen; China; Taiwanese suppliers

Chapter.  6240 words. 

Subjects: International Business

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