Commodity-Chains in Global Perspective
Lecture Organization
1. The Market: Sales to the United States
The Source: Producers in the Non-Western
world
The Intermediaries: Global Corporate
Connections
2. Commodity chain dynamics:
Concentration of ownership
Struggle: Western Buyers versus NonWestern sources
3. Commodity logic:
Consumer spaces: Retail giants in the West
Commodity Chains: Linking West and
Non-West
Value and Resource Use
The Apparel Industry: a knowledge test
?? What percentage of US apparel is controlled by
the top 5 firms? What are they?
Percentage of apparel controled by top 5 firms =
068%
Firms: year 2000 data
Wal-Mart
Sears
Kmart
Dayton Hudson (target, mervyn’s,
dayton’s, hudson’s, marshall field)
JC Penney
Next 24 firms = 30%
Same trend in other first world nations
Year 2010 data
1. Commodity chains: Basic concepts
a.
Consumption and
production are linked through a
web of sites
b.
Nodes and links
c.
Each node and link has social,
economic and environmental
consequences
social=affects lives through
work relations,
economic = wealth is
accummulated,
ecological = production
activities affect the
environment
2.
Producer Driven Commodity Chains
Producer-driven commodity chains are
managed by the product producers. Retail
owners have little control over the structure of
the chain itself
3.
Buyer-Driven Commodity Chains
4. Power: who controls the commodity
chain? Who determines how things
(nature, labor) are valued in production?
Is this ‘natural’?
History of the commodity
Commodities in Nature
Buyer-Driven Chains are controlled by
retailers or larger intermediary purchasers
(Wholesalers)
Triangle Manufacturing/Sourcing: the
foreign producer becomes a middle
merchant who then contracts most or all
production to firms in other
regions/countries
Gereffi
Struggle: Buyer- versus producer-driven chains,
Who will wrest control of manufacturing?
Who will advance 'up the ladder' to brand
manufacturing independence:
OEM (original equipment) manufacturing,
or ‘full-package’ manufacture,
then to OBM (Own Brand) manufacture
as foreign companies begin to produce
their own brands.
Branded apparel manufactures:
widely recognized brands that carry out no
manufacturing whatsoever: ‘born global’ with
outsourcing always overseas.
Struggle
a.
a tension exists between foreign
OBM manufacturing and first world retail
firms who are moving ‘vertical retail’
production with own brand shops (e.g. the
gap)
b.
This tension is evident in the
struggle over ‘up-grading’ where foreign
manufacturers try to gain a larger share of
the value-added in the apparel industry
Conclusion
1.
Commodity chains are increasingly
global in scope
2.
The location of the different nodes,
however, is constantly changing
3.
Commodity chains embed power
relations: the nodes each contain real
people with interests in the location of
brand name manufacture
4.
the struggle is over who will run the
brand name game. JC Penny’s is
instructive in this regard. They were
snubbed by Liz Claiborne for distribution
early on, but have since developed their
own brands and have come back strong
(e.g., Arizona jeans)