TELL – TECHNOLOGICAL KNOWLEDGE AND LOCALISED LEARNING:
WHAT PERSPECTIVES FOR A EUROPEAN POLICY?
THE FASHION INDUSTRY ON THE LEATHER FILIÈRE:
PRODUCTION ORGANISATION, TECHNOLOGY AND CREATIVITY
[WP2 – D.2.2.4. Leather Filiére (S4)]
CEG/UL
Mário Vale
Josué Caldeira
Paulo Feio
Sara Bordalo
With collaboration:
ICS/UL
João Ferrão
DMS/INETI
Margarida Fontes
February, 2003

Table of Contents
1 Introduction .........................................................................................................4
Part I - The contextual and analytical framework
A - Understanding the footwear industry
2
Production Organisation of the Leather Filière .................................................6
2.1 The Tanning industry ........................................................................................ 6
2.2 The Leather footwear industry ......................................................................... 9
3 Changing Demand and Differentiated Products ...............................................11
3.1
Life cycle of leather filière products ............................................................... 11
3.2 Product differentiation in the case of the footwear industry .......................... 13
B - Placing Fashion within industrial innovation processes
4 The Fashion Issue: its place between consumption and production .................17
4.1 From new patterns of consumption towards an intensification of the fashion processes ........................................................................................................ 18
4.2 Fashion and the natural enchantment with the "New" .................................... 22
4.3 From personality affirmation to the organization of industrial complex of fashion ............................................................................................................ 24
5 Towards a Fashion Innovation System: a perspective from the footwear industry ...............................................................................................26
5.1 Basic economics of creative industries ........................................................... 26
5.2 The fashion innovation system in the footwear industry ................................ 29
Part II - The empirical material : A European perspective of the footwear industry
6 The Footwear Industry in Europe .....................................................................38
6.1 Characteristics of the organization of the footwear industry in Europe ......... 38
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6.2 Changing European footwear sector resulting from alterations in the world geography of footwear ................................................................................... 43
7 European Patents in Footwear ..........................................................................48
8 Portuguese Northern Region Case Study ..........................................................53
9 Corporate Case Study: the Aerosoles Portugal Group .....................................53
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This report intends to provide an approach to study the governance of knowledge in the fashion industry on the leather filière
, particularly on the footwear industry. The knowledge base in the footwear industry is changing due to the incorporation of new knowledge generated in the fashion world, which is increasingly important to the production organisation of the footwear industry. The opportunities for innovation are lower than other science-based industries and appropriability is also week at firm level however there is high cumulativeness at industry level, which allows for increasing returns. Other critical change in the industry is the growing relevance of consumers’ choices and preferences. Therefore the production of leather goods is more complex and the communication channels are critical to knowledge creation and learning in the industry.
In order to discuss the knowledge generation, accumulation and diffusion in the industry, we organised the report as follows: Part I, section A provides a short overview on the production organisation of the leather filière
and an analysis of the changing demand for leather products and the product differentiation strategies of firms in the footwear industry. Section B provides a broad discussion on the fashion issue and its place between consumption and production and an analytical framework to the study of knowledge generation, accumulation and diffusion in the fashion industry on the footwear manufacturing activity, based on the innovation systems literature, is developed. Part II of this report gives an analysis of aggregate data of the footwear industry at European level, concerning production, trade, firms, patent analysis and international fairs. The lack of reliable information on fashion activities
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is a major bottleneck and therefore the next report will assess the fashion knowledge governance in the footwear industry through the development of a case study. In the
Part III, we present the first results of our fieldwork focusing the regional and corporate case studies.
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The leather filière
covers the industrial activities of tanning, the production of footwear and components (main activity) and other articles in leather (leather clothing, fashion accessories and articles for travel, furniture and upholstery). The productive sectors related to the leather filière
are chemical, metal manufacturing and textile (figure 1).
2.1
The Tanning industry
Backwards production of leather articles activity is the tanning industry, which uses leather as its raw material. Tanning production is based on a set of chemical and mechanical processes with a view to preserving the leather and its preparation, in compliance with particular specifications required by the downstream sectors , such as resistance, appearance and quality (Fonseca, Lameira et al. 2001). The output of the tanning industry is leather for diverse applications, among which footwear, leather accessories, upholstery and furniture are predominant. There are three main phases in the process of tanning production:
Tanning - preparation by the chemical and mechanical processes of leather, originating a blue colour product (known as wet blue) whenever chromium is used in this phase;
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Retanning - involves mechanical operations of regulating the leather and chemical operations of retanning, dyeing and oiling;
Finishing - final treatment ranging from drying to the leather stapling stage, followed by pressing.
According to Nicolau (Nicolau 2001), technological innovation in the tanning industry is responsible for alterations in the production process. Effectively, the process of vegetal tanning has become substituted by mineral tanning agents composed of chromium which guarantees greater speed and flexibility, bringing benefits to the leather's final quality (malleability, impermeableness, resistance to heat and improved colour). Growing environmental concerns have been recently registered owing to pollutants expelled during the chromium based tanning process. Companies have subsequently come to adopt vegetal and mineral alternatives to chromium to help reduce environmental pollution. In addition to this, the reduction of environmental impacts has also been resolved by end of pipe measures (sewage treatment).
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Source: Adapted from Fonseca et al.
(2001), p. 14-15
Figure 1 – Manufacturing activities in the leather filière
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The product innovations stem, on the one hand, from the need to accommodate the demand of more demanding market niches (flame-proof, water-repellent and machine washable dressed leather) and, on the other, from the importance of biodegradable products in some more significant market segments (upholstery). In this case, vegetal tanning still has a very limited market, achieving lower levels of productivity and variety (especially as far as the dyeing process is concerned) when compared to chromium based tanning. On the other hand, the latter is resistant to high temperatures, thus being able to tolerate the techniques of vulcanisation and sole injection used in the footwear industry. Subsequently, greater divulgence of vegetal tanning is rendered unfeasible and so, it continues only to be used in market niches
(Fonseca, Lameira et al. 2001).
2.2
The Leather footwear industry
The leather footwear production process presents many similarities to that of other leather articles (for example, accessories and travel articles). The production cycle is basically divided into five phases (Fonseca, Lameira et al. 2001):
Cut - corresponds to the cutting of leather in compliance with the model's specifications, by means of laser techniques, vibrating knife or high pressure water jet;
Pre-stitching - preparation of cuts through gluing and sewing procedures;
Sewing and pre-joining - use of diverse stitching techniques to join the cuts;
Assembly - joining of the shoe's components by means of automatised equipment (during the production process a wooden or plastic form is used and scaled to all sizes of the model, comprising a particularly important part of the assembly phase);
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Finishing - final treatment with a view to improving the appearance of the footwear, including a series of procedures (cleaning, smoothing and dyeing)
Despite being considered a traditional industry, the production of footwear and leather articles has registered several technological innovations namely, computer-assisted conception and design (CAD), the use of cutting equipment by laser and the robotization of both plastics injection and the assembly process (Fonseca, Lameira et al. 2001; PROINOV 2002).
Before the production process itself, it is necessary to conceive and design the product. The parts of the footwear are immediately transferred into moulds. Some companies prefer CAD to cardboard moulds since they achieve immediate access to the cutting tables. Information technologies are also used in the areas of procurement and logistics and in the control of faults throughout each phase of the production process.
The assistance of cutting technologies by water jet or laser represents an important advance in relation to traditional cutting equipment. Robotization in sole injection lines and shoe assembly implies the existence of large production series, representing a large increase in productivity.
The product innovation in the footwear industry is the result of a combination of two main factors: utilitarian (comfort, durability, practicability,…) and aesthetic (style) concerns. The increasing importance given to comfort among consumers of more developed markets is reflected in the greater concern with the model's technical attributes and the physical quality of the material used. In this case, the material's flexibility, reaction to perspiration, impermeableness and ergonomics are crucial characteristics for certain market segments (Fonseca, Lameira et al. 2001). Aesthetic
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concerns stem from a need to accommodate the demand for certain market niches with preferences associated to the fashion world. According to (Ragazzi 1992), footwear serves utilitarian needs but also presents similar characteristics to other objects of consumption: to satisfy the demands of elegance, the need to affirm social status or distinction (or belonging to a particular social group or lifestyle).
The constant evolution of the leather filière
products has acted in accordance with international competition and the life cycle of each product. The evolutionary tendencies of the turnover of leather products in the EU are also associated to behavioural changes of potential demand. This has given rise to companies in the leather industry adopting new competitive strategies which are reflected in the combination of technological innovation in the processes of production, creativity
(aesthetics) and design (in the sense of technical characteristics) in the product innovation.
3.1
Life cycle of leather filière products
The life cycle model of a generic product describes the typical stages of a product's development and production throughout its life in compliance with the evolution of sales, in four main stages: development, growth, maturity and decline. It may be argued that footwear is now found to be at its full maturity stage, owing to sale growth rates which tend to be low (Cicoletti 1992). Shoe production in the EU has suffered a marked decline as a result of the reduction in exportations. Effectively, the production of shoes in the EU decreased 4.6% between 1997 and 1998 and fell a
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further 6.1% in 1999 due, primarily, to the exportation reduction: -13.4% in 1999, after a 10.2% fall in 1998 (C.E.C. 2001).
Technological maturity in the manufacture of leather products has permitted the entry of new competitors into international markets. These competitors have a more favourable cost structure owing to their low salaries particularly China and, to a lesser extent, some new EU comers (Poland, Czech Republic, Hungary and Slovakia) and one applicant country (Turkey). This cost differential was used by North American multinationals in the 60's in their transferral of plants to produce goods in the maturity phase, to countries with cheaper labour costs (Vernon 1966). This tendency to transfer production to Asian countries is also observed in footwear production. Nevertheless, the dynamics of the emerging countries in the leather filière
are mainly endogenous, based on a strategy of highly intensive labour in the manufacturing of products from the lower market segment which, in some cases, are disrespectful of the international labour standards.
International competition has led European manufacturers to invest in high quality products which are more diversified and offer higher added value, implying the use of new technologies in the production process and the incorporation of design in the product. However, it would be wrong to affirm that the lower market segments are not important to the European manufacturers and are a "reserve" for the products imported from countries with low labour costs (C.E.C. 2001). In fact, the lower market segment has been substituted by medium quality products involving a wide range of European producers. Moreover, some top market segment companies have gradually added cheaper models to their range of products (C.E.C. 2001).
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3.2
Product differentiation in the case of the footwear industry
An analysis of company competitive strategies in the footwear industry reveals a change in the factors of competitiveness. In figure 2 the main competitive factors are illustrated in accordance with the stages of the product life cycle, where the tendency to place increasing importance on the productivity in the lower market segment and investment in creativity in the top segment products may be observed (Melo and
Duarte 2001). EU companies have confronted international competition and changes in demand by using technological innovation to increase productivity and give value to aesthetic attributes.
Source: Adapted from Melo & Duarte (2001), p. 41
Figure 2 – Competitive factors in the footwear industry
The market segmentation based on the price/quality relation consists of five main segments: economical, medium, medium-fine, fine and luxury (Ragazzi 1992).
According to our previous affirmations and using this categorisation, we may observe
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that European companies have tried to position themselves in the top market segments, even though the intermediary segment continues to be relevant.
In a study on the Italian footwear industry, it was concluded that the design and fashion attributes were already important in the mid 80's. This was accentuated a decade later (42% and 32% of companies attributed relevance to design and fashion, respectively) clearly exceeding the comfort attribute (Cicoletti 1992). Companies appreciating quality more as a strategic factor attribute less importance to design and more to fashion content. The author points out, nonetheless, that the relevance given to both these attributes does not present a linear relation with the segments of the product based on the quality/price relation. Effectively, the footwear manufacturing companies in the economic, medium and medium to fine segments place more importance on fashion content and less on design, while in the luxury segment both attributes are highly relevant among company strategies. Therefore, there is a differentiated understanding of forms of acquiring quality through fashion and design contents among footwear manufacturing companies.
In order to encapsulate the changes in the differentiation of the product, it is necessary to forget the segmentation principle based exclusively on the quality/price relation.
This relation does not respond appropriately to the differentiation of the product which does not always express a good quality/price relation.
Generally, the utilitarian function of footwear can be divided into three main business areas: standard, sport and specific use (corrective, orthopaedic and professional use), which may be subdivided into segments of special, comfort, classic, casual and fashion footwear (Ragazzi 1992; Fonseca, Lameira et al. 2001). "Special" footwear aims at responding to the demand of market niches, according to certain technical specifications which are normally more demanding than in other types of footwear.
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The "comfort" segment shares some affinities with the previous segment as well as aesthetic concerns which do not affect the special footwear segment. Classic footwear concentrates on the supply of undated models under constant demand by specifically defined professional sectors and age groups. The "casual" segment carries most weight in the footwear industry and is characterised by the supply of hybrid models which are better adapted to certain lifestyles. The "fashion" segment is of less importance and reflects, more than any other segment, the differentiation logic of the product based exclusively on aesthetic quality.
Source: Adapted from Fonseca et al. (2001), p. 105
Figure 3 – Comfort and design in the footwear products
In the Portuguese industry, the fashion content is particularly relevant in the radical type shoes and, to a lesser extent, in the casual, while concerns with comfort related design are reflected primarily in the special and comfort segments (Figure 3).
Nevertheless, and according to general tendencies, special and comfort footwear are progressively including more fashion content. According to Fonseca et al.
(2001), the comfort segment, while displaying an image of comfort among consumers, in fact,
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competes directly with the casual segment as a result of the increasing importance given to the aesthetic content of its products. Indeed, the importance of comfort alone is clearly not a priority for the fashion segment, perhaps not even for the classic, where beauty and material value respectively are playing a more significant role in the market.
In short, the product differentiation strategy is beginning to abandon the quality/price logic and is increasingly including aesthetic elements associated with other attributes such as design in terms of practicability. This tendency leads to a fusion of attributes among the different segments, whereby the specialisation of companies in a single market niche tends to occur only among companies manufacturing high aesthetic value products ("fashion" segment) or using valuable materials ("classic"). Even so, only certain manufacturers, especially Italian, can invest unmistakably in market niches, owing to the image of the Italian shoe, in view of which it is considered to be a very risky strategy for the manufacturers of countries with less visibility in the international market. Consequently, most companies invest in the casual segment owing to great demand in that sector, or they combine the manufacture of diverse products for different market niches to compensate for possible failures of a particular collection in one of the segments. Nevertheless, it is clear that creative elements in the leather filière
are gaining increasing importance in the strategies of product differentiation, thus justifying further discussion of certain social and economic aspects regarding fashion.
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An examination of the fashion process in the leather filiére
leads us to an introductory analysis of the insertion of fashion in the approach to consumption and production.
Our introduction sets out to emphasise the role attributed to fashion in the recent evolution of social and economic systems, particularly those of the so-called Western world.
Our first commentary for the introduction of the theme is an appropriate quotation, taken from the provocative work of Lipovestky, on the study of the fashion phenomenon:
L'empire de l'éphémère
. The text opens with the author stating that the fashion theme does not shake the intellectual world. The phenomenon must be stressed: while accelerating its legislation, entering new spheres, dragging along with it every social layer and age group, fashion fails to arouse those whose vocation in life is to clarify the functioning and motivations of modern societies. (Lipovetsky
1989/1987:15) Indeed, in the field of social sciences, studies on the analysis of fashion as a social and economic phenomenon are still scarce, however, it has gradually gained increasing relevance as a function in day to day modern social life.
In already existing works, the study of fashion emerges mainly as an integrated part of consumption processes, dominated by approaches associating the phenomenon with surrounding cultural and psychological characteristics of consumers. In this context, the vast majority of studies on consumption still come from the disciplines of sociology and cultural studies. On the other hand, the material or economic
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component has been treated marginally specially regarding its industrial and institutional organisation, this is, the organisation of the industrial production of fashion, and the complex articulation established by this actual fashion industry with other sectors of contemporary economies.
A critical analysis of contemporary readings on fashion allows us to identify elements of characterisation for the development of an alternative approach to the economic and social positioning of fashion at its current stage of development, as well as an adequate questioning of the fashion creation process within the framework of this research project.
4.1
From new patterns of consumption towards an intensification of the fashion processes
Owing to profound alterations in the functioning of capitalism, resulting from the early seventies crisis, studies on consumption have developed considerably. Profound changes in the formerly dominant Fordist model of production of the period after the
II world war have brought about important qualitative changes to the social function and economic position of consumption which have subsequently drawn the attention of the social sciences. It is acknowledge that during the Fordist period, especially in post-war years, that both consumption phenomenon and marketing related activities played a fundamental role in the functioning of the more developed capitalist economies. For some authors [ a ] s an accumulation regime (...) Fordism involves a virtuous circle of growth based on mass production and mass consumption, (p. 47) As such, [c]ommercial capital has a key role in establishing the links between mass production and mass demand via mass advertising, mass retailing (...) consumer research etc. The mass media have acquired a crucial role in diffusing mass consumption norms. Marketing needs also feed back into design (...) to encourage
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marginal product differentiation, annual style changes, etc. Thus design becomes a
key factor in linking mass production and mass consumption” (p. 49) (Jessop 1992, emphasis added)
Three important aspects emerge from this quotation: first, the critical role of the new
“mode of consumption" – the mass consumption - in the functioning of the economy during the second half of the last century: an essential condition of the capitalist accumulation , as Aglietta put it (Aglietta 1997(1976):180). Secondly, the influence of the new role of consumption on the development of other (commercial/marketing) activities in close articulation with the need to bring sustained dynamism to the production itself and to create norms for its sustainable growth (publicity, consumption studies and information ( media )). Thirdly, the role adopted by design and aesthetics features of commodities in order to attract consumers and increase consumption levels through the social devaluation of previous production. However, at that stage of organisation of production and consumption, as some commentators remind us, “the production apparatus of fordist industries was focus above all on reaping the advantages of economies of scale through the standardisation of products and the cultivation of mass markets. As a result, the cultural content of much output of fordist industry tended to become subservient to the more functional design imperatives” (Scott 1997:326).The emergence of a flexible accumulation regime
(Harvey 1990: Part II) from which reveals a direct confrontation with the rigidities of
Fordism , resting upon flexibility with respect to labour processes, labour markets, products, and patterns of consumption (p.147, emphasis added), brings about significant qualitative changes in the organisation and functioning of consumption processes from which arises an ever-wider diversity of consumption patterns breaking the iron role of mass consumption of standardised products.
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The broad economic context of increasing entrepreneurial competitiveness forces industries towards a refined profitable creativity regarding both the fragmentation of markets and the speeding up of turnover times of sales in order to keep high profit rates. To answer effectively to the new demands of the new production-consumptionproduction cycle some observers stress the ability of mastering the production of volatility of merchandise, for example through the manipulation of tastes and opinions. It is at this point that the Fashion Phenomenon takes a central role. “The mobilisation of fashion in mass markets provide a means to accelerate the pace of consumption” not only in its traditional field – clothing – but also in a much wider range of products as well in ideas and life-styles (Harvey 1990:285). Therefore, for some authors, post-Fordism is often seen as the economic counterpart and response to the increasingly fluid demands imposed upon consumption by cultural
determinants. The economic system is compelled to provide for the pluralism of
tastes both through filling market niches and by responding rapidly as these shift frequently and unpredictably”
(Fine 1995: 136, emphasis added).
Changes in the functioning of capitalism in the final quarter of the last century has motivated a huge amount of literature within social sciences . These writings are characterised by a broad range of approaches, which are often radically different in their choice of explanation for such alterations. This also applies to the aspect of consumption. The processes at the root of the alterations in consumption models and respective consumer behaviour characterising the current developed capitalist societies constitute an important theme for debate. From an analytical perspective affecting the broader understanding of recent alterations in consumption, the central issue may be summed up in the following question: What has determined the alterations of consumption models? Can we understand these changes as being
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supply-driven or demand-driven? If the answer is both, then how are they linked?
Until now, the debate seems to have been dominated by studies favouring the approach of consumption alterations based on demand. As already mentioned some of these approaches focus on the alterations of cultural surroundings as well as the psychological changes displayed by consumers. Thus, in compliance with these approaches, alterations of consumption models have been marked by an accentuation of hedonistic values (regarding the demand for pleasure sources) and by an increase in individual aesthetic reflexivity. Therefore, according to some authors [a] new hedonistic consumer has come into being, whose demands are no longer regulated by
‘an economy of needs’ but by ‘an economy of desire and dreams’, or the longing for something new and inexperienced”
(Gronow 1997:74). On the other hand, but from the same perspective, important psychological changes in present-day society have led to behavioural changes in consumers, influencing the specificity of current consumption models and practices. Some authors stress the greater degree of attention being paid to the fostering of individuality, especially as projects of selfactualisation”
(Glennie and Thrift 1992:437). This leads to the concept that “ the shaping of personality has become a more reflexivity systematic concern (...) there has been a gradual shift from a 19th-century (and earlier) model founded on ideas of
‘character’ to performative models of ‘self’ in which appearance and bodily presentation ‘expresses’ the self. For example, amongst many social groupings commodities like clothing have increasingly become (...) ‘emblems of soul’ ” (p.
437 ) .
Symbolic concerns with consumption practices have increased within developing motivation of the construction and expression of social identity of individuals and their lifestyles (Campbell 1995). In this context, some researchers propose alternative
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approaches to consumption which go beyond its functional nature of accommodating the needs of individuals. For example, Jackson suggests treating consumption as a process by which artefacts are not simply bought and ‘consumed’, but given meaning through their active incorporation in peoples’ lives
(Jackson 1993:209). Therefore, among the "new" explanatory factors of consumption, aspects associated with appearance and the body are particularly stressed and subsequently predominant in more recent studies on new habits and consumption patterns. They are, indeed, the social dynamics and psychological motivations that have profoundly influenced the majority of studies on the alterations of consumption practices and models in current developed capitalist societies. They are part of the field (regarding both sociological and individual aspects) responsible for the pronounced importance of fashion's social function, seen as a regulating institution of social practices and consumption behaviour, reflected in the various approaches to this phenomenon. The scarce volume of studies dedicated to an analysis of the factors dominating fashion dynamics tends to focus mainly on the sociological and psychological motives.
4.2
Fashion and the natural enchantment with the "New"
There are two tendencies among existing theoretical approaches to fashion, which have gained reference in studies related to this theme. The first approach, based on a study by Veblen and Simmel at the beginning of the last century, focuses on the phenomenon of fashion as a symbolic phenomenon of class differentiation. This is the class differentiation theory . In compliance with this approach and according to
Goffman, the class structure of society requires appropriation of symbolic devices by which social classes can distinguish themselves from each other. Clothing, generally, and fashion, in particular, lend themselves admirably to this purpose (quoted in
(Davis 1994:111). This is how the fashion cycle began among the higher social
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classes, descending, through a process of imitation, to the lower social classes, as a result of alterations caused by limited purchasing power, reaching its common, final state. In this way, fashion acquired a social differentiation function, a class status.
The second approach withdraws the classist nature of fashion and associates it with
"modern temper". Herbert Blumer, the author of this approach, defines it as the collective selection theory. According to Blumer, quoted by Davis, the fashion mechanism appears not in response to a need of class differentiation and class emulation but in response to a wish to be in fashion, to be abreast of what has good standing, to express new tastes which are emerging in a changing world.” (See
(Davis 1994:116). Thus, fashion results from a social propensity, a certain enchantment with the "New", which is seen as a characteristic of modern society: a rather generalised cultural disposition to ‘keep abreast of the times’” (Davis
1994:117).
From a rather unique point of view, the work of Lipovetsky develops some of the arguments presented by the second, above-mentioned approach. Indeed, without explicitly stating so, the author shares the opinion expressed by Blumer in the mid twentieth century, in a particularly enthusiastic way. He writes as follows ...
it is time to extract the analyses of fashion from the heavy artillery of the social classes, the dialectic of distinction [a clear reference to the works of Pierre Bourdieu] and class pretension. Contrary to the imperialism of symbolic challenge schemes between classes
(…) in the history of fashion, 'the values' and modern cultural meanings have served to dignify the New and the expression of human individuality and have also played a crucial role in the creation of an establishment of the fashion system (Lipovetsky 1989/1987:18, emphasis added). To fashion, Lipovetski attributes the special powers of social structuring ...the capital fact of our societies
(…) is the
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advent of a society, fully restructured by seduction, the ephemeral and the logic of fashion, itself. (p.19). This is the author's main conceptual strand, which he endeavours to highlight throughout his work. Lipovetsky's thesis, namely when focused on current reality, is, nonetheless, questionable when the profound transformations throughout the fashion system , within the context of the social and economic changes of the last century, are taken into account. It is particularly arguable to suggest an intensification of the fashion phenomenon through a social and psychological process, resulting from the democratic alterations of modern Western societies, without considering the profound alterations in the characteristics of fashion taken as an actual industry or as a particular industrial cluster. Today, more than ever, fashion phenomena displays a distinct industrial and commercial slant which is increasingly associated with the stimuli of new mass consumption (or large scale consumption), while benefiting from an unusual development in publicity and marketing activities.
4.3
From personality affirmation to the organization of industrial complex of fashion
Fashion, nevertheless, has assumed new qualities in the heart of the functioning of societies and economies of the Western world. However, the existence and functioning of fashion per se should not be viewed as a distinctive factor of current society and economy. As some authors recall [t] he main difference between our modern age and traditional cultures would (...) not be the very existence of fashion but rather the rapidity and regularity of these transformations. The difference would thus be more of a quantitative than qualitative nature (p. 76) (...) As economic historians have shown, the demand for novelty was characteristic of the markets for mass consumption goods from the very beginning” (p.78) (Gronow 1997).
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Effectively, this is a central issue in the analysis of fashion in general and of fashion in today's society. Both the above-mentioned theories, and particularly works by authors such as Lipovetsky, display a serious reflection, which emerges as a strong limitation, on the great social and economic transformations of the last century.
Particular emphasis is given to the last three decades as ultimate causes of the alterations in the fashion system. Indeed, for Lipovetsky, it was not the world that altered the reasons for fashion, but rather the opposite: this is a society fully restructured by seduction and the ephemeral.
Nevertheless, fashion's new status in current Western societies needs to be given particular attention, especially its mass nature: “ a consumer society – or an abundant society – is a society of fashion and mass fashion in particular
” (Gronow 1997:82).
On the other hand, fashion has long ceased to have a single orientation as we observe today with the explosion of fashion's pluralism. As some authors stress “ different socio-economic, age, subcultural, ethnic, and regional groupings, no matter what their relationship to the ‘means of production’ or the occupational structure of a society, adopt and frequently create their own rather distinctive fashion”
(Davis
1994:108).
However, it is difficult to sustain interpretations that base the explanation of fashion's role in society on alterations of social and individual values. Indeed “ the fashion process cannot be explained in terms of any single psychological motive, human propensity, or societal exigency” (Davis 1994:123). It is fundamental that we take the material and social conditions of the production of fashion into account: this means that we need to analyse the organisational and functional conditions of the true complex fashion production, which implies the consideration of the institutions, organisations and market structures that form it.
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Fashion is a decisive element in the product differentiation of the leather industry. The increasing inclusion of fashion content in products from the leather industry, especially footwear, for diverse market segments, confirms the relevance of the creation activity in this sector. Moreover, the leather filière has a series of activities where creativity is combined with production technology on both company and geographical agglomeration levels. We will go on to discuss the economic properties of fashion, relations between fashion, technological resources, organisation structures and consumers choice and preferences in the fashion-leather innovation system in a perspective from the footwear industry.
5.1
Basic economics of creative industries
Surprisingly, the economic analysis has not paid much attention to the organisation of activities in which the product (good or service) contains creative elements. The economic properties of the creative activities are different to others. Caves' recent contribution regarding economic properties, based on industrial organisation studies and the theory of contracts, is essential to the understanding of the functioning of creative activities (Caves 2000). A brief summary of the seven main basic economic properties of this activity formulated by Caves follows:
1) Uncertain Demand ( Nobody knows property)
There is great uncertainty surrounding the acceptance of new creative products by consumers until their placement on the market. No matter how well the producer
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understands the production process of a creative good, it is impossible to foresee the reaction of consumers, designated by Caves, as nobody knows property. Therefore, the risk associated with creative activities is extremely high and therefore, the companies try to share it with other production organisations.
2) The creator-product relation ( art for art's sake property)
In activities containing a large content of creative elements, the creators are particularly concerned with the characteristics of the final product (originality, technical achievement, harmony…). In the industrial activities which need to incorporate creative elements, such as the case of the leather filière
, collaboration between creators and other human resources of production must exist. This relation between creation activities and humdrum activities, according to Caves, is not always easy because co-operation implies compromise on both parts and the creators frequently reject limitations to artistic creation ( art for art's sake property). This property implies an establishment of agreements between the creators and the entity responsible for the production. This raises some problems for the company as “ the traits of the product and the terms of employment of the creative inputs must be negotiated at the same time, and with persons unwilling and perhaps unable to precommit their creative choices”
(Caves 2000: 5). Nevertheless, and still according to the same author, the company benefits from the low costs of the creative inputs.
3) Diversity of specialisation ( motley crew property)
Many creative products require a diversified combination of skilled and specialised labour. The diversity of tastes and preferences complicates the organisation of the economic activity as it is practically impossible to elaborate formal contracts. Caves
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stresses that the creative activity involves a multiplicative production function where the substitution of one factor for another may not occur ( motley crew property). This property obliges the company to take special care with the selection of inputs and with the co-ordination of all involved members.
4) Product differentiation ( infinite variety property)
The creative products are vertically differentiated (if product A is better than product
B and if both are sold at the same price, no one will buy B). But they are also differentiated horizontally (two cultural products considered to be similar but are not identical and so, some consumers will prefer product A and others product B). The distinction between the products with creative elements does not lead to a certain product A having total advantage over the others. This situation is slightly more frequent when differentiation dimensions in the products increase. Caves identifies this characteristic with the infinity variety property. According to the author, this property has a direct influence on the organisation of creative activities: “
Individuals choose among creative goods in a constantly shifting context of the activities that they undertake (both work and leisure) and the terms (process, qualities) on which they consume all other goods and services…”
(Caves 2000: 182). The economic agents involved in the production of goods and services with creative elements evidently do not make indifferent choices.
5) Skills differentiation ( A list/B list property)
If the products with creative elements unexpectedly vary in the preferences of the consumers, it seems clear that the creative elements do not all have the same capacitation in the fields of technique, originality and, consequently the creative
28

inputs are vertically differentiated ( A list/B list property, according to Caves). The organisation of the production of goods and services which include creative elements struggles with the choice of the creator, opting to follow a criteria of differential rent
(the extra number of consumers who will acquire the product if it includes in its origin the work of a creative element from A list).
6) Time and co-ordination ( time flies property)
The diversity of agents (creative and other) involved in the creative activities demands a strict management of time (a collection of shoes has to be ready for the fair).
Therefore, the creative inputs are not only measured by their quality but also by their delivery period as the company's profit is also dependent on this factor (in accordance to Caves, the time flies property).
7) Durability of the products and rents ( ars longa property)
There are many durable creative products which generate durable rents (the most typical case concerns the products with rights of copyright. This characteristic may even be observed in other products with creative elements: the design of a shoe model may be accepted in the market for many years (this, essentially, is the definition of classic footwear). Caves denominates this characteristic as ars longa property.
5.2
The fashion innovation system in the footwear industry
In this section it is explored the existing relationship between firms behaviour and the organisation and the technological environment in the fashion industry on the leather filière
, particularly in the footwear industry. We aim to understand the learning processes of agents involved in the production of shoes with a certain content of
29

creativity and how it is managed the combination of technology and creativity to produce something new.
The production of fashion goods can be considered as an activity where technological knowledge plays a key role, in the sense that fashion creation is a collective good that is produced using several bits of previous information and knowledge. The firm has to manage a distinctive and dedicated flow of interactions regarding its internal structure and its productive environment, requiring a specific ability to organize, control and combine different resources (Antonelli 2001).
The concept of innovation system seems very useful to study the governance of technological knowledge and learning, as “… overall innovation performance of an economy depends not only on how specific organisations like firms and research institutes perform, but also on how they interact with each other and with the government sector in knowledge production and distribution
” (Gregersen and
Johnson 1997:482).
The innovation system approach encapsulates the dynamics and processes of technological knowledge generation and diffusion and the learning process in the fashion industry in the leather filière . According to Antonelli (2001), “… technological pieces of knowledge can become collective when and if dedicated efforts are made and institutional conditions apply, so as to make real the implicit and potential complementarity of the different bits. Technological knowledge can become collective when and if actual technological communication takes place among learning agents. Access to collective knowledge depends on the extent to which effective communication among innovators takes place through the innovation system ” (p. 74). There are numerous learning agents interacting in the production of fashionable leather goods. In the case of the footwear industry it is clear that
30

manufacturing firms, component suppliers, universities and research centres, fashion agents (stylists, designers,…) and a myriad of other specific actors, including the distribution activities, interact in a repeated and dynamic way.
The interaction of diverse agents with different kinds of knowledge requires communication channels which are developed through an interaction in space.
According to Lundvall, there are four dimensions of space: economic, organisational, geographical and cultural (Lundvall 1992). This means that technological communication between agents may occur in one of these four dimensions of space as proximity does not refer exclusively to geographical distance. Moreover, localised technological knowledge is related with the intrafirm and interfirm relations (Metcalfe
1995). However, in many cases the regional concentration of innovative activities is an evidence of the local spillovers and increasing returns related with the geographical space.
The production of leather goods may not be compared with other industries dependent on R&D equipment and instrumentation. The opportunity conditions in the footwear industry are based in external sources of knowledge to the industry and do not match the opportunity level of emergent industries. Malerba and Orsenigo refer the depletion of technological opportunities along with the industry life cycle (Malerba and
Orsenigo 1993). Considering the footwear industry a mature activity, the firms develop technology strategies oriented to incremental innovations or imitation rather than radical innovation strategies. One of the most relevant changes has been the introduction of fashion in the product, enabling product differentiation and an higher value added. However, stylist innovations alter the configuration of humdrum resources employed in the leather filière . Traditionally, tanning and chemical industries as well as the footwear components industry had a strong relevance in the
31

product innovation. The introduction of fashion in the footwear production were at the beginning reserved to products for luxury market segment. The entry of new specialised firms in the industry was made possible by the new knowledge base used in the production of fashionable leather goods.
In the leather filière
opportunities for innovation are related with the fashion industry, in general outside the footwear industry itself, and are based in the user-producer interaction. In fact, the fashion subsystem and the leather filière subsystem increasingly interact with each other however influenced by the consumers choices and preferences mediated by gatekeepers (figure 4). It is a much larger number of agents and a more complex type of interactions between agents that we found in the fashion industry on the leather filière
. It is not just a simple upward integration strategy of the footwear established firms that expand the product conception phase in the production organisation.
The user-producer relationship plays a major role in the opportunities for innovation in the leather products. This interaction may be mediated by gatekeepers. These agents are typically buyers for large department stores and distribution agents that select particular products to be sold in the retail shops. According to Caves (2000), the gatekeepers “ cannot and do not articulate their reasons for selecting a particular design ("it's stunning!"), yet like the designers they bring a sense of changes occurring in their customers' lifestyles and interests, and in their likely feeling of the relevance and appropriateness of various styling notes and elements
” (p. 183).
32

Figure 4 – The fashion innovation system in the leather filière
The increasing role of fashion in the leather industry opened up opportunities for innovation in established producers. Literally, fashion is used in almost all the footwear segments and therefore new agents arrived to the industry with new knowledge. Established firms had to cope with this changing knowledge base and the
33

learning processes require interaction with the new fashion agents. The stylists and designers know current and past styles and inspired themselves on fine arts, literature and social happenings that can be translated in new designs (Caves, 2000). However they can not be absolutely sure about the products that will be bought. Nevertheless, new knowledge is based on previous bits of knowledge, which confirms the cumulativeness of fashion knowledge, in the sense that “… today innovations and innovative activities form the base and the building blocks of tomorrow innovations
…” (Malerba and Orsenigo 1993: 48). Thus, present innovative firms on the fashion-leather filière
are more likely to be the innovative firms in the future.
According to Malerba and Orsenigo (1993), high cumulativeness at firm level indicates also high appropriability of innovations. However, in the fashion industry it seems that cumulativeness is present at industry level rather than firm level. The numerous agents involved in the fashion knowledge production and the geographical agglomeration of fashion agents denote increasing returns which align well with cumulativeness at industry level. It also reveals that knowledge base on fashion has an high degree of tacitness, tipically an external localised knowledge base. The high degree of complexity is much more related with the different competencies necessary to the production process, and frequently external to the manufacturing firms' boundaries, ranging from fashion trends definition to components production, to consumer tastes analysis and to distribution. Obviously, the tanning industry, the
R&D institutions and the manufacturing equipment’s industry are also essential competencies to produce leather products with a fashion content.
The cumulativeness at industry level goes along with low appropriability conditions, which means that knowledge diffuse across firms of the leather filière . However, firms make use of different instruments or means to protect their innovations. As it is
34

known, patents, secrecy, continuous innovation and the control of complementary assets are the means used by firms to protect innovation. In the case of fashion all these instruments are used by firms, however secrecy and continuous innovations are more used than other means due to the creative factor of fashion production. The need to change at least two times a year the footwear collection require a permanent innovation at the industry and firm levels. Nevertheless, innovative firms do not show the new products until the pre-market phase, thus avoiding imitation strategies form other competitors. After this phase, innovative firms develop other new products to the next season (continuous innovation strategy). Some firms are able also to create a brand or patenting innovations, which represent a strategy of protecting innovations through different means. The brand and patenting strategies are not concerned exclusively with fashion knowledge, on the contrary they are often related with product attributes and material physical properties.
To summarise, in the leather filière
opportunities for innovation are lower than other industrial sectors and appropriability conditions are also lower than other industries, however there is high cumulativeness at industry level. Footwear producers in the fashion-leather innovation system usually develop two strategies to respond to the changes in the knowledge base: complementary assets and competencies. The production of leather goods in the past did not contain such a large creativity content.
The introduction of fashion in the present leather filière
is a response to consumer changing behaviour and to the competition of producers from low wage countries outside Europe. The fashion innovation system is much more complex and should be study considering the fashion subsystem (colours and shape committees, schools of fashion and design, fashion trends offices, designers and stylists, fashion media and events), the footwear manufacturing subsystem (incorporating tanning industry,
35

manufacturing firms, components suppliers and capital goods industries, R&D institutions, new material producers), and the consumption subsystem (mediated by gatekeepers). The industry and trade policies, as well as horizontal policies, like innovation and job training, affect the leather filière
activities and as such they have to be considered in the study of knowledge governance.
All these components are part of the fashion-leather system. In figure 5, key-agents of this innovation system are represented, illustrating the diversity and complexity of the footwear agents in a broad perspective. The interactions in an innovation system are critical for its performance. The communication channels are fundamental to the knowledge generation, accumulation and diffusion in the fashion innovation system.
The principal communication channels in the this innovation system are the inter-firm relationships, the science, technological and educational system, the local labour market, the international fairs and other commercial events and the fashion magazines and media.
36

5 –
(Subsystems and dominant connections)
Colour and Shape
Committees
Schools of
Fashion and
Design
Fashion
Trends Offices
Designers/
Stylists
Fashion Media
Footwear
Components
New
Materials
Technological
Development and Research
Footwear
Manufacturing
Trade and Distribution networks
Marketing Industry
Consumption Markets
Labour
Market
Machinery and
Equipment
Industries
Industrial Policies
Social and cultural context
Figure 5 - Fashion Innovation System: the case of footwear industry
37

6.1
Characteristics of the organization of the footwear industry in Europe
The European Continent forms one of the main areas of footwear production in the world. As far as the European Union in concerned it stands out as the main source of world production in this sector, reaching almost 44% of world production (in value).
However, it only attains 13% of the world's produced footwear (number of shoe pairs), making it the second world producer after South East Asian countries.
Among the manufacturing industries, the footwear sector is of little relevance in EU countries, contributing with only 0.6% to the total production of European manufacture (Eurostat - ProdCom). However, the importance of analysing this sector in a European context is not restricted to an appreciation of the global value of its production.
Indeed, for several southern European regions the footwear industry is a fundamental part of the local economy, emerging in some European countries as an important sector in the respective national manufacturing industry. Furthermore,
Europe joins countries with relevant importance on a global scale both in terms of the volume and value of its production and, even more importantly, in terms of the innovation of products and the definition of footwear characteristics influencing the sector's global production and orientation.
Regarding the spatial organisation of footwear production in Europe, it is mainly in the southern countries that the sector flourishes in terms of production. Italy has a
38

predominant position as the great producer and European leader in the sector, contributing with around 43% of the fifteen member States' production, making it the sector's third world producer in terms of production value (pairs of shoes) (Fig. 6).
Moreover, Italy, namely the Milan region, stands out as being one of the most important fashion footwear production centres, thus representing a unique reference in the global definition of the sector's styles and trends. Spain, Portugal and France also emerge in the group of main footwear producing countries in Europe. This set of four
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Number of Pairs
Production Value
Source: based on Eurostat (2000), APICCAPS (1999)
Figure 6 – European Union: footwear production by country - 1997 countries contributes with approximately 83% of the sector's production volume in the
EU. However, significant differences are found in the position of the footwear sector in the national manufacturing industry in both the European Union in general, and among the largest producers. Therefore, Portugal is, by far, the country in the
European Union for which footwear production has greater economic importance.
Indeed, Portugal presents the highest industrial specialisation index in the footwear industry (Table 1), contributing to this sector with 4% of the national manufacturing
39

production. Italy also registers a high industrial specialisation rate, corresponding to
2% of the respective manufacturing industry. France and Germany, however, have a very limited manufacturing production in the footwear sector.
Table 1 – Footwear Industrial Specialisation Index - 1999
European Union
Italy
Spain
Portugal
France
Germany
Footwear
Production
(Value)
100,0%
43,5%
17,6%
10,3%
9,3%
9,1%
Share of
Footwear prodution in total manufacturing
Footwear
Industrial
Specialisation
Index
0,6%
2,0%
1,3%
3,9%
0,3%
0,2%
1,0
3,3
2,2
6,7
0,5
0,3
Source: Eurostat – PRODCOM (data covering enterprises with 20 employees and more
Significant differences between countries may also be observed in the characteristics of the respective footwear sectors, namely the dominant production segments. In this aspect, Portugal and Spain in particular, reinforce their positions as European footwear producers in the leather footwear segment. The Iberian countries and Italy stand out as the main European producers and exporters of leather footwear (Table 2), considered to be the best quality footwear.
Table 2 – Share of leather in footwear production
European Union
Germany
Spain
France
Italy
Portugal
Footwear production
(pairs)
100,0%
Share of leather in footwear production
67,8%
3,7%
19,1%
12,4%
42,3%
9,5%
78,4%
82,3%
43,6%
67,1%
85,0%
Source: APICCAPS (1999)
40

At a very aggregated level, a clear difference in the functions performed by the
European countries in the footwear market is observed. In terms of production, as already mentioned, the southern countries are the great producers of the European continent. Resulting from their demographic dimension and their high consumption patterns, the northern countries emerge as great consumer markets. In this case, countries such as Germany, France and the United Kingdom. There are other
European countries which function as commercial platforms. They are the countries with very high exportation volumes, much higher than the national production, supported also by high importation quantities: these are countries which import mainly to export. Belgium, Luxembourg, Sweden, Ireland and Austria are in this group.
The available statistical data provides a very general picture of footwear industry distribution in Europe and around the world, however, it does not reveal the complex manufacturing relations that characterise the entire footwear filière
and which are reflected in the existing patterns of spatial organisation. For instance, the subcontracting relations between different manufacturing plants or the varying forms of manufacturing relations between the different footwear production segments are non-identifiable. Evidently, the spatial organisation of the footwear production system has a profound articulation with the sector's manufacturing organisation. This is characterised by a certain social and technological division leading to a particular form of spatial organisation, in response to the differentiated needs of the organisation of the work process, technological knowledge and the institutional systems of support to the process of productive innovation. In fact, regarding the objectives of this research project, it is far more crucial to identify the organisational patterns of the shoe chain production than to learn about the levels of footwear production among
41

countries or European regions. Such identification would benefit the study of the complex network of relations between companies and, consequently, between production spaces, in terms of discovering the location of strategic decision centres, as well as the organisation of the main flows of the sector's value chain .
From this perspective, and merely as a superficial indicator, the information extracted from an analysis of the sector's company structure on a European scale is significant. The list of 100 of the largest producing companies of footwear products and other leather articles, kindly granted by Dun&Bradstreet for the purposes of this study shows a very different geographical organisation to the geography offered by producing countries. This list confirms Italy as the leading country in this set but also draws attention to the sale volume and number of companies in France, Germany and the
United Kingdom. On the other hand, the low position accomplished by great footwear producing countries such as Spain and Portugal is highlighted with emphasis on the residual values and lower positions than those of Austria and Denmark in the list of large European countries (Table 3).
Table 3 – 100 largest footwear company in Europe
Austria
Denmark
England
Finland
France
Germany
Italy
Portugal
Spain
Total
N. of companies Sales (US dol)
1
21
17
2
1
8
43
3
3
312919
264686
751454
34326
2008512
1332218
3396837
193499
162339
100 8456790 100,0%
Sales
3,7%
3,1%
8,9%
0,4%
23,8%
15,8%
40,2%
2,3%
1,9%
Employment
1810
1
5170
430
10619
5726
12131
3943
747
4,5%
0,0%
12,7%
1,1%
26,2%
14,1%
29,9%
9,7%
1,8%
40577 100,0%
Source: Dun & Bradstreet
42

These figures suggest a dominant position, namely for the Iberian countries, of the subcontracted companies in the large European footwear production chains which find profitable conditions in southern European countries for maintaining high levels of competitiveness. Both the tradition of the footwear sector to use a work force with specifically developed skills and the low-wage levels, supplied by southern countries, are indeed, crucial competitive factors for an industry which is so dependent on an intensive use of labour.
The development of case studies in the next phase of this project will surely bring a more profound knowledge of the manufacturing relations in the heart of the footwear production system. A specific study of the form of organisation and governance of fashion in footwear production will permit a specific approach to the organisation of this industry. It will hopefully contribute to providing greater understanding of the technological knowledge process in the footwear sector.
6.2
Changing European footwear sector resulting from alterations in the world geography of footwear
Important changes in the world geography of the footwear sector have recently been identified, particularly in relation to the position and composition of the European industry. The main characteristic of these recent alterations comes from a reinforcement of South East Asian countries' share of world market, particularly the volume of production (number of pairs produced). The effects of this alteration in the industry of the European Union became particularly noticeable at the beginning of the last decade when a profound alteration in the external trade relations of the sector took place. So, in 1991 the footwear imports figure was higher than that of exports, leading to a negative value in the respective trade balance, which has worsened significantly in recent years (Fig. 7). In this sense, the European Commission observes that the
43

European footwear industry’s share of EU market has fallen (from around 50% in preceding years to 45% in 1999) because of the constant rise in imports (C.E.C.
2001:7). According to data from the EUROSTAT, the European footwear imports (in value) totalled 30% of apparent consumption
1
by the end of the last decade (1999) against 25% in 1995. A growth of this nature clearly demonstrates the rapid absorption process of the European market on the part of production located outside
Europe.
7000
5000
3000
B alance
EXP S
IM P S
1000
-1000
-3000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: Eurostat (2000)
Figure 7 – European footwear industry – Trade Balance (Millions EURO)
Indeed, several studies point to a tendency to transfer production to developing countries, particularly South East Asian countries (Fonseca et. al, 2001), in search of a work force with dramatically cheaper costs (Table 4). The social and political context of these countries is characterised by a weak regulation of work relations and almost non- existent environmental regulation, giving rise to more competitive advantages particularly in the lowest quality footwear segment. Recent data regarding the world footwear market highlight the dominant position of underdeveloped countries among
1 - Apparent Consumption = production + imports – exports.
44

the largest footwear producers. China stands out as the great world producer with a
43% share in the number of pairs produced. Other Asian countries have registered a remarkable growth in terms of production volume: India, Thailand and Indonesia
(Table 5). The extraordinarily low costs of the work force of some of these countries have great influence on the respective capacity to attract foreign investment in general and on the footwear sector in particular.
Table 4 – Wages and Salaries in footwear industry
(Selected countries)
France
Japan
Spain
U K
China (Hong Kong)
China (Macau)
India
Indonesia
Source: UNIDO (2001)
Salaries per employee (1000 dolars)
19,0
12,7
11,1
19,7
10,3
4,8
0,9
0,6
WORLD
10 Largest
China
Brazil
Italy
India
Thailand
Indonesia
Turkey
USA
Japon
Spain
Table 5 – 10 largest world footwear producers
(Number of pairs - millions)
10029
7344
4276
500
476
462
410
371
231
227
204
187
100,0%
73,2%
42,6%
5,0%
4,7%
4,6%
4,1%
3,7%
2,3%
2,3%
2,0%
1,9%
Accumulated
42,6%
47,6%
52,4%
57,0%
61,1%
64,8%
67,1%
69,3%
71,4%
73,2%
Source: APICCAPS (1999)
45

The reinforced position of the Asian continent as the largest world space for footwear production (in volume production- number of pairs) has had a particular effect on the external relations of the European Union in the footwear sector. Four Asian countries
- China, Vietnam, Indonesia and India - are part of the group of the five most important suppliers of the Union, representing 50% of the footwear imports figure
(outside Europe) in 2000, a much higher figure than the 43% registered in 1995
(Table 6).
Table 6 – The five main Asian countries suppliers of the EU
1000 ECU 1995
Total Extra-EU Imports 5249595
2000
100% 9304336 100%
5 countries
China
Vietnam
Indonesia
India
Thailand
2507229
848471
373693
673130
327124
284811
48% 4920889
16% 1809060
7% 1636927
13% 680092
6%
5%
481403
313407
53%
19%
18%
7%
5%
3%
Metric Tons 1995
Total Extra-EU Imports 512238
5 countries
China
Vietnam
Indonesia
India
Thailand
298554
141958
47969
64577
20113
23937
2000
100% 772336
58%
28%
9%
13%
4%
5%
450009
184006
146141
45048
54172
20642
100%
58%
24%
19%
6%
7%
3%
Source: Eurostat – COMEXP
The development of external trade policies at the European level has been an important element, on a global scale, of support in the reconfiguration of the spatial organisation of the footwear sector. As the European Commission observes in a recent report, the sector has adjusted its production capacities and its logistics with a view to deriving maximum benefit from the agreements that were concluded with the
46

countries of the E [xtreme] E [ast] A [sia] , the applicant countries of Central and
Eastern Europe (CEECs, the countries of North Africa and the Customs union with
Turkey.
Many operators in the EU, for instance, have certain parts of the footwear (such as
“uppers”) manufactured in low-wage countries in this zone [North Africa] – a practice which has become indispensable in order to remains competitive on the international market ” (C.E.C, 2001: 14).
It is, therefore, foreseeable that both the enlargement of the European Union to include European Eastern countries and the increasing regulation of trade relations with Maghreb and South Mediterranean countries, under the Euro Mediterranean partnership
2
, should become a determining factor in the new reconfiguration of the industrial geography of the footwear sector, extending the European footwear production chain to the Union's neighbouring countries. Such an alteration in the geographical configuration of the footwear industry carries serious risks for the regions and European footwear producing countries in more vulnerable segments of production.
As a result of the geographical transfer of production towards less developed countries, the European footwear industry has been pressured with the above mentioned effects, namely the increasing share of external footwear in the apparent consumption of the Union. This has led to a repositioning of the industry throughout the sector's filière
as well as its respective chain value. In fact, although European
Union countries have come to lose relevance in both world production and the share of footwear production within the EU, as far as pairs of shoes (footwear volume) are concerned, an increase in the Union's share in the value of produced footwear has
2 - Offical Journal of the Europena Communities, 22.7.2000,
47

been observed. Indeed, the EU moved from a 40% share in the world Gross Added
Value in 1985 to 44% in 1995. These values stem from important alterations in the position of Europe in footwear production chains resulting from a greater concentration of activities in higher value production segments and phases. As the
European Commission recognises, the principal value generated within Europe relate to the creation (design), the appropriate processing of the raw materials, the cutting of the leather parts and the assembly of the final product – since all these factors are necessary for the quality of the end product (C.E.C., 2001: 14).
Through the emergence of new producing countries and the repositioning of the important countries which supply footwear throughout the production filière
and in the hierarchy of footwear products segments, the alterations taking place in the world footwear industry highlight, for the industry of the European Union, the factors associated with innovation, design and quality as being strategically affirmative in an increasingly competitive market. The phenomenon of creation, diffusion, and fashion appropriation is also, in this context, of central importance to the European footwear industry.
The patents give exclusive rights to its holders to prevent others from producing, using and selling the patented invention. They are granted by specialised offices to new inventions displaying a certain innovative level and industrial application.
The patents guarantee the right to exclude third party exploitation of the invention for a certain period of time; in other words, they protect the patent holder. Footwear patents are important as they prevent the copy of certain characteristics of the shoe
48

which are associated with a particular brand name, whether visual (style, shape, design) or the improvement of the shoe's comfort and resistance. This analysis has been carried out on a European level for European patents. Regardless of their country of origin, they are registered as European patents.
As regards the patents registered as characteristic features of footwear (Table 7), it may be observed that they mainly focus on footwear for sporting purposes and footwear with health or hygienic arrangements, the former resulting from the obvious need of various sport types to obtain better and more adequate accessories and equipment, including shoes (greater speed, adhesion and comfort), and the latter owing to the recent increase in concerns with well-being and health protection. This has been reflected in the demand for more comfortable and aerated footwear, adapted to the various characteristics of foot problems.
Table 7 – European Footwear Patents
Europe (Referencies)
A43B1 - Footwear Characterised by the Material
A43B3 - Footwear Characterised by the Shape of the Use
A43B5 - Footwear for Sporting Purposes
A43B7 - Footwear With Health or Higienic Arrangements
A43B9 - Footwear Characterised by the Assembling of the Individual Parts
A43B11 - Footwear With Miscellanous Arrangements to Facilitate Putting-On or Removing
A43B13 - Soles; Sole and Heel Units
A43B15 - Welts for Footwear
A43B17 - Socks
A43B19 - Shoe- Shaped Inserts; Inserts Covering the Instep
A43B21 - Heels; Top-Pieces
A43b23 - Uppers; Boot Legs; Stiffners; Other Single Parts of Footwear
Nº Patents
35
184
1044
441
100
23
548
4
212
32
90
163
Total 2876
Source: http://ec.espacenet.com/espacenet
As far as the parts of footwear are concerned, most of the technological innovations are centred on the soles, insoles and upper parts of the shoe (Soles; Sole and Heel
49

Units, Socks, Uppers; BootLegs; Stiffeners; Other Single Parts of Footwear). In this particular case, the great inventions are found in the rubber types and their manipulation and alteration, as well as the need to modify footwear to accommodate fashion trends such as, for example, long boots which need to be comfortable and adapted to the leg \for maximum mobility.
If we consult the subgroups referring to leather (Table 8), we may observe that the number of patents is insignificant, clearly demonstrating that the great innovations and research areas are not found among the natural products. Indeed, the majority of technological innovations apply to the synthetic products.
Table 8 - Footwear subgroups with references to leather
A43B1/02 Footwear made of animal or plants fibres or fabrics made therefrom
A43B21/04 Leather
1
0
A43B23/14 Made of Leather 0
Source: http://ec.espacenet.com/espacenet
The E.U. holds approximately 60% of European patents, allowing any country in the world to register patents as European. The main footwear producers in the European
Union may be divided into 3 subgroups. The first group is formed by Italy, the second by Spain and the third by Portugal, Germany, France and the United Kingdom. If we compare these figures with the number of patents registered in each one of these countries, we come to the conclusion that some of these countries are merely producers and that all the upstream stages of shoe production linked to technological innovation come from abroad. There is a clear centralisation of patents in Italy,
Germany, France and Austria. In the former countries, the number of existing patents is natural, as the production level is high. However, in Austria, there is a greater
50

tendency for R&D than for production (1.9%) since it represents 9% of patents in the
European Union (fig. 8).
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Patents
Production
Source: http://ec.espacenet.com/espacenet (2002), EUROSTAT (2000)
Figure 8 – European Union: Footwear Patents and Production
However, in the United Kingdom and especially Spain, there are fewer patents.
Portugal stands out for its total lack of patents while belonging to the group of main producers. This leads to the conclusion that these countries, particularly Portugal, do not have creators/inventors in the technological field for footwear. Portugal is, above all, a country based on production through subcontracting.
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350
300
250
200
150
100
50
0
Italy
Germany
France
United Kingdom
Spain
Subgroups of patents
Source: http://ec.espacenet.com/espacenet (2002)
Figure 9 – European Union: Number of Patents by Main Production Countries
As far as footwear patents held by the main producing countries are concerned (fig.
9), Italy holds the most in general, but not in the above-mentioned range of types
(only in footwear for sporting purposes). Germany clearly dominates in footwear with health or hygienic arrangements, footwear characterised by the assembling of the individual parts and soles; sole and heel units and socks.
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(*) Work on progress
(See Power Point presentation file)
53

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