Why Sourcing from China? A Case Study on VF Corporation’s Textile and Apparel Sourcing and Supply Chain Strategy

Abstract

BackgroundThis study aims to explore the key factors that affect U.S. fashion companies' choice of China as a sourcing base for apparel and their textile intermediaries. Existing studies on related topics mostly looked at country-level macro trade data or focused on finished garments only (Guan, Xu, Jiang, & Jiang, 2019;Datta & Kouliavtsev, 2020). Instead, we conducted a firm-level analysis of VF Corporation's entire apparel supply chain in 2020, which included a total of 327 factories worldwide, making either finished garments or their textile inputs (VF Corporation, 2021). A case study on VF Corporation (VF), one of the most historical and largest U.S. apparel corporations, will significantly enhance our understanding of U.S. fashion companies' latest China sourcing strategy and offer unique insights into today's T&A supply chains. Literature reviewA review of existing literature suggests a few factors that may affect U.S. fashion companies' selection of China as a T&A souring base. First, as China has one of the world's most complete T&A supply chains (Lopez-Acevedo & Robertson, 2012), U.S. fashion companies are likely to source from China for apparel items with a longer and more sophisticated production process (H1). Second, China is heavily involved in an Asia-based regional textile and apparel production network (Lu, 2019). Thus, U.S. fashion companies are more likely to source from China when other production processes across the apparel supply chain also occur in Asia (H2). Third, U.S. fashion companies likely use China more as a textile supplier than an apparel supplier today (H3). Notably, while U.S. fashion companies are increasingly moving sourcing orders from China to other Asian countries for finished garments, many of these garments still contain textiles supplied by China (Goto, 2017;Ngo, 2017). Additionally, product pricing and social and environmental compliance risks matter for vendor selection (Yadlapalli, Rahman, & Rogers, 2019). However, researchers could not conclude whether considering these two factors would increase or decrease T&A sourcing from China (Guan, et al.;Lu, 2020). Methods and dataLogistic regression was performed to evaluate the key factors that affect VF's selection of China as a sourcing base over other suppliers for apparel products and their textile intermediaries. The logit model uses China (souring from a Chinese T&A factory =1 and otherwise=0) as the binary dependent variable and includes six independent variables corresponding to the hypotheses: • Supply chain length (an apparel item's total production stages as specified by VF) • Asia% (the percentage of an apparel item's total production stages that occurred in Asia)