Corporate Power Global Trend to the Fashion Industry in Ethiopia - Assignment Example

The Impact of Corporate Power Global Trend to the Fashion Industry in Ethiopia The fashion and textile industry has benefited from the growth of corporate power. Many corporations, traders, and investors in the fashion industry have spread from country to country. Starting from U.S., the corporate power has driven the spread of fashion to South Korea, Japan, China, and Ethiopia, among other countries. The spread was fueled by factors such as free trade agreements (Brian). The high costs of operations and other barriers have forced investors in the fashion industry to look for new markets that have low costs of production. Ethiopia is one of the relatively new market and investment grounds in the textile industry. The fashion industry in Ethiopia is growing since it has received significant amounts of corporate investments. The investors, suppliers, and large corporations have been entering the country to take advantage of low costs of productions in terms of land and labor. The large tracts of land are also fertile for the growth of cotton. The stable government encourages investments. Additionally, Ethiopia has a young population that is trainable. However, the textile industry faces some drawbacks such as transport logistics, corporate scandals, and misuse of land and labor laws. The corporate power would continue to influence the fashion industry positively in Ethiopia if companies continued to take advantage of the country’s favorable factors and co-operated to eliminate drawbacks. The textile industry in Ethiopia has come from far and has a potential of soaring to greater heights if the current corporate investments persist. Ethiopia is in Sub-Saharan Africa, a region that experiences a nascent growth in the textile industry compared to the Northern parts of Africa. According to Fassil Tadesse, Kebire Enterprises Chief Executive Officer, Ethiopia textile tradition can be traced back a long way but its development had begun taking roots just a few years ago. A critical analysis shows that Ethiopian textile industry forms part of a wider pattern of the global trade movement. It moved to Japan after beginning in the United States. It advanced to South Korea before crawling to China (Mosavi). The soaring cost of conducting business in China over the last few years has made investors shift to Africa due to low costs in the region. Speaking to the Economist Intelligence Unit, Fassil said fashion development emanates mainly from Turkey, India, China, South Korea, and Bangladesh. He believes that the industry will continue maintaining a healthy and strong momentum that will see the country becoming the epicenter of the textile and garments industry in Africa. Big brands are finding their way into Ethiopia to invest in the growing industry. The corporate power in textile and fashion industry is promoting economic growth in Ethiopia because it utilizes the high population and provides employment to the country’s trainable population. Ethiopia is the second most populous country in Africa after Nigeria, with about 94 million people. Most of the population (50%) is made up of people aged between 15 and 64 years. It has a high young population evidenced by a median age of 17.6 years. Over 40% of the population consists of individuals that are 15 years and below. The young population can thus receive training under the sponsorships of textile corporate firms and the government to work in textile companies or cotton firms. Therefore, corporate power is raising the living standards of people. Additionally, the Ethiopian country is one of the countries in African that experience relative stability and peace, thus promoting investments and economic growth. According to International Monetary Fund (IMF), the country emerged among the fastest growing economies in the globe by recording an economic annual growth of 10% in 200-2009 (Virginia). Ethiopia’s economic growth is also because large corporations are taking advantage of the low production costs and suitability of large tracts of land for cotton plantations. The size of the area is similar to that of Pakistan, the globe’s fourth-largest cotton producer. Consequently, Ethiopia has attracted manufacturers who buy cotton from the farmers at fair prices. Agriculture offers 85% of the gross employment. It provides 47% of the Gross Domestic Product (GDP). Low cost of infrastructures and inputs like water, power, and electricity are other factors that are driving more investors into the country. Institutions such as ETIDI are striving to equip the textile industry to compete internationally by offering sustained consultancy, promotion, training, research, laboratory, marketing services, and support. The Ethiopian country also has a stable government that encourages both local and foreign investments and trade by lowering barriers to trade. The government attracted pioneering investors by enabling textile and apparel manufacturers to offer competitive prices. Consequently, some international players began to be interested in conducting business with the manufacturers. Irish textile discounter Primark, Swedish Hennes & Mauritz (H&M), and British retailer Teco are already getting their clothes supplies from Ethiopia (Timmerman 25). The Ethiopian Textile and Garment Manufacturers Association (ETGMA) say that H&M and Tesco are sponsoring the training of workers to work in the Ethiopian garment industry. According to the Communications Director of ETIDI (Ethiopian Textile Industry Development Institute), Bantihun Gessesse, the textile and clothing international companies are transferring skills to local companies. They also invest in safety, growth in productivity, environmental protection, and improve the quality of the clothe-making processes and the products. Bantihun also confirmed that the Western markets are increasingly demanding Ethiopian textiles and garments. For instance, the country exported 47% of its production to Germany in 2013. The past few years have therefore seen the country earning $ 75.28 million from the exports of textile (Virginia). However, the textile industry faces some drawbacks when it comes to transport logistics, corruption and usage of resources. Although it is strategically positioned to serve Asia, Europe, and America, Ethiopia’s transport systems have not developed well enough to meet business needs. The government is channeling efforts towards constructing railway lines, roads, and highways. On the part of corruption, some investors bribe to have favorable advantages in terms of market, raw materials, labor, and other factors of a business. The government is trying to ensure the fight of corruption goes on. It has put in place a standards authority that ensures exports and imports meet the set criteria. The economy could even develop further if the country properly utilized the under-utilized land. According to the director of ETIDI (Ethiopian Textile Industry Development Institute), Ethiopia uses only about 7% of its 3 million hectares suitable for cotton growth. He stresses that the textile industry can fully benefit from high-quality cotton grown in the country if more land is put into use. The misuse of land and labor has forced the government to enforce relevant laws (Quisumbing and Yohannes 43). It has established labor laws as per the standards of the ILO (International Labor Organization). Furthermore, it has discouraged the dumping of wastes and use of water without treating effluents. Corporate power is a trend that has not left the Ethiopian fashion industry behind. Large corporations and investors have entered the country to take advantage of low costs of production, stable government that encourage investments, large tracts of land suitable for cotton growth and a high population of trainable labor. The impact of corporate power has been the growth of the economy in Ethiopia due to the creation of labor, foreign exchange, and transfer of skills to the country. However, inadequate transport systems and underutilization of resources have hindered greater impact. Additionally, some investors and large corporations engage in corruption and other unethical behaviors. If the government and investors joined hands to solve these drawbacks, the fashion industry in Ethiopia would soar to greater heights in future. Works Cited Mosavi, S. "Made in Ethiopia: The rise of the textile industry." N.p., 28 Oct. 2014. Web. . Quisumbing, A. R., and Y. Yohannes. "How fair is workfare? gender, public works, and employment in rural Ethiopia." Economic Growth Factors 3.2 (2005): 20-31. Print. Roach, Brian.“Corporate Power in a Global Economy”.Modules. Tufts University, 12 Mar. 2007. Web. 9 Mar. 2015. Timmerman, K. Where am I wearing?: A global tour to the countries, factories, and people that make our clothes. Hoboken, NJ: Wiley, 2012. Print. Virginia. "Is Ethiopia a rising textile sourcing and production star? textile-future by Virginia F. Bodmer-Altura." N.p., 2014. Web. . Read More