managing demand and supply in chinese fashion apparel firms

173 Pages·2017·2.57 MB·English

by  Ying Ye

C
MANAGING DEMAND AND SUPPLY IN HINESE
:
FASHION APPAREL FIRMS AN EXPLORATORY
STUDY UNDER THE FOURTH INDUSTRIAL

STRUCTURAL CHANGE

A Thesis Submitted in Fulfilment of the Requirements for the Degree
of Doctor of Philosophy

Ying YE
MSc (Logistics and Supply Chain Management)
BSc (Logistics Management)

School of Business Information Technology and Logistics
College of Business
RMIT University
January 2018
DECLARATION
I certify that, except where due acknowledgement has been made, the work is that of the author
alone; the work has not been submitted previously, in whole or in part, to qualify for any other
academic award; the content of this thesis is the result of work that has been carried out since the
official commencement date of the approved research programme; any editorial work, paid or
unpaid for, by a third party is acknowledged; and ethics, procedures and guidelines have been
followed.

Ying Ye
January 2018
ii
ACKNOWLEDGEMENTS
I take this opportunity to express my appreciation to the special people who have provided me a
fulfilling research candidature at RMIT University.
I wish to express my profound gratitude to my supervisory team: Dr Kwok Hung Lau, Dr Leon Teo,
and Dr Konrad Peszynski. Their invaluable support, advice, proper guidance, and continuous
inspiration enhanced my confidence to accomplish this research. I am indebted for their
encouragement and inspirational advices received throughout the association.
I would also like to extend my appreciation to Dr Sek Yong Wee and Dr Chin Eang Ong. They have
provided me with many great opportunities and advices on teaching which helps me further develop
my academic competency. Their generous support has made this journey more fulfilling.
My gratitude also goes to the colleagues and all my PhD friends in school. We have been sharing our
sweat, tears, joy and love during these solid years. It has been a great pleasure to meet each one of
them, and I hope our lives will cross-path again in future.
My deepest thanks are felt to my beloved family, who provided me this opportunity to follow my
academia passion, and further my education. Without their valuable financial support, this journey
would have never commenced. Their encouragement has been a constant source of substance in my
journey.
To my partner and best friend, Weixiao Jia, I am deeply grateful for his unconditional love, trust and
support during this journey. He has made me a better person.

This thesis is dedicated to the memory of my beloved grandmother.

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ABSTRACT
The Chinese market represents one of the largest growing retail markets in the world. The new rise
of e-commerce and digital technology has transformed the local commerce and retail landscape
creating significant competitions and opportunities. Driving $4.84 trillion worth of sales alone in
2016, Chinese retail market is fuelled by rising demand from the large inland and regional areas, and
growing purchases for high quality services and products. The fashion apparel (FA) sector, often
characterised by short product lifecycles, high market volatility, low demand predictability, and a
high number of impulse purchases, is one of the main retail industries in China experiencing radical
transformations. Traditional FA companies have encountered a series of disruptive changes,
including rising labour costs, out-dated manufacturing lines, and a chronic oversupply problem,
which has led to supply chain breakdowns. Despite the challenges and uncertainties faced by the
industry, research on how Chinese FA companies adapt to these changes is limited.
The present study explores how the Chinese FA companies manage and restructure their supply
chain under the emerging market dynamics. As supply chain management (SCM) is still at the
nascent stage of development in China, this study establishes an exploratory research, proposing a
strategic SCM framework, comprised of core demand and supply process elements, and
management components based on Western practice. Drawing upon the theoretical perspective of
Alignment Theory, the study introduces four strategic fit types of the supply chain configurations:
Make-to-forecast/Administration (A), Make-to-order/Production (P), Pack-to-order/integration (I),
and Buy-to-order/Development (D). Working under the proposed SCM framework, the study applies
the framework into the Chinese market context to probe how domestic FA companies have
restructured their internal supply chain during the period of transformation, and whether the
alignment of internal supply chain elements and components of the external market situation exists
in current businesses.
The findings of this study reveal that companies capable of leveraging a new strategic fit of SCM
alignment among their process elements and management components encourage a better business
performance during the transformation. Key actions driving the business into a successful strategic
fit configuration are identified in the findings. The findings also unveil some of the common
characters residing in the Chinese economic ecosystem, and prescribe a series of practical
implications in terms of formulating strategic supply chain solutions and enhancing competencies for
the Chinese businesses.
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TABLE OF CONTENTS
Declaration .............................................................................................................................................. ii
Acknowledgements ................................................................................................................................ iii
Abstract .................................................................................................................................................. iv
List of Tables ........................................................................................................................................ viii
List of Figures ......................................................................................................................................... ix
List of Acronyms ...................................................................................................................................... x
CHAPTER 1: INTRODUCTION ................................................................................................................... 1
1.1 Research Background .................................................................................................................... 1
1.2 Motivations ................................................................................................................................... 5
1.3 Purpose and Research Questions ................................................................................................. 7
1.4 Research Scope ........................................................................................................................... 11
1.5 Significance of the Study ............................................................................................................. 12
1.6 Structure of the Thesis ................................................................................................................ 12
CHAPTER 2: LITERATURE REVIEW ......................................................................................................... 14
2.1 Origin of the SCM and Definitions .............................................................................................. 14
2.2 Scopes of the SCM Framework ................................................................................................... 17
2.3 Process Elements of the SCM Framework .................................................................................. 21
2.4 Management Components of the SCM Framework ................................................................... 25
2.5 Strategic Configurations of the SCM Framework ....................................................................... 27
2.6 Achieving Strategic Fit of the Alignment in SCM ........................................................................ 30
2.7 Summary ..................................................................................................................................... 32
CHAPTER 3: CHINESE FA INDUSTRY UNDER THE STRUCTURAL CHANGES ........................................... 33
3.1 The First Structural Change ......................................................................................................... 33
3.2 The Second Structural Change .................................................................................................... 35
3.3 The Third Structural Change ....................................................................................................... 37
3.4 The Fourth Structural Change ..................................................................................................... 39
3.4.1 External Impacts on the Supply and Production .................................................................. 39
3.4.2 External Impacts on the Market Demand ............................................................................ 40
3.4.3 External Impacts on the Corporate Management ............................................................... 41
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3.5 Summary ..................................................................................................................................... 45
CHAPTER 4: RESEARCH METHODOLOGY .............................................................................................. 46
4.1 Research Approach ..................................................................................................................... 46
4.2 Research Strategy ....................................................................................................................... 48
4.3 Case Study Design ....................................................................................................................... 49
4.3.1 Case Selection ...................................................................................................................... 49
4.3.2 Data Collection ..................................................................................................................... 52
4.3.3 Data Analysis ........................................................................................................................ 53
4.4 Research Quality ......................................................................................................................... 55
4.4.1 Research Validity .................................................................................................................. 55
4.4.2 Research Reliability .............................................................................................................. 56
4.5 Summary ..................................................................................................................................... 57
CHAPTER 5: WITHIN-CASE ANALYSIS .................................................................................................... 58
5.1 Company A (SOE) ........................................................................................................................ 58
5.1.1 Company Background .......................................................................................................... 58
5.1.2 Transitional SCM Changes to the External Impacts ............................................................. 59
5.1.3 Summary of All Internal SCM Changes to the External Impacts .......................................... 66
5.1.4 Alignment between the Intra- and Inter-Organization ........................................................ 68
5.2 Company B (Franchised) ............................................................................................................. 70
5.2.1 Company Background .......................................................................................................... 70
5.2.2 Transitional SCM Changes to the External Impacts ............................................................. 72
5.2.3 Summary of All Internal SCM Changes to the External Impacts .......................................... 78
5.2.4 Alignment between the Intra and Inter-Organization ......................................................... 80
5.3 Company C (SPA) ......................................................................................................................... 82
5.3.1 Company Background .......................................................................................................... 82
5.3.2 Transitional SCM Changes to the External Impacts ............................................................. 83
5.3.3 Summary of All Internal SCM Changes to the External Impacts .......................................... 89
5.3.4 Alignment between the Intra and Inter-Organization ......................................................... 91
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5.4 Company D (B2C) ........................................................................................................................ 93
5.4.1 Company Background .......................................................................................................... 93
5.4.2 Transitional SCM Changes to the External Impacts ............................................................. 95
5.4.3 Summary of All Internal SCM Changes to the External Impacts ........................................ 101
5.4.4 Alignment between the Intra and Inter-Organization ....................................................... 103
5.5 Company E (Multi-channel) ...................................................................................................... 105
5.5.1 Company Background ........................................................................................................ 105
5.5.2 Transitional SCM Changes to the External Impacts ........................................................... 106
5.5.3 Summary of All Internal SCM Changes to the External Impacts ........................................ 113
5.5.4 Alignment between the Intra and Inter-Organization ....................................................... 115
5.6 Summary ................................................................................................................................... 117
CHAPTER 6: CROSS-CASE COMPARISON FINDINGS ............................................................................ 118
6.1 Cross-case Comparison between the Demand-side Elements ................................................. 118
6.2 Cross-case Comparison between the Supply-side Elements .................................................... 120
6.3 Cross-case Comparison between the Strategic Management Components ............................ 122
6.4 Summary ................................................................................................................................... 124
CHAPTER 7: DISCUSSION AND CONCLUSIONS .................................................................................... 125
7.1 Summary of the Research Findings: Answering the Research Questions ................................ 125
7.2 Research Contribution and Implications ................................................................................... 131
7.3 Limitations and Further Research ............................................................................................. 134
7.4 Conclusions ............................................................................................................................... 135
REFERENCES ........................................................................................................................................ 136
APPENDIX A: RESEARCH PROTOCOL ................................................................................................... 152
APPENDIX B: EXAMPLE OF DATA ANALYSIS ........................................................................................ 156
APPENDIX C: INVITATION LETTER (ENGLISH VERSION)....................................................................... 158
APPENDIX D: INVITATION LETTER (TRANSLATED CHINESE VERSION) ................................................ 160
APPENDIX E: LETTER OF ETHICS APPROVAL ........................................................................................ 162
APPENDIX F: LIST OF PUBLICATIONS ................................................................................................... 163

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LIST OF TABLES
Table 1-1: External Impacts on China’s FA Industry ............................................................................. 10
Table 2-1: Definitions of SCM ............................................................................................................... 16
Table 2-2: Important SCM Frameworks Leading to the Paradigm Shift ............................................... 18
Table 2-3: Supply Chain Strategies and Configurations ........................................................................ 28
Table 3-1: The Conditions of Chain Retail Enterprises in the Textile and Garment sector................... 38
Table 3-2: Types of Distribution Model and Business Ownership in the Existing Market .................... 42
Table 3-3: Literature Review on the Development of Chinese FA Industry ......................................... 43
Table 4-1: The Four Research Approaches Commonly Adopted in National Science Research ........... 46
Table 4-2: Research Sampling Frame .................................................................................................... 49
Table 4-3: Profile of Selected FA Firms ................................................................................................. 51
Table 4-4: Interview Records ................................................................................................................ 52
Table 4-5: Techniques and their Implementation for Establishing Validity and Reliability in the Case
Study Research ...................................................................................................................................... 55
Table 5-1: A Summary of the Transitional SCM Changes of Company A .............................................. 67
Table 5-2: A Summary of the Transitional SCM Changes of Company B .............................................. 79
Table 5-3: A Summary of the Transitional SCM Changes of Company C .............................................. 90
Table 5-4: A Summary of the Transitional SCM Changes of Company D ............................................ 102
Table 5-5: A Summary of the Transitional SCM Changes of Company E ............................................ 114
Table 6-1: The Results of the Cross-case Comparison for the Demand-side Elements ...................... 119
Table 6-2: The Results of the Cross-case Comparison for the Supply-side Elements ......................... 121
Table 6-3: The Results of the Cross-case Comparison for the Strategic Management Components . 123
Table 7-1: A Summary of the Cross-case Comparison Findings and the Alignment Outcomes ......... 126

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LIST OF FIGURES
Figure 1-1: SCM Research Framework .................................................................................................... 4
Figure 1-2: Development of the Chinese Apparel Industry .................................................................... 6
Figure 1-3: SCM Research Framework for the Chinese Fashion Apparel Industry ............................... 11
Figure 2-1: Literature Review Mind-map .............................................................................................. 15
Figure 2-2: Elements of Strategic Fit (Chorn 1991) ............................................................................... 31
Figure 3-1: Timeline of the Chinese Textile and Apparel Industry Development ................................. 34
Figure 5-1: A Development Timeline of Company A ............................................................................. 59
Figure 5-2: Company A’s Strategic Fit of the Alignment between the Intra-and Inter-organization
during the Fourth Structural Change .................................................................................................... 69
Figure 5-3: A Development Timeline of Company B ............................................................................. 71
Figure 5-4: Company B’s Strategic Fit of the Alignment between the Intra-and Inter-organization
during the Fourth Structural Change .................................................................................................... 81
Figure 5-5: A Development Timeline of Company C ............................................................................. 83
Figure 5-6: Company C’s Strategic Fit of the Alignment between the Intra-and Inter-organization
during the Fourth Structural Change .................................................................................................... 92
Figure 5-7: A Development Timeline of Company D ............................................................................ 95
Figure 5-8: Company D’s Strategic Fit of the Alignment between the Intra-and Inter-organization
during the Fourth Structural Change .................................................................................................. 104
Figure 5-9: A Development Timeline of Company E ........................................................................... 106
Figure 5-10: Company E’s Strategic Fit of the Alignment between the Intra-and Inter-organization
during the Fourth Structural Change .................................................................................................. 116

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LIST OF ACRONYMS
B2C Business to Consumer
FA Fashion Apparel
FDI Foreign Direct Investment
FFE Foreign Funded Enterprise
GDP Gross Domestic Product
O2O Online to Offline
OEM Original Equipment Manufacturer
PE Private Enterprise
SCM Supply Chain Management
SME Small and Medium Enterprise
SOE State-Owned Enterprise
SPA Specialty Private Apparel
TA Textiles and Apparel
TVE Township and Village Enterprise
WTO World Trade Organization

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