Gary G. Hamilton and Misha Petrovic The principal thesis of this chapter is that the single most important driver of Asia’s economic growth has been, and continues to be, the symbiotic relationship between large American and European retailers and brand name merchandisers, on the one hand, and Asian manufacturers, on the other hand.1 In the past 40 years, East Asian countries have become the world’s chief site for sourcing manufactured consumer goods. The most important ﬁrms that source goods from Asia are the large retailers and brand-name merchandisers. At ﬁrst, many of these were American ﬁrms, but, since the 1980s, European retailers and merchandisers have also increasingly sourced goods from Asian manufacturers. As these American and European retail ﬁrms have become larger, more globally oriented and more competitive with each other, they have increasingly come to rely on Asian manufacturing to supply them with high-quality, but relatively inexpensive, goods. Beginning in the late 1970s, Asian ﬁrms, although remaining very competitive with each other, gradually worked out a division of labour, so that some economies in the region developed large vertically integrated conglomerates specializing in producing ﬁnished products, and other economies developed extensive inter-ﬁrm networks specializing in producing small to large batches of goods designed for niche markets. In the 1990s, responding to diﬃcult market conditions, many of the leading manufacturers from throughout the region (namely, from Taiwan, Hong Kong, South Korea and Japan) began to relocate some of their factories to China, leading to extraordinarily rapid growth in...
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