CBDS

Business in Development Studies

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How to escape the supplier squeeze in apparel global value chains

By Lindsay Whitfield and Felix Maile

Most scholarship on apparel global value chains (GVCs) finds that powerful fashion brands and retailers relentlessly squeeze their suppliers in the global South. While requirements on turnaround times, quality standards and efficiency keep rising, the unit prices that suppliers receive continue to fall. Brands closely monitor suppliers’ cost structures and appropriate any efficiency gains. At the same time, they leverage fierce global competition, playing suppliers against one another by threatening to shift sourcing to lower-cost countries. As a result, apparel assembly is widely viewed as a dead end for value capture for both suppliers and workers.

At the same time, the value capture among the largest apparel suppliers globally varies substantially: Figure 1 illustrates the gross profit margins for 12 publicly listed top apparel suppliers from the mid-2000s to the early 2020s. Three firms in particular – Shenzhou, Eclat, and Youngone – stand far above the rest. Not only do they consistently achieve substantially higher margins than their competitors, but since the 2010s their profitability has continued to climb, even as margins for most other suppliers have stagnated or declined. This creates an empirical puzzle: how do some apparel suppliers manage to escape the “supplier squeeze”?

Figure 1.  Annual gross profit margin (%) of giant apparel suppliers, 2005-2022

We solve this puzzle in a new article on ‘Rethinking economic upgrading in apparel GVCs: Value capture through strategic partnerships in product innovation cycles’. The article traces how ‘giant apparel contract manufacturers’ from Hong Kong, South Korea, Taiwan, Sri Lanka, and China have sought to capture more value over the past 25 years. It shows that even among the largest suppliers globally, only few suppliers have been able to extract concession on profit sharing from fashion brands and retailers. They do so by entering strategic partnerships with lead firms operating within what we call product innovation cycles.

Product innovation cycles are time-specific end-market dynamics in which lead firms temporarily escape competition with other lead firms by pioneering new products characterized by rapid growth and higher profit margins. To commercialize these products, fashion brands and retailers require suppliers with specialized manufacturing capabilities. Entering such strategic partnerships requires building specialized complementary assets such as advanced synthetic fabric capabilities. Strategic partnerships tend to be short-lived. They end once the lead firms (or the suppliers themselves) are emulated by competitors with the same capabilities. Thus, economic upgrading (understood as capturing more value along the chain) is only a transient condition that must be continuously renewed through new strategic partnerships.

Felix Maile is a doctoral researcher in development economics at the University of Vienna.

Lindsay Whitfield is Professor for Business and Development at Copenhagen Business School.

Read more in our new Blog Post and in our new open access paper ‘Rethinking economic upgrading in apparel GVCs: Value capture through strategic partnerships in product innovation cycles’.

Radiance in the Temple: The Mass of Las Auténticas and the Indigenous Disobedience of the Gender Binary

By Jacobo Ramírez

Juchitán de Zaragoza, November 16, 2025

I grew up hearing that the Isthmus of Tehuantepec is a land of strong winds and even stronger wills. That idea always felt true, but only in recent years have I understood that this strength lives not only in the Zapotec history of territorial defense: it also lives in the bodies and lives of those who challenge, every day, the limits imposed by coloniality. Among them are the muxes.

When I arrived in Juchitán to accompany the 50th anniversary of Las Auténticas Intrépidas Buscadoras del Peligro, I understood that muxeidad is not just an identity category: it is a way of walking through the world, grounded in relationships with community, memory, ritual, and territory. Muxes inhabit a social and spiritual space shaped by Zapotec cosmology and by the colonial wounds that attempted to silence the gender plurality that existed long before evangelization.

Anthropological records speak of Aztec priests who wore clothing associated with another sex, Maya deities with multiple bodies, and ritual figures embodying duality and fertility. But those references, useful as they are, do not capture what it feels like to stand inside the church of San Vicente Ferrer and watch the muxes enter in their Tehuana dresses, carrying resplandores that illuminate centuries of resistance.

On that November 16th, as I watched them walk in, I realized I was witnessing something nearly impossible anywhere else in the world: a formal Catholic ritual dedicated explicitly to a third-gender community. An improbable gesture within the canon of a Church that has historically policed bodies and disciplined difference. Yet in Juchitán – as in so many Indigenous territories – imposition was never total. Here, Catholic faith was negotiated, reinterpreted, resisted, and at times transformed from within.

As the muxes advanced down the central aisle, accompanied by Maya representatives from Yucatán who also belong to Mesoamerican non-binary gender traditions, I felt history fold onto itself. It was as if precolonial traces and colonial wounds touched for a brief moment, revealing the persistence of worlds that never disappeared.

The priest spoke of justice, perseverance, and peace. He evoked the parable of the widow who insists before an indifferent judge, reminding us that those who seek justice often find doors closed. I heard his sermon not only as a spiritual message but as a living metaphor for what it means to be muxe in a country where gender, violence, and inequality intersect daily. At that altar, the Bible and everyday life seemed to speak to each other as equals.

After the Mass, a local band accompanied the procession toward the mayordoma’s home. The streets of Juchitán filled with music, sones, laughter, and steaming Oaxacan mole served in deep clay bowls. We were also offered fresh hibiscus water, and, as tradition holds, we gave a cash donation to the mayordoma – a communal gesture that reminds us that every celebration, every vela is sustained by an economy of care, daily labor, and collective commitment.

From my anthropological perspective, but also from my position as a person with Isthmus roots – child of parents born in this territory – returning to learn, I understood the political depth of that ritual. What happened that afternoon was not simply a Mass: it was a declaration. A statement that Indigenous worlds persist beyond attempts at colonial normalization. A living expression of ontological plurality. A bodily and spiritual resistance to the imposed gender binary.

For centuries, muxes have sustained community life in the Isthmus: they organize velas, care for their families, work in the markets, and keep alive the affective and ritual networks that uphold Zapotec existence. They are central to social reproduction, though their contributions rarely fit the economic and administrative categories defined by the State. Their labor is relational, situated, vital, and deeply feminized. And like so many forms of feminized labor, it is profoundly undervalued.

This Mass, this crossing of the Indigenous and the Catholic, of colonial wounds and everyday creativity, illuminates the contradictions that muxes inhabit without seeking to resolve them. From within ambivalence, they transform the systems that once excluded them. Through the aesthetic work of the body, they weave historical continuity. From the margins, they open futures.

I remember walking behind the procession, thinking about the way muxe testimonies overflow any fixed category. They do not seek to explain an identity; they assert a presence: they exist from within a world where ritual, care, and resistance are deeply intertwined. They told me – between laughter, makeup, pain, memories, and pride – that being muxe cannot be translated into Western categories; it is a relationship, a mode of community-making, a way of sustaining social life in the face of persistent coloniality.

This blog emerges from that moment: from a Mass that not only celebrated fifty years of history but revealed a continuity far older. From the understanding that muxes are neither folkloric symbols nor tourist postcards: they are living testimony of how Indigenous peoples create worlds at the margins, reinvent what they inherit, and challenge what was imposed upon them.

It is in that territory – fractured, vibrant, contradictory, and profoundly human – that the testimonies I share here are born. Each one is a situated intervention, a form of future-making that pushes its way through the winds of the Isthmus.

Final Note

The photographs included in this blog were taken by me, in an effort to capture not only the moments but also the strength and presence of those who made this celebration possible. Everyone portrayed granted verbal consent for the publication of these images, which aim to honor their stories and their journeys.

I extend my deep gratitude to Felina Santiago Valdivieso, Kika Godínez, Amurabi Méndez, Eduardo López Castillo, Patricia Castillo Luna, and Torben Laurén for their accompaniment, their care, and their supportive presence during the Vela of Las Auténticas Intrépidas Buscadoras del Peligro. Their support made possible not only this visual record but also the collective experience that sustains it.

Dr Jacobo Ramírez is an Associate Professor at the Centre for Business and Development Studies (CBDS) at Copenhagen Business School (CBS). His research focuses on organisational strategy in fragile states and other complex institutional environments shaped by security risks, displacement, and social unrest. His current work examines renewable energy investments in emerging markets. A Mexican–Danish dual national, Jacobo was born in Mexico and has lived and worked in Copenhagen since 2006.

Are shareholders the main beneficiaries of the global apparel industry?

By Felix Maile and Cornelia Staritz

Who captures most of the profits created in the global apparel industry? When discussing distributive issues in apparel global value chains, scholars, policy makers and activists tend to focus on distributive struggles between five groups of actors: Consumers, fashion brands and retailers, manufacturers, workers, and states. Much of the analysis concludes that the rise of global value chains since the 1990s has enabled fashion brands and retailers (also known as ‘lead firms’) to capture juicy profits, and consumers to benefit from low-cost yet fashionable apparel products. By comparison, manufactures operate with razor thin margins and workers are exposed to harsh working conditions and low wages. States in turn earn limited taxes, given the investment and sourcing attraction policies that are common in special economic zones through which many supplier countries are integrated in the apparel industry. Yet, this analysis factors out one group of actors that is central in distributive matters: The shareholders that own the fashion brands and retailers and that have the claim on the profits that these lead firms generate. In this blog, we question the dominant perception of stock markets serving as the major ‘source of finance’ for apparel corporations to run their operations. Analyzing patterns of value creation and capture as well as corporate financing in the past 30 years, we come to a different conclusion: Stock markets barely contribute to apparel lead firms’ financing. Instead, apparel lead firms have funded stock markets, based on the profits that they generated vis-à-vis manufacturers and workers in their value chains.

In order to understand the distribution between shareholders and actors in global value chains, we draw on the conceptual and methodological toolbox of the corporate financialization literature. This strand of work emerged in the early 2000s, seeking to make sense of a shift in corporate strategy and management practice towards ‘shareholder value’ that had been underway since the 1980s: Financialization scholars have analyzed the balance sheets and income statements of major corporations in order to trace their sources of funding and understand how profits are created and allocated.

The seminal financialization literature of the early 2000s concluded that large firms had shifted their strategy from ‘retain and invest’ to ‘downsize and distribute’. What they meant was that formerly vertically-integrated firms shifted away from reinvesting profits in ‘productive’ means such as machinery, their workforce, or research and development. Instead, they outsourced less profitable parts of the value chain, often to firms based in lower-cost countries, and disbursed their profits to shareholders, either via dividend packages or so called ‘share buybacks’, in which companies repurchase their shares to boost their stock price. Financialization and globalization are therefore closely interrelated and reinforcing processes in the global economy.  

More recent contributions challenged this seminal literature by highlighting the dramatic acceleration of corporate financialization since the turn of the millennium, which changed its characteristics. Central to this were two processes: Globalization expanded on a different scale, with China’s WTO entry in 2001 providing low-cost global value chains centered around China as a backbone of accelerated outsourcing and offshoring, and shifts in financial markets created a low-interest rate environment. This changed the profit capacity of transnational corporations: Rather than ‘downsizing’, transnational corporations have merged, and monopolized global consumer markets both in high income and in emerging economies. Because their dominant position required fewer investments, and low interest rates during this period reduced financing costs, transnational corporations loaded incurring super profits on their shareholders.

This is precisely what happened in the global apparel industry: Since the early 2000s, the ten largest apparel lead firms by annual turnover have quadrupled their revenues, by expanding in established end markets such as the US, Europe, and Japan, but especially in China. The liberalization of apparel trade as well as China’s entry into the WTO in 2001, which soon thereafter accounted for 40% of global apparel exports, put apparel lead firms in a structurally advantageous bargaining position vis-à-vis manufacturers, workers, and supplier countries. As Figure 1 (blue line) depicts, the hyper-competition in the supply base allowed these ten firms to boost profits realized on goods sourced (‘gross margin’) dramatically, from 33% in the mid-1990s to more than 50% by 2010. At the same time, net profits during the same period (orange line) barely exceeded 8%, because apparel lead firms made hefty expenses on their distribution network as well as in brand building and marketing, which is the essential competitive advantage for apparel corporations. However, an ever-larger chunk of these net profits was disbursed to shareholders: Expenses for dividends and share buybacks (‘shareholder payouts’, green line) rose dramatically, from 1,6 % of annual revenue in 2000 to 7,8% in 2022.

Figure 1: Gross profit margins (%), net profit margins (%) and shareholder payouts (%, on annual revenue), top 10 apparel lead firms
Note: The top ten apparel lead firms were selected based on their 2022 revenue. These firms include Nike, Inditex, Adidas, H&M, Fast Retailing, Gap, PVH, VF, Ralph Lauren, Levi’s. To control for global value chains dominated by apparel firms, we excluded high revenue brands that are part of multi-segment luxury conglomerates (LVMH, Kering) and wholesale retailers (Walmart, Target)

While apparel lead firms have distributed the bulk of their profits to shareholders, it is striking that they have barely used stock markets as a source of funding. Figure 2 shows that the annual proceeds lead firms generated from stock issuance since the early 1990s have been fairly meager (blue line), accounting for 0,7% when compared to annual revenues. Most apparel corporations had their public offering on stock markets during the 1970s to 1990s, through which they raised a few hundred million US dollars at the time. Afterwards, new share issuance was rather the exception than the norm. Once these firms turned global, the payouts to shareholders began to amount to several billion US dollars per year. By comparison, the central source of finance for apparel lead firms in the past 30 years have been bonds markets. Proceeds from corporate bonds accounted for 4,7% of revenue on average during that period (orange line), thus exceeding the funds secured from stock issuance by 7 times.

Figure 2: Proceeds generated from share issuance and bond issuance (%, compared to annual revenue)

The distributive relationship between apparel lead firms and their shareholders thus turned into a one-way street. Since the mid-1990s, net financial flows from lead firms to stock markets have been negative for all financial years. By 2022, this net negative finance flow accounted for on average 7,8%, when measured against lead firms’ annual revenues.

Figure 3: Net financial flows between apparel lead firms and stock market (%, compared to annual revenue)
Note: Net financial flows are calculated by comparing annual stock issuance with annual shareholder payouts, benchmarked against firms’ revenues.

These results raise broader questions about the role of stock markets in global capitalism.   Stock markets perform an array of functions: They are an institution of corporate control. Corporations also make use of their own shares as a currency to pay for acquisitions of other firms, and to remunerate their top executives. Stock markets further serve as an institution for ‘firm creation’, because the outlook for an initial public offering acts as a magnet of funding for early stage firms. Finally, as the market turmoil in recent weeks has shown, stock markets have become the central global institution of wealth management, on which institutional investors such as insurances, pension, sovereign wealth funds, hedge funds, but also wealthy individuals and retail investors seek to optimize their investment portfolios. But counterintuitively, stock markets do not function as a significant source of finance for firms. Instead, major transnational corporations, with fashion brands and retailers as a prime example, channel the profits created in global value chains to their shareholders.

Understanding global distributional inequality thus requires linking value creation in globalized production with value capture in global financial markets. The starting point for this is to acknowledge and understand the role of financial markets and actors as one of the main beneficiaries of globalized production, how they impact the business and sourcing strategies of (lead) firms, and ultimately shape the value capture of governments, manufacturers and workers integrated into apparel global value chains.  

Felix Maile is a doctoral researcher in development economics at the University of Vienna.

Cornelia Staritz is Associate Professor in Development Economics at the Department of Development Studies at the University of Vienna.

This blog post has first been published here.

Frelimo and the fate of Mozambique: Part 2

By Pedro Alarcón

The general election of 9 October 2024 in Mozambique triggered a political crisis in which hundreds of Mozambicans have been killed, injured or arrested. This blog post seeks to explain its origins and implications.

This is the second part in a two-part blog post. See the first part on Frelimo and the fate of Mozambique here.  

In early December 2024, during the protests triggered by the 9 October election, a statue of Alberto Chipande was brought down in Pemba, Cabo Delgado’s capital. It is hard to imagine that the crowd was not targeting the image of Frelimo’s strongman and businessman, once a guerrilla combatant, and fifty years later one of the richest people in the country with links to companies that hold interest in the hydrocarbon sector. Joseph Hanlon, who conducted research on Mozambique for around 40 years, argues that young people believed that the 9 October election was an opportunity for change, yet they saw this opportunity cheated. With the lowest life expectancy index of the continent, three out of four Mozambicans are younger than 30 years old. They lived their whole life under Frelimo rule. They are well aware that prestige inside the party opens the gates to success in private business and conspicuous wealth. 

During half a century, Renamo was the challenger, first as a contra guerrilla and then as a political party, exerting formal opposition from the National Parliament. This particular configuration is sometimes referred to as the rule of ‘Frenamo’ to underscore that Renamo was Frelimo’s unpleasant partner in steering national politics (with ups and downs depending on political leverage) and in controlling state businesses (sometimes making their claims with weapons). After all, Afonso Dhlakama, Renamo’s leader, was a member of the Council of State during Guebuza’s presidency. Dhlakama died in 2018 at the age of 65. The government decreed a state funeral with official honors. 

To stay in power, Frelimo co-opted the domestic opposition using the state apparatus as a toolbox. Amidst any threat, the Frelimo elite closed ranks and responded as a block. Frelimo governments secured international aid by embracing the changing socioeconomic and political agendas of multilateral aid institutions and Western governments’ aid agencies, or making these aid agencies believe that they embraced them. A few private fortunes thrived during the half-century, but the living conditions in the country barely improved for the majority. Three-quarters of the 35 million Mozambicans live in poverty, and the figure is growing. Maintaining control over society has been an increasing challenge for Frelimo as elections proved an illusion, and wealth generated by natural resource extractivism serves to keep clientelistic and patronage networks rather than to benefit the majority. Frelimo increasingly bets on state authoritarianism and outright repression.

The 2019 general election was the last election in which Renamo was the second force in parliament after Frelimo. On 23 December 2024, the Constitutional Court ratified Daniel Chapo as the winner of the 9 October presidential election and Frelimo with a majority of seats in Parliament.  Podemos had the second largest amount of seats, with 43 seats out of 250. For the first time since 1994, Renamo was not second. It goes without saying that Podemos’ unexpected electoral success was linked to the support of Venancio Mondlane as a presidential candidate. After the announcement of the Constitutional Court, protests resumed countrywide; between December 23 and January 9, 165 people were killed, 36 more than during the previous ten weeks. 

Venancio Mondlane returned to Maputo from his self-exi le on 10 January. At least three more people were killed while trying to reach airport facilities to take part of a massive reception. The morning of Mondlane’s arrival, the leaders of the political parties met President Nyusi in his office. Hours before, Podemos announced that the party was occupying their seats in parliament, tacitly accepting the results of the election. A setback for Mondlane, he officially broke with Podemos on February 4th in a press release.

Daniel Chapo was sworn in on 15 January amidst street protests in Maputo. Five days before, on the other side of the Atlantic, Nicolás Maduro assumed for the third time the presidency of Venezuela. Maduro’s election was also contested, locally and internationally. Nevertheless, his assumption meant a turning point to five months of fraud allegations, local protests, and demonstrations across all Latin American main cities with large communities of Venezuelan migrants. International pressure also faded. After all, Venezuela is an oil-rich country, and the global North still yearns for fossil fuels despite climate commitments and the rhetoric of a transition towards cleaner energy sources. With the benefit of hindsight, this could also apply to Mozambique. While Maputo awaits with high hopes the resumption of natural gas extraction in Cabo Delgado, President Chapo announces austerity measures to cope with the crisis. Attacks by the Al-Shabab also continue; by mid-2024, more than five thousand people had been killed and more than half-million have been displaced in Cabo Delgado’s third war.

Mass mobilization accompanies Venancio Mondlane in his tour throughout the country. In an interview for a British newspaper, Mondlane declared to have been offered a minister position in the new government, and that he was considering it. Daniel Chapo never denied it. Perhaps things never change: Frelimo’s old strategy of coopting the opposition, as the opposition mobilizes the people to put pressure on the government. 

Indeed, nothing has changed for the majority of Mozambican citizens. Mondlane catalyzed the opposition against Frelimo. In many ways, he unified a fragmented opposition that was found outside the formal political parties. Nevertheless, o povo (the people) was on the verge of a backlash after fifty years of Frelimo’s rule. But it seems it is not enough to alter the Mozambican political landscape. Alternatives must be offered. Alternatives to a democratic politics that maintain clientelist networks and co-opt oppositional forces. Alternatives to natural resource extractivism and rentier state dynamics that benefit few private pockets. Without addressing structural problems, the country will reproduce its history of suffering or, in words of Yussuf Adam, Mozambique might escape the crocodile’s teeth only to fall into the leopard’s mouth (“escapar aos dentes do crocodilo e cair na boca do leopardo”). 

Pedro Alarcón is a Global Forum Democracy and Development (GFDD) research fellow at the Nelson Mandela School of Public Governance of the University of Cape Town. Alarcón has held guest professor positions and fellowships in Europe, Latin America and South Africa. His research lies at the crossroads of climate change, energy, and society. Regions/countries of interest: Southern Africa, Andean countries, the Philippines. https://globalforum.ceu.edu/pedro-alarcon/

Reimagining Multilateral Governance: Integrating Humanitarianism, Development, and Peace in the UN and the Organization of Islamic Cooperation

By Christina Plesner Volkdal

Amid escalating humanitarian crises, protracted conflicts, and overlapping global disruptions, multilateral institutions are under renewed scrutiny. The demand for more coherent, inclusive, and sustainable responses has propelled the rise of the “Triple Nexus” framework – an integrated approach that seeks to align humanitarian aid, development strategies, and peacebuilding efforts. Yet, translating this framework into institutional reality remains a challenge. A recent series of CBDS policy papers interrogates this challenge through comparative analyses of the United Nations (UN) system and the Organization of Islamic Cooperation (OIC), revealing structural gaps and offering strategic pathways for reform.

The first policy paper examines how six key UN agencies – United Nations Development Programme (UNDP), United Nations High Commissioner for Refugees (UNHCR), World Health Organization (WHO), World Food Programme (WFP), Food and Agriculture Organization (FAO), and International Labour Organization (ILO) – engage with the Triple Nexus framework. While rhetorical alignment exists across the system, implementation remains fragmented. The analysis uncovers significant divergence in governance models, integration capacities, and financing mechanisms. Agencies such as WHO and ILO demonstrate stronger governance coherence, yet still encounter operational bottlenecks. Others, including FAO and WFP, struggle to institutionalize peacebuilding within their sector-specific mandates. The paper argues that political economy constraints – ranging from donor-driven priorities to rigid bureaucratic procedures – undermine Nexus implementation. It recommends a shift toward integrated governance structures, pooled and flexible funding, and localization strategies that prioritize adaptive, context-sensitive programming.

The second paper turns to the OIC, whose humanitarian operations are hampered by fragmented coordination and limited institutional capacity. Despite its reach across 57 member states, the OIC lacks a centralized humanitarian architecture capable of delivering timely, resilient responses. This paper calls for the establishment of an OIC Humanitarian Operations Centre and a regional Disaster Risk Reduction framework. It further proposes the integration of the Triple Nexus as a guiding principle – connecting emergency relief with development financing and peacebuilding mandates. Drawing lessons from the Association of Southeast Asia Nations (ASEAN) and the African Union (AU), the paper emphasizes localized preparedness, digital innovation, and multi-year investment strategies to enhance institutional resilience and programmatic coherence.

The third policy paper critically assesses the OIC’s role in peace and security. Unlike the UN, AU, and the European Union (EU), the OIC lacks a dedicated peace and security infrastructure, relying instead on ad hoc diplomacy and non-binding resolutions. The paper proposes the creation of an OIC Peace and Security Council, a Mediation and Crisis Response Unit, and a Standby Force capable of rapid deployment. It also recommends the establishment of a Peace and Security Fund grounded in Islamic financial instruments such as zakat and sukuk. These institutional reforms, the paper argues, are essential for transforming the OIC from a rhetorical actor into an effective agent of conflict resolution and peacebuilding.

Together, the three policy papers underscore the urgent need for institutional innovation within multilateral systems. Whether at the global level within the UN or the regional level within the OIC, the operationalization of the Triple Nexus remains hindered by structural fragmentation, financing gaps, and insufficient coordination. Addressing these challenges requires more than technocratic adjustment – it demands a political and institutional reimagining of how global governance engages with complexity, crisis, and change.

Christina Plesner Volkdal is a PhD Fellow at Copenhagen Business School, affiliated with the Department of Management, Society, and Communication. With a background in the UN, particularly in humanitarian coordination, and an approach as a participant observer, she leverages first-hand experiences to offer profound insights, enriching her contributions to the field.