Belt and Road Initiative – Collaboration for Success (Textile Science and Clothing Technology) [1st ed. 2020] 9811515247, 9789811515248

Table of contents :
Foreword from Chief Trade Logistics Branch, UNCTAD
Foreword from the Perspective of International Business
Foreword from the Perspective of Marketing and Supply Chain
Foreword from the Management Perspective
Foreword from the Higher Education Sector
Acknowledgements
Introduction
Background
Rationale Behind Publication of Book
Research Methodologies
Data Collection
Research Analysis
Limitations
Summary
Structure of Book
References
Contents
About the Editors
The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development
1 Introduction
2 China’s T&C Exports Overview
3 Previous Research on China’s Impact on Asia
4 The Gravity Trade Model
5 Econometric Methodology
6 Econometric Analysis
6.1 Impact of China’s T&C Exports on Its Neighbors
6.2 GDP and Per-capita GDP
6.3 Geographical Distance
6.4 Exchange Rates
6.5 Population
6.6 Labor Cost
6.7 Female Workers
6.8 Value-Added Factors
6.9 Dummy Variables
6.10 Time Dummy 2001
7 Sensitivity Analysis for Checking the Structural Changes in T&C Trade
8 Belt and Road Implications
9 Conclusions
References
Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis
1 Background
2 Extended Gravity Model of Clothing Trade Between Hong Kong and Some B&R Countries in Asia
3 Data Analysis and Results
4 Implications of BRI for Hong Kong Clothing Companies
5 Conclusion
References
The Belt and Road Initiative: An Entrepreneurial Perspective
1 Introduction
2 The GEM Framework
3 Conceptual Framework of Variables
3.1 Entrepreneurial Intention
3.2 Perceived Opportunities
3.3 Perceived Capabilities
3.4 Fear of Failure
4 Methodology
5 Results
6 Limitations and Policy Implications
7 Conclusion
References
The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders
1 Introduction
2 The Global Identity of Textile and Clothing Manufacturing and Trade
3 The Belt and Road Initiative (BRI) and T&C Trade
4 Economic Co-operation in Asia
5 Determinants of T&C Bilateral Trade Identified in the Literature
6 Methodology
7 Findings and Discussion
8 Conclusion
References
Exploring Hong Kong’s Role as a Strategic Partner for “Belt and Road” Countries—Closing the Cultural Gap
1 Background
2 B&R Cultural Readiness Model
3 Literature Review
3.1 Social Identity Theory and Ethnocentrism
3.2 Psychic Distance
3.3 Cultural Familiarity
3.4 B&R-Readiness
4 Research Design
5 Scales and Measures
6 Scale Development and Data Analysis
7 Findings and Discussion
References
Why Does China Need Belt and Road Initiative?
1 Introduction
2 Unpacking the Chinese Interests and Benefits Behind Belt and Road Initiative
3 Contextual Challenge of Belt and Road Initiative
4 Supply Chain Sustainability Related Risks and Solutions for Belt and Road Initiative
5 Textile and Clothing Industries in Focus
6 Recommendations and Future Extensions
References
List of Belt and Road Countries
Belt and Road Country Profiles of T&C Exporters
North Africa
Algeria
Egypt
Morocco
Sudan
West Africa
Cape Verde
Cote d’lvoire
Gambia
Ghana
Mali
Mauritania
Nigeria
Senegal
Sierra Leone
Togo
Central Africa
Cameron
Republic of Congo
East Africa
Burundi
Kenya
Madagascar
Mozambique
Seychelles
Tanzania
Uganda
Zambia
Zimbabwe
Caribbean
Antigua and Barbuda
Dominican Republic
Jamaica
Europe
Albania
Austria
Belarus
Bosnia and Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
Greece
Hungary
Italy
Latvia
Lithuania
Luxembourg
Moldova
Montenegro
North Macedonia
Poland
Portugal
Romania
Russia
Serbia
Slovakia
Slovenia
Ukraine
North America
Tunisia
Central America
Costa Rica
El Salvador
South America
Bolivia
Ecuador
Guyana
Peru
Suriname
Uruguay
Central Asia
Armenia
Azerbaijan
Kazakhstan
Kyrgyzstan
East Asia
Korea
Mongolia
South Asia
Bangladesh
China
Maldives
Nepal
Pakistan
Sri Lanka
Southeast Asia
Brunei
Cambodia
Indonesia
Laos
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam

Citation preview

Textile Science and Clothing Technology

Eve Man Hin Chan Angappa Gunasekaran   Editors

Belt and Road Initiative – Collaboration for Success

Textile Science and Clothing Technology Series Editor Subramanian Senthilkannan Muthu, SgT Group & API, Hong Kong, Kowloon, Hong Kong

This series aims to broadly cover all the aspects related to textiles science and technology and clothing science and technology. Below are the areas fall under the aims and scope of this series, but not limited to: Production and properties of various natural and synthetic fibres; Production and properties of different yarns, fabrics and apparels; Manufacturing aspects of textiles and clothing; Modelling and Simulation aspects related to textiles and clothing; Production and properties of Nonwovens; Evaluation/testing of various properties of textiles and clothing products; Supply chain management of textiles and clothing; Aspects related to Clothing Science such as comfort; Functional aspects and evaluation of textiles; Textile biomaterials and bioengineering; Nano, micro, smart, sport and intelligent textiles; Various aspects of industrial and technical applications of textiles and clothing; Apparel manufacturing and engineering; New developments and applications pertaining to textiles and clothing materials and their manufacturing methods; Textile design aspects; Sustainable fashion and textiles; Green Textiles and Eco-Fashion; Sustainability aspects of textiles and clothing; Environmental assessments of textiles and clothing supply chain; Green Composites; Sustainable Luxury and Sustainable Consumption; Waste Management in Textiles; Sustainability Standards and Green labels; Social and Economic Sustainability of Textiles and Clothing.

More information about this series at http://www.springer.com/series/13111

Eve Man Hin Chan Angappa Gunasekaran •

Editors

Belt and Road Initiative – Collaboration for Success

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Editors Eve Man Hin Chan Department of Design Faculty of Design and Environment Technological and Higher Education Institute of Hong Kong Hong Kong, China

Angappa Gunasekaran School of Business & Public Administration California State University Bakersfield, CA, USA

ISSN 2197-9863 ISSN 2197-9871 (electronic) Textile Science and Clothing Technology ISBN 978-981-15-1524-8 ISBN 978-981-15-1525-5 (eBook) https://doi.org/10.1007/978-981-15-1525-5 © Springer Nature Singapore Pte Ltd. 2020 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Foreword from Chief Trade Logistics Branch, UNCTAD

One way to look at the Belt and Road Initiative (BRI) is to consider the BRI as an intercontinental transport and trade corridor. Along this corridor, business clusters contribute to the globalized production of goods and services. In the book Belt and Road Initiative – Collaboration for Success, the authors look at different elements of this corridor for the case of globalized textile production and Hong Kong’s position and perspectives. One such element is the role of distance. As improvements in transport and technologies have reduced the impact of distance on trade flows, other variables are increasing in importance for modeling and forecasting trade. By investing in trade facilitation and logistics services, cities like Hong Kong can maintain a comparative advantage and a leading role as a trade logistics cluster within the textile and clothing (T&C) production chain. Hong Kong continues to be among the best-connected ports in the world according to the UNCTAD Liner Shipping Connectivity Index, although the city has lost some ground above all vis-à-vis competing Chinese ports. At the World Trade Organization (WTO), Hong Kong was among the first to ratify the Trade Facilitation Agreement and notify the implementation of specific key trade facilitation measures. As geographical distance loses relative importance, economic distance will be increasingly impacted by such aspects. Another element of a cluster along the BRI is the cooperation among its stakeholders. When discussing and implementing trade facilitation reforms, it is important that the public and private sectors cooperate. By the same token, the interests of smaller and larger companies, importers and exporters, and users and providers of transport and trade supporting services need to be aligned. Stakeholders with different commercial interests need to find mechanisms where they can cooperate and coordinate their activities toward the common interest of facilitating trade and its transport. At UNCTAD, we promote and support National Trade Facilitation Committees as important mechanisms that achieve such cooperation. Under the Trade Facilitation Agreement, all WTO members are obliged to put in place such a committee. From the perspective of the private sector, such a

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committee is a good opportunity to present its concerns and support the further streamlining of trade procedures. A third element that determines the success of this corridor is investment in the latest technologies. Hong Kong already has one of the most advanced intelligent urban transport systems. Learning from this experience can also help in the digitalization of international trade and its transport. In particular, the digitalization of international shipping poses important opportunities, but also challenges. Optimizing processes requires the exchange of data, yet this exchange needs to be sufficiently secured to avoid abuse and protect private and commercially sensitive data. The research presented in this book eloquently illustrates the impacts of the BRI on international trade, Hong Kong, and the surrounding Asian countries. The book covers different aspects of the abovementioned elements of international trade and transport corridors, supplemented by the basic country profiles of selected B&R economies which have T&C industries and an insightful discussion of the future research agenda. The book helps scholars to learn about recent and ongoing research about the BRI, and opens the door to many new questions and projects for future studies. Dr. Jan Hoffmann, Ph.D. Chief, Trade Logistics Branch Division on Technology and Logistics, UNCTAD Geneva, Switzerland

Foreword from the Perspective of International Business

One of the editors and authors of this book, Dr. Eve Man Hin Chan, and I met at the annual Academy of International Business (AIB) conference in Copenhagen in the summer of 2019. I was impressed by her enthusiasm about her research work on the role of Hong Kong in the Belt and Road Initiative (BRI), particularly in the textile and clothing (T&C) industry. The BRI provides fresh impetus to the global economy in the twenty-first century and creates exciting opportunities for the different sectors of Hong Kong. As a leading professional service hub, and a financial and logistic center with unique advantages under the “One Country, Two Systems” policy, Hong Kong has the expertise, experience, liquidity, and global networks to serve as a super-connector along the routes of the Belt and Road (B&R). The anticipated gains for Hong Kong from taking part in this initiative are substantial. The dynamic changes in the global economic landscape and the emergence of new low-cost production bases in developing countries offer Hong Kong firms opportunities to invest in trade-led manufacturing in the low-wage and labor-intensive sectors, i.e., the T&C industries. Hong Kong firms excel in such prospects from at least aspects. First, the competitive economic environment in Hong Kong allows Hong Kong firms to contribute to the sustainable and green development of B&R economies. In addition, Hong Kong as a global financial center promotes a coherent relationship between financial capital and productive investment in economies where financial capital alone may not generate the desired economic advancement. This book has high practical relevance for T&C companies in that they can use the information to respond to economic and trade policy changes in a timely manner. Fresh perspectives on the B&R are presented in the book which features new opportunities and partners for collaboration. The findings will greatly benefit

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corporate decision-makers and policy-makers in developing appropriate strategies and programs to facilitate T&C production and trade. They will also help to build a new or restructure an existing supply chain under the BRI in a dynamic business environment. Prof. Jiawen Yang, Ph.D. International Business and International Affairs Elliott School of International Affairs The George Washington University Washington, D.C., United States

Foreword from the Perspective of Marketing and Supply Chain

The Belt and Road Initiative (BRI) of China is both economic and political initiatives. The BRI is likely to revitalize economic development in a large number of countries in Asia, Europe, and Africa. As per the Asian Development Bank, Asia needs massive infrastructural investment (USD 26 trillion by 2030) and the BRI development strategy is a welcome initiative in partially meeting the investment needs. The BRI is a huge infrastructure investment effort and over 130 countries (Italy is the 130th country to sign on) are likely to be impacted through this initiative, thus making the BRI the largest project in the world both geographically and politically. The BRI will affect 60% of the world’s population. According to a World Bank report, the potential benefits of BRI projects are a 2% reduction in travel times along the economic corridors, 2.7–9.7% increase in trade, up to a 3.4% increase in income, and a reduction in the extreme poverty of 7.6 million people. The BRI will help to develop markets for China’s products in the long run and alleviate industrial excess capacity in the short run. The BRI will have significant impact on international business, global logistics, and value creation. Trade barriers are likely to diminish with inter-country cooperation. As countries commit to infrastructure creation through railroad projects, highway construction, opening of sea routes, and many other initiatives, international business is likely to flourish. Bulk movement of goods through rails, roads, and seas will enable companies to achieve efficiency and reduce wastage. Studies at both the macro- and micro-levels are needed to understand the long-term implications of the BRI development strategies. To that effort, this book is a welcome addition to our understanding of local and global developments. This book focuses on the textile and clothing industry, a sector that has had a long

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tradition of movement of goods from China to the rest of the world. The research presented in this book highlights the impacts of the BRI on international trade, the mechanisms of cross-country developments, and the market forces that might arise under the BRI. This book is a timely addition to our understanding of country-specific issues. The textile industry is dynamically evolving—customer choices, technology, and labor are playing major roles in the strategic directions of this industry. A chapter in this book investigates how Hong Kong can strengthen its “super-connector” role by facilitating sustainable trade and development in the clothing industry among some of the BRI economies. There is a growing trend in relocating textile companies away from China to other cheap labor countries in the ASEAN region. Another chapter is dedicated to finding the reasons on why and how that is happening. Macro-level considerations such as bilateral trade, trade policy and development strategy, transport and logistics infrastructure, and sustainable development are the focus of yet another chapter. With a qualitative approach (through the gravity model), the authors address current international trade between the US and China. Human resources development, in both technical and employment opportunities, is a contentious issue in the Asian and ASEAN countries. Governments of these countries are often under immense pressure to create employment opportunities for the rapidly increasing number of working adults in the workforce. Hopefully, the stimulus provided through BRI investments in textile and the related industries will create significant employment opportunities for the younger generation. Prof. Purnendu Mandal, Ph.D. Strategy Management & Supply Chain Department of Management and Marketing College of Business Lamar University, Texas, USA

Foreword from the Management Perspective

The Belt and Road Initiative (BRI) is a global development strategy spearheaded by the Chinese Government in promoting closer economic cooperation that has received strong endorsement and warm support from more than 80 countries and international organizations. With strong emphasis on connectivity and international socioeconomic cooperation, the Initiative provides enormous impetus for future regional development. This book entitled “Belt and Road Initiative: Collaborative for Success”, to embrace the concept of win-win cooperation in the Initiative and to illustrate how the Initiative is transforming the development landscape. A key link in the BRI, Hong Kong has an important role to play in taking forward the national strategy. In years ahead, Hong Kong will continue to leverage the unique advantage under “one country, two systems” to seize the new window of opportunities. Hong Kong will serve as a financing and professional service platform for the Belt and Road and further deepen the role in connecting the Chinese Mainland with other economies to contribute to the development of BRI. This book focuses on China’s BRI in Textiles & Clothing industries, written from a business and management perspective. Additionally, topics span macro-economy, international business environment and strategy, logistics and supply chain, policy change, and sustainability. It includes descriptive, theoretical, and empirical studies exploring business- and management-related opportunities and challenges emanating from the BRI. All in all, this book represents a valuable contribution for those with an interest in BRI. Prof. Eric Ngai, Ph.D. Department of Management and Marketing Faculty of Business The Hong Kong Polytechnic University Hung Hom, Kowloon, Hong Kong

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The Belt and Road Initiative (BRI) aims to open borders by expanding economic and social connectivities for global prosperity, just as Mainland China opened its doors 40 years ago and began its remarkable transformation into the second largest economy in the world today. When China embarked on her reform, Hong Kong played a crucial role as an investment source and an international facilitator and in recent years, as a globalization partner to work with countries in the BRI. The spirit of enterprise, world-class expertise, together with an established legal system and an open, well-regulated market, are the competitive advantages of Hong Kong that connect individuals and transform concepts into reality. The book emphasizes both the core and specific interests of individual countries for participating in Textiles and Clothing (T&C) industries along B&R countries and examine the implications, challenges, and opportunities of such projects for businesses and governments. The authors show the perspectives of China and other countries that highlight the significance of reviving the ancient Silk Road connectivities to others on the world map and connect the East with the West. The book will be of equal interest to policy-makers, practitioners, entrepreneurs, consultants, businesspersons, strategic analysts, and academics in China and other countries along the B&R. Prof. Leslie Chen, JP Dean of Faculty of Design and Environment Technological and Higher Education Institute of Hong Kong Hong Kong

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Acknowledgements

We would like to acknowledge and thank all of the researchers who contributed to the success of the exploratory study on business- and management-related opportunities and challenges of the Belt and Road Initiative in the textiles and clothing industries and this book. We would also like to extend our gratitude to the companies that participated in this study. Their representatives generously gave their time and allowed the researchers to explore and learn about the business challenges and opportunities. We would also like to express our gratitude to the Research Grants Council of the Hong Kong Special Administrative Region, China, for financially supporting this study. Special thanks go to Dr. Jan Hoffmann, Chief of the Trade Facilitation Section of the United Nations Conference on Trade and Development (UNCTAD); Prof. Jiawen Yang, Professor of International Business and International Affairs in the Elliott School of International Affairs at The George Washington University in the United States; Prof. Purnendu Mandal, Professor of Strategy Management and Supply chain at Lamar University in the United States; Prof. Eric Ngai, Associate Head and Professor of Management and Marketing at The Hong Kong Polytechnic University; and Prof. Leslie Chen, JP, Dean of Faculty of Design and Environment at the Technological and Higher Education Institute of Hong Kong, for writing the foreword of this book. We are grateful to each and every one of you. Eve Man Hin Chan Angappa Gunasekaran

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Background Inspired by the ancient Silk Road that runs from China to Europe, Chinese President Xi Jinping launched The Belt and Road Initiative (BRI) in 2013 as a strategy and framework for developing a land-based “Silk Road Economic Belt” and twenty-first-century ocean-going “Maritime Silk Road” (MSR) (Ferdinand, 2016; Syed, 2017) to facilitate connectivity and cooperation among China, Europe, and Africa. By linking the vibrant economic circle of East Asia with the developed economies of Europe and emerging countries in Africa, countries along the two routes would have the opportunity to benefit from the significant potential for economic growth based on the initiative. China is also facilitating the initiative by establishing the Asian Infrastructure Investment Bank and Silk Road Fund, and other public and private financial institutions are also helping to support infrastructures and projects of the BRI. “Belt and Road” Initiative Together, the Silk Road Economic Belt and twenty-first-century MSR are amalgamated into one global trade and development initiative. The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia, and Europe (the Baltics); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia, and the Indian Ocean. The twenty-first-century MSR is designed to span from the east coast of China to Europe through the South China Sea and the Indian Ocean as one route, and from the east coast of China through the South China Sea to the South Pacific as the other route [15]. According to HKTDC [13], there are currently 134 countries involved in the BRI, including countries in the: • Central Asia Region: Armenia, Azerbaijan, Bahrain, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan;

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• East Asia Region: Korea and Mongolia; • Middle East Region: Cyprus, Georgia, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, and Yemen; • South Asia Region: Afghanistan, Bangladesh, Bhutan, China, Maldives, Nepal, Pakistan, and Sri Lanka; • Southeast Asia Regions: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam; • Oceania Region: Fiji, Micronesia, New Zealand, Papua New Guinea, Samoa, Tonga, Vanuatu; • East Europe Region: Albania, Austria, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, Moldova, Montenegro, North Macedonia, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, and Ukraine; • Africa Region: Algeria, Angola, Burundi, Cameroon, Cape Verde, Chad, Chile, Republic of Congo, Cote d’Ivoire, Djibouti, Egypt, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana. Guinea, Kenya, Liberia, Libya, Madagascar, Mali, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, Somalia, South Africa, South Sudan, Sudan, Tanzania, Togo, Uganda, Zambia, and Zimbabwe; • America Region: Bolivia, Costa Rica, Ecuador, El Salvador, Guyana, Panama, Peru, Suriname, Tunisia, Uruguay, and Venezuela; • Caribbean Region: Antigua and Barbuda, Barbados, Cuba, Dominica, Dominican Republic, Grenada, Jamaica, Trinidad and Tobago; and • Island Countries: Cook Islands and Niue. In addition, the BRI is geographically structured along six economic corridors and the MSR. These include: • the New Eurasian Land Bridge, which runs from Western China to Western Russia through Kazakhstan; • the China–Central Asia–West Asia Corridor, which runs from Western China to Turkey; • the China–Pakistan Economic Corridor (CPEC), which runs from southwest China to Pakistan; • the China–Mongolia–Russia Corridor, which runs from Northern China to Eastern Russia; • the China–Indochina Peninsula Corridor, which runs from Southern China to Singapore; • the China–Myanmar–Bangladesh–India Corridor, which runs from Southern China to Myanmar; and • the MSR, which runs from the east coast of China through Singapore to the Mediterranean.

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Benefits to Textile and Clothing Industries Hong Kong enjoys a strategic location with easy access to the Southeast Asian and Pacific countries and has strong financial services and technology sectors, all of which are anticipated to place Hong Kong in a favorable position to greatly benefit from the BRI. Monumental gains are anticipated for Hong Kong as part of the BRI. For example, large banks in Hong Kong can provide financing opportunities for infrastructure projects, such as the construction and expansion of airports, railways, seaports, highways, gas and oil pipelines, as well as communication cables along the economic corridors. Aside from infrastructure investments, there are other lucrative private-sector investment opportunities. More notably among these opportunities is the development of new sources of supply. The increase in new and accessible low-cost production bases in developing countries along the Belt and Road (B&R) provides unprecedented opportunities for Hong Kong companies to restructure their supply chains toward higher financial returns. The landscape of the textile and clothing (T&C) industry, among other low-wage and labor-intensive sectors, in countries that pursue export-led growth strategies, is likely to be transformed as the BRI progresses. Taking inspiration from the name and purpose of the original Silk Road that involved the trade of Chinese silk to Europe, it is not surprising that the new routes will also have a major impact on Chinese and global T&C trade. China is already investing in some of the largest projects associated with the BRI, such as the China-Pakistan Economic Corridor, a Sri Lankan port city, and an Indonesian high-speed railway, which are all designed to help facilitate international trade. Moreover, the China Civil Engineering Construction Corporation is currently investing USD 158 million [17] to build the Dire Dawa Industrial Park in Dire Dawa, a city in east-central Ethiopia. The industrial park hopes to attract a number of different investors including textiles and is nearing completion at the time of the publication of this book. This endeavor will significantly improve the textile industry in Ethiopia and has already enhanced Sino-Ethiopia relations. In 2017, the local government of the first stop along the Silk Road Economic Belt–the Xinjiang Uygur Autonomous Region, invested around USD 66 billion in infrastructure, which was projected to increase by 50 percent year-on-year. Also in 2017, 700 freight trains headed for Europe from Urumqi, the capital of Xinjian. Since then, there have been around 2200 trips to Europe which have positioned Xinjiang as a hub of the BRI. With the BRI as an ongoing endeavor in which more projects are being launched, and business opportunities continue to materialize, the partnering countries of the BRI are highlighting their potential for foreign direct investments (FDI) in trade-led manufacturing. The past few years have witnessed a growth in FDI from Hong Kong to the T&C industry in South and Southeast Asia B&R countries. This is plausible because these countries are in close proximity to Hong Kong and enjoy a lower-labor cost advantage vis-à-vis China. This has meant that some of the T&C companies have relocated to different countries in anticipation of lower production costs, e.g., from China to Cambodia, Bangladesh or Vietnam [9]. Yet, companies in

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this sector not only have to address the challenges of growing production costs, but also the rise in protectionism which threatens global trade. Unsettling geopolitics (e.g., the US-Sino trade war) has triggered changes that disrupt the supply and production of T&C products. Issues related to the sustainability of the natural environment have also been the center of concerns and have impacts on the T&C industry for all of the members along the supply chain. These powerful forces will continue to shape the development of the T&C industry under the BRI. Furthermore, they will render global T&C production and trade a contested terrain that warrants further studies. Trade Cooperation Chinese imports and exports have been experiencing unprecedented growth. The import and export volume between China and the B&R countries reached USD 1.4 trillion, in 2017, which is a 13.4% increase from 2016 and accounted for 36.2% of the total import and export trade of China in 2018. Imports were worth USD 666 billion in 2018, which have been increasing by 19.8% annually and accounted for 39.0% of the total imports of China in 2018. This is the first time that imports have outgrown exports since 2012 [4]. Exports to B&R countries accounted for 34.1% of the total exports of China in 2018, which has been increasing by 8.5% annually and worth around USD 774 billion [14]. Textiles continue to have precedence in Chinese trade, and the BRI is enhancing cooperation and growth in this sector. For example, the three dominant apparel and clothing accessory exporters (with the exception of knitted and crocheted goods) are B&R countries. They are Korea (22%), Russian (25%), and Kyrgyzstan (15%) [14]. The BRI has also provided opportunities for textile manufacturers. As salaries increase in China, manufacturers have started to relocate their operations to regions with lower pay, such as countries in South Asia and Southeast Asia. The International Trade Centre reports that the top exporters of raw materials for textile from China are also countries along the routes in South Asia, such as India and Bangladesh, or in Southeast Asia, including the Philippines and Vietnam [14]. “Belt and Road” Standard Connectivity The Office of the Leading Group for the Belt and Road Initiative issued the “Action Plan on Belt and Road Standard Connectivity (2018–2020)” on January 11, 2018 [5]. This action plan defines the goals for three years, which include developing open and inclusive standards that would allow exchange and mutual evaluation, interconnectivity and sharing of results, as well as compliance between the standards in China and those of other countries. That is, standardization would be fundamentally and strategically important for promoting the BRI. The focus of the Action Plan on Belt and Road Standard Connectivity (2018– 2020) is on the key interconnecting channels and major projects. Therefore, nine key tasks are established, national standardization resources are prepared, and nine

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special actions will be implemented. The open standards and compliance with international standards are to: • facilitate interconnectivity among different policies, facilities, trade, funds, and public views, • allow technical communication and cooperation along the B&R by aligning Chinese standards with international standards, • improve compatibility of the standards systems in the countries along the B&R through mutual concessions, and • enhance the status of Chinese standards by contributing to the construction of the B&R.

Rationale Behind Publication of Book While there have been debates globally on the different facets of the BRI, its business and management components have remained largely underexplored. This book focuses on the regional implications of the BRI in terms of the business, economic, and socio-cultural developments. Six research studies are presented in this book (four empirical studies, one conceptual, and one discussion). The first research study titled, “The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development” by Lau et al., investigates the dominating effects of China’s growing T&C trade on neighboring Asian countries. The study evaluates the T&C landscape before the BRI came into effect. The proceeding studies in the next few chapters examined the trade environment after the BRI came into full effect. The second chapter thereby presents a macro-level study called “Hong Kong’s “SuperConnector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis” by Ho et al., which uses a quantitative approach to examine how changes in country-specific factors, such as GDP, exchange rate, labor supply, and membership of trading blocs, broadly affect the trade pattern over time. The study presents insight into how Hong Kong can be a “super-connector” that facilities sustainable trade and development of new products in the clothing industries in the B&R countries. The third chapter titled “The Belt and Road Initiative: An Entrepreneurial Perspective”, by Mathur and Nathani, is another quantitative study that provides insight into factors that influence entrepreneurial behavior between five different countries, namely China, Taiwan. South Korea, Japan, and Hong Kong after the BRI was enforced. Amidst the rollout of the BRI, the heavyweight T&C companies see both opportunities and challenges in optimizing and restructuring the networks of their production facilities. One notable and growing trend associated with the BRI is the relocation of T&C manufacturing from China to Southeast Asia countries and the establishment of new factories along the B&R. The authors of this book are interested in determining how the BRI has influenced T&C trade between

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Hong Kong and other B&R countries in Asia. Therefore, Chapter Four is a research study at a micro-level, titled “The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders”, by Chan et al., that uses a qualitative approach to examine how managers and stakeholders in the T&C sector address the opportunities and challenges that stem from changes in the market and government policies that affect international trade in the short term. Investigating how these forces influence T&C trade and their impacts on Hong Kong companies provides valuable information for businesses to make informed decisions. The authors identified major challenges and opportunities that T&C companies face when they are establishing or relocating production to B&R countries. The following study in Chapter Five, titled “Exploring Hong Kong’s Role as a Strategic Partner for “Belt and Road” Countries—Closing the Cultural Gap” by Lee et al., conceptualizes the relationship between psychic distance, cultural familiarity and perceived role of Hong Kong on One-Belt-One-Road (OBOR) readiness. Their OBOR readiness is a construct that reflects the level of preparedness of managers working for professional services firms in belt and road countries, to accept, adopt, and implement strategies and activities under the BRI. Lastly, Chapter Six, titled “Why Does China Need Belt and Road Initiative?” by Shafiq et al., is where the authors discuss the BRI for China. The study addresses obstacles and opportunities, as well as examines how the BRI has a role in helping the developing countries to improve their infrastructure for trade. The study closes with a discussion of the research gaps in the literature and suggestions for future research directions. The chapters in this book focus on the BRI, and in several of the studies, focus on the T&C industries based on a business and management perspective. Additionally, the topics range from the macro-economy, international business environment and strategies, logistics and the supply chain, policy changes, to sustainability. The book offers descriptive, theoretical, and empirical studies that explore business- and management-related opportunities and challenges that are derived from the BRI. The book emphasizes both the core and specific interests of individual countries for participating in the BRI projects and examines the implications, challenges, and opportunities of such projects for businesses and governments. The authors show the perspectives of China and other countries that highlight the significance of reviving the ancient Silk Road connectivity to others on the world map and connect the East with the West. The book will be of equal interest to policy makers, practitioners, entrepreneurs, consultants, businesspersons, strategic analysts, and academics in China and other countries along the B&R.

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Research Methodologies The studies in this book use statistical analyses and qualitative interviews with industry experts to explore in-depth the factors that influence T&C trade and the T&C trade relationships between Hong Kong and its neighboring B&R countries. International empirical studies have carried out statistical analyses with the gravity trade model extensively [3, 12] in the areas of economics, social circumstances, and spatial interactions. Tinbergen [18] first introduced a gravity model to explain for trade patterns, which stated that the magnitude of trade flow bilaterally between any two nations can be determined based on Newton’s law of universal gravitation; that is, two planets of similar size and proximity are attracted to each other. When applied to trade, countries with economic proximity (by examining their GDP) are attracted to each other, but this attraction is weakened by their geographic distance. Apart from the use of the gravity trade model in empirical studies, the model has been applied to validate different trade theories including the expenditure share model in Anderson [1], general equilibrium model in Bergstrand [6], and the trade theory in Deardorff [11] based on the factor proportions model originally developed at the Stockholm School of Economics by economist Eli Heckscher and expanded by his graduate student, Bertil Ohlin. The first two studies, titled “The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development” by Lau et al. and “Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis” by Ho et al., use a modified gravity trade model to investigate the T&C sectors of the B&R countries to account for the effect of various factors on international trade. The conventional gravity trade model posits that trade between two countries is negatively affected by the distance between them, although the model is often augmented with a number of other country-specific variables that affect flow [7, 8]. Factors commonly explored in the literature include GDP, per capita GDP, distance, and population. Factors that have been neglected in previous studies in the clothing sector include production costs, wages, export supply chain costs, technologies, demographic factors, and the characteristics of the business environment and policies. The studies extend the model is to analyze the development of T&C trade patterns by considering additional factors that are more specific for the T&C industry. The modified model can apply panel data and measure a fixed effect over time. This allows any changes to be investigated, as well as manipulation of the quality and quantity of the data, which would not be possible with the use of cross-sectional or time series estimations alone. Another quantitative study titled “The Belt and Road Initiative: An Entrepreneurial Perspective”, by Mathur and Nathani applies the Global Entrepreneurship Monitor (GEM) framework using linear regression to examine the entrepreneurial behavior across five different countries, namely China, Taiwan. South Korea, Japan, and Hong Kong after the BRI was enforced.

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Chan et al. carried out a qualitative study in “The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders”, through semi-structured in-depth interviews with experts from the T&C industry in Hong Kong. The study explores the challenges and opportunities of investing in T&C trade in the B&R countries. Interviews are a good way of eliciting discussions that can identify and extract current and practical information [16]. The fifth study, titled “Exploring Hong Kong’s Role as a Strategic Partner for “Belt and Road” Countries—Closing the Cultural Gap” by Lee et al., is a conceptual study. The study hypothesizes the relationship between psychic distance, cultural familiarity and perceived role of Hong Kong on OBOR readiness and outlines the research design that will be used in the research.

Data Collection The studies in Chapters One and Two “The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development” and “Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis” of this book apply historical data collected from the United Nations Comtrade Database and the Hong Kong Trade Development Council, while information such as per capita GDP, real GDP, national population, and real exchange rate have been sourced and compiled from the International Financial Statistics of the International Monetary Fund, Eurostat, and other statistical references and relevant sources. The number of female workers and wage levels is also obtained by referencing the United Nations Industrial Development Organization (UNIDO) Industrial Statistics Database (INDSTAT). The study in Chapter Three “The Belt and Road Initiative: An Entrepreneurial Perspective” also utilized historical data, but collected from the Global Entrepreneurship Monitor for the period 2013–2018. Data was collected for five countries (China, Taiwan, South Korea, Japan, and Hong Kong) based on the availability of data for analysis. With Chapter Four “The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders” being a qualitative study, purposive sampling was utilized to recruit T&C industry experts to determine the factors that organization value when they are considering the establishment of manufacturing firms in the B&R countries in Asia. The study solicited industry experts from private-sector organizations and governmental institutions for participation in the study. The criteria are that the informants are from organizations/institutions involved in T&C manufacturing and that the organizations have at least one manufacturing plant in a B&R country in the South Asia and Southeast Asia regions.

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Research Analysis The data in Chapters One and Two “The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development” and “Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis” was analyzed by using the panel data estimation approach with economic and statistical software—EViews, which is designated for econometric analysis. A pooled cross-sectional (PCS) or cross section (CS) ordinary-least-square (OLS) is often utilized in the gravity trade model. Unfortunately, studies like Cheng and Wall [10] have shown that these estimation approaches create biased results. Since heterogeneity is not allowed, there is an error term in standard CS regression equations. The gravity trade model then overestimates the results. In order to resolve the OLS problem, the panel data estimation approach is used to determine the variables that affect the bilateral trade flow between B&R countries over time. As Baltagi [2] noted, the advantages of using this method is an increase in the volume of informative data invariability but with less collinearity among the variables. Moreover, the method will allow greater degrees of freedom and efficiency. Finally, the regression results of the OLS will be compared with those of the panel data estimation with fixed effects in order to examine the degree that the models fit the data. Chapter Three “The Belt and Road Initiative: An Entrepreneurial Perspective” adopts a cross-country analysis using SPSS 18 by applying a simple linear regression. Chapter Four “The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders” uses a ground theory approach to code and analyze interview transcripts.

Limitations The studies in this book provide insight into the business challenges and opportunities for T&C trade in Asia. Therefore, the studies in Chapters One and Two “The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development” and “Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis” were limited to analyses of B&R countries within the South Asia and Southeast Asia regions. A total of 15 countries are taken into consideration in the studies: Bangladesh, Brunei, Cambodia, China, Indonesia, Laos, Malaysia, Myanmar, Nepal, Pakistan, the Philippines, Singapore, Sri Lanka, Thailand, and Vietnam. One of the countries in Southeast Asia that is also involved in the BRI, Timor-Leste, is not included in the research sample because they do not trade in the T&C industry. The studies mainly focus on the exporting of T&C products from these countries to major importing countries such as the USA, Japan, and the EU-28. Future studies can consider including all of the countries in the BRI,

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e.g., countries in Central Asia, the Middle East, and Africa, to examine the T&C trade patterns at a more global scale. Chapter Three “The Belt and Road Initiative: An Entrepreneurial Perspective” also presents similar limitations where the study was limited to several countries. This dues to unavailable or incomplete data on certain countries, and hence, only 5 countries were used in the research study. Moreover, using a cross-country analysis can give inconsistency as countries have different economic, technological, infrastructure, political, and cultural backgrounds. The qualitative study presented in Chapter Four “The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders” only used 10 interviews in total. The interviews were carried out with organizations and a government department with T&C relations. Despite the smaller sample size, the partners present an insightful overview of the industry experts who are trading between Hong Kong and the B&R countries in Asia. The study presents preliminary findings that can be used for further qualitative research work.

Summary The studies in this book have examined how different key social, economic, and logistic performance factors including logistics performance can affect T&C trade between the B&R countries and Hong Kong. The studies have also elaborated on potential opportunities for T&C companies in Hong Kong so that they can benefit from investing in the B&R countries and trading with them. At the same time, the risks associated with investment and trade in the B&R countries are explored. Factors associated with trade uncertainty, for instance, trade policies and sustainability issues, are found to have significant influence on Hong Kong T&C companies if they relocate or expand their manufacturing business to other countries.

Structure of Book This book presents three empirical research studies on the T&C trade of Hong Kong with 15 B&R countries in Asia. The first study by Lau et al., “The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development”, uses the gravity trade model and a statistical analysis to investigate the dominating effect of China’s T&C trade on neighboring developing Asian countries. The second study by Ho et al., “Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis”, is a macro-level study analyzing the impacts of the BRI. The third study by Mathur and Nathani, “The Belt and Road Initiative: An Entrepreneurial Perspective”, investigates the entrepreneurial

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behaviors. The fourth study, by Chan et al., “The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders”, explores the factors that are driving and inhibiting the synergistic, mutually beneficial development of T&C production and trade among the B&R countries. The fifth study by Lee et al., “Exploring Hong Kong’s Role as a Strategic Partner for “Belt and Road” Countries—Closing the Cultural Gap”, presents initial discussion on conceptualizing a OBOR-readiness scale for managers in professional services firms in China and belt and road countries to assess and improve their level of OBOR readiness. Finally, the last chapter by Shafiq et al., “Why Does China Need Belt and Road Initiative?”, is a discussion of the BRI for bilateral trade with China and outlines the opportunities and challenges for industrial stakeholders and future research endeavors.

References 1. Anderson J E (1979) A theoretical foundation for the gravity equation. A Econ Rev 69(1): 106–116 2. Baltagi B H (5th ed) (2013) Econometric analysis of panel data. John Wisely and Sons, New York 3. Bayoumi T, Eichengreen B (1997) Is regionalism simply a diversion? Evidence from the evolution of the EC and EFTA. In: IMF Working Paper 109, Washington, DC. University of Chicago Press, Chicago, 189–226 4. Belt and Road Portal (2019a)《“一带一路”贸易合作大数据报告2018》正式发布. https:// www.yidaiyilu.gov.cn/xwzx/gnxw/54720.htm. Accessed 14 September 2019 5. Belt and Road Portal (2019b) Action plan on belt and road standard connectivity (2018–20). https://eng.yidaiyilu.gov.cn/zchj/qwfb/43577.htm. Accessed 14 September 2019 6. Bergstrand J H (1985) The gravity equation in international trade: Some microeconomic foundations and empirical evidence. Rev of Econ & Stat 67(3):474–481 7. Chan M H E, Au K F, Sarkar M K (2008) Antecedents to India’s textile exports: 1985–2005. Int J Ind Cult & Bus Man 1(3):265–276 8. Chan M H E, Chu W C A, Nguyen O H O (2016) Assessing the displacement effect of exports with gravity trade model: China’s textile and clothing case. Working paper, 2016 9. Chan M H E, Ho C K D, Yip T L, Cheung J, Gunasekaran A (2019) The belt and road initiative’s impact on textile and clothing supply chains in asia: Views from Hong Kong industrial stakeholders. Int J Appl Business Int Manag 4(2):9–16 10. Cheng I H, Wall H J (2005) Controlling for heterogeneity in gravity models of trade and integration. Fed Res Bank of St. Louis Rev 87(1):49–63 11. Deardorff A V (1998) Determinants of bilateral trade: Does gravity work in a neo-classical world? National Bureau for Economic Research Working Papers Series No. 5377 12. Havrylyshin O, Pritchett L (1991) European trade patterns after the transitions. PRE Working Paper Series no. 748. World Bank, Washington, DC 13. HKTDC (2019) Hong Kong trade development council: One belt one road countries. http://beltandroad.hktdc.com/en/country-profiles. Accessed 15 September 2019 14. ITC (2019) International trade statistics. www.intracen.org/itc/market-info-tools/tradestatistics/. Accessed 14 September 2019 15. NDRC (2019) Vision and actions on jointly building silk road economic belt and 21st-century maritime silk road. http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html. Accessed 14 September 2019

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16. Neuman W L (3rd ed) (1997) Social research methods qualitative and quantitative approaches. Allyn and Bacon, Boston 17. SGS (2019) The ‘Belt and Road’ initiative: Opportunities in the textile sector. https://www. sgs.com/en/news/2018/10/the-belt-and-road-initiative-opportunities-in-the-textile-sector. Accessed 14 September 2019 18. Tinbergen J (1962) Shaping the world economy: Suggestions for an international economy policy. The Twentieth Century Fund, New York

Contents

The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development . . . . . . . Yui-yip Lau, Eve Man Hin Chan and Hong-Oanh Nguyen

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Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Chi Kuen Danny Ho, Eve Man Hin Chan, Angappa Gunasekaran and Tsz Leung Yip The Belt and Road Initiative: An Entrepreneurial Perspective . . . . . . . . 39 Garima Mathur and Navita Nathani The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders . . . . . . . 51 Eve Man Hin Chan, Chi Kuen Danny Ho, Tsz Leung Yip, Jenny Cheung and Angappa Gunasekaran Exploring Hong Kong’s Role as a Strategic Partner for “Belt and Road” Countries—Closing the Cultural Gap . . . . . . . . . . . 63 Liane Wai Ying Lee, Tak-Yan Leung and Piyush Sharma Why Does China Need Belt and Road Initiative? . . . . . . . . . . . . . . . . . . 77 Kashif Shafiq, Zubair A. Shahid, Yu Chen, Alishah Chandani and Atif Ghulam Nabi List of Belt and Road Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Belt and Road Country Profiles of T&C Exporters . . . . . . . . . . . . . . . . . . 91

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Dr. Eve Man Hin Chan is a scholar from the Technological and Higher Education Institute of Hong Kong (THEi). She got her Ph.D. in Fashion and Textiles Marketing and Merchandising from the Institute of Textiles and Clothing, the Hong Kong Polytechnic University (HKPolyU) in 2009. Prior to joining THEi, she was Research Fellow at the Hong Kong Community College of the HKPolyU and Visiting Lecturer of the Hong Kong Design Institute. In terms of her professional experience, she had served as Global Business Controller and Manager of the internationally renowned fashion company, H&M. She possessed extensive industrial experience in buying, merchandising, marketing, and retailing before commencing her academic career. Currently, Dr. Chan is managing several competitive research projects in international trade of fashion and textile, location analysis of production in the belt and road initiative, as well as econometric modeling of trade and sustainable transport and logistics operations in smart cities of the Greater Bay Area. She has successfully collaborated with local and international fashion brands and apparel companies in carrying out research projects. Her research findings, which have generated an impact on the fashion and textile sector, are recognized by both academia and industry. Her publications include book chapters, papers in major peer-reviewed journals and international academic conferences. Dr. Chan is the recipient of various research awards, including the best research paper award in an international conference—the 14th Asian Textile Conference (ATC-14) in 2017. She had been invited to be the keynote speaker, conference committee member, session chair, and reviewer of several international conferences. Dr. Angappa Gunasekaran is Dean and Professor at the School of Business & Public Administration, California State University, Bakersfield. Prior to this, he served as Dean of the Charlton College of Business from 2013 to 2017, Chairperson of the Department of Decision and Information Sciences from 2006– 2012, and the founding Director of Business Innovation Research Center (BIRC) from 2006 to 2017 at the University of Massachusetts Dartmouth. He has over 350 articles published in peer-reviewed journals. He has presented about 50 papers, xxxi

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published 50 articles in conferences, and given a number of invited talks in many countries. He is on the editorial board of several journals. He has organized several international workshops and conferences in the emerging areas of operations management and information systems.

The Dynamics of T&C Export Performance Between China and Other Asian Countries: Implications for BRI Development Yui-yip Lau, Eve Man Hin Chan and Hong-Oanh Nguyen

Abstract This paper employs the gravity model to investigate how the growth of China’s textile and clothing (T&C) exports is dominating the exports of other Asian developing countries over the 1990–2015 period. Aggregate analyses were undertaken, and the endogeneity of Chinese exports were accounted by applying instrumental variables with country fixed effects. It was found that there was a negative impact of China’s emergence on T&C exports on other Asian developing countries. We further explored whether such displacement effect varies across Asian countries and the results showed that a more pronounced effect was found in low-income countries than high-income ones. Our findings suggest that the export competitiveness of China’s neighbors, i.e. both more and less developed Asian countries, are affected by the emergence of China in T&C Trade. However, China’s Belt and Road Initiative (BRI) warrants further research to suggest that once the Initiative goes into full force, collaborative opportunities are available between China and other Asian developing counties. The implications of China’s BRI are also discussed.

1 Introduction With strong government support, economic reforms and progressive trade liberalization since 1979, China has rapidly emerged as the preferred exporter in the global Y. Lau (B) Division of Business and Hospitality Management, College of Professional and Continuing Education, The Hong Kong Polytechnic University, Kowloon, Hong Kong e-mail: [email protected] E. M. H. Chan Department of Design, Faculty of Design and Environment, Technological and Higher Education Institute of Hong Kong, Hong Kong, China e-mail: [email protected] H.-O. Nguyen Department of Maritime and Logistics Management, University of Tasmania, Hobart, Australia e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5_1

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Textile and Clothing (T&C) industry. Over the past 37 years, the country has recorded an annual average GDP growth rate of around 9.9%. In 2017, the trade value of China’s textile and clothing exports to the world amounted to US$109 billion and US$157 billion respectively, representing 40.2% and 39.6% of the world total T&C exports [50]. Since 1995, China has become the world’s largest T&C exporter. China’s size with its highly elastic supply of low-cost labor and on-going trade liberalization have increased adjustment concerns in both developed and developing countries around the world. The dramatic increase of China’s T&C exports has particularly triggered fear of increased competition for developing economies and hollowing out manufacturing firms in advanced countries. China’s accession to the WTO in 2001 further reinforced such fear. Over the years, China’s economic growth have gradually affected all parts of the world and in particular its neighboring Asian countries due to their close geographical proximity. The impact is especially strong on countries that are at the same stage of development with similar relative factor endowments and production costs and rely on T&C exports. The abundant supply of low-cost labor in China accentuates its comparative advantage in labor intensive T&C products, making developed countries in the region feel at risk of being displaced in global markets. However, due to current situations e.g. the Sino-US trade war in 2018, Free Trade Agreements and infrastructure development under the Belt and Road Initiative (BRI); the idea of China displacing other less developed countries does not appear to be the case after the BRI was established. Once the BRI enters full force, and alongside external factors (e.g. trade war), it will significantly change the landscape. Collaboration with the BRI may be the way forward. Unlike many previous studies [29, 31, 40, 52] that adopted a general equilibrium framework or used indirect measurement of trade similarity, this paper employs a more robust econometric method and an identification strategy that explicitly acknowledges the potential endogeneity of China’s exports to explore the impact of China’s emergence as a leading T&C exporter on other Asian countries. Our findings show that a more pronounced displacement effect is found among low-income Asian economies than high-income ones, suggesting the export competitiveness of China’s neighboring countries, both more and less developed countries, is affected by China’s growth in T&C exports.

2 China’s T&C Exports Overview The T&C sectors are central to global economy and have played an especially important role in the export-oriented development of Asia, initially in Hong Kong, South Korea and Taiwan, and more recently, China. These sectors have been responsible for creating millions of jobs, increasing income and contributing to economic growth of Asian nations as reflected by the cross-countries statistical evidence of the impact of T&C export growth on national economic growth [4, 15].

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In 2017, global T&C exports amounted to US$725 billion [50]. Approximately 150 countries around the world are involved in T&C exports with many of them being highly dependent on these sectors for employment and foreign exchange. Although some 30 nations are importers of T&C, in reality, T&C suppliers are dependent on three principal import markets, namely the USA, EU and Japan. The EU accounts for about 16 and 56% of world T&C imports, surpassing the US by 4 and 28% and has become the world’s largest importer since 2013 due to its enlargement to 28 member countries. With the increasingly globalized T&C production, distribution and complexity involved in the design of supply chains, the T&C exports industry has contributed significantly to creating employment and economic growth, in particular among developing countries. As Gereffi and Memedovic [23, p. 22] noted: “In Northeast and Southeast Asia, [T&C exports] have declined in importance, except in China where it remains the top export item, and in Indonesia and Vietnam where apparel has climbed to third place.” Many Asian countries are dependent on T&C exports, which often accounts for a significant share of their export earnings and hence, create a relatively high degree of dependency. T&C exports trade has dominated China’s total exports and become the major foreign exchange earner since the country’s Open Door Policy in 1978. With the remarkable efforts made by enterprises and the accession to the WTO, China is seen to exert a boosting effect on its T&C exports, reinforcing its role as the largest supplier to world markets. In fact, China’s T&C industries have been growing steadily over the years. In 1980, the country’s textile and clothing exports valued at US$1 billion and US$2 billion respectively and were ranked the eleventh and eighth largest exporters in the world. China’s T&C export trade continued to grow in the following decades. In 1990, its T&C exports values reached US$7 billion and US$9 billion respectively, making the country the fourth and third largest global exporter. In 2000, China’s T&C export values further increased to US$16 billion and US$36 billion respectively. Most recently, the trade value of China’s T&C exports to the world amount to approximately US$105 billion and US$186 billion, representing 28% and 25% of the total world T&C exports. In fact, since 1995, China has become the world’s largest T&C exporter with an average annual growth of 15 and 18% in T&C exports from 1980 to 2015. During this period, China’s T&C exports trade to the world continued to boom and experienced robust growth, particularly after 2000. Its market share in the EU, the US and Japan has grown remarkably between 1990 and 2015 from 3 to 11% in the EU, 6–25% in the US and 31–85% in Japan. The above figures also imply that the T&C industries in China have experienced substantial and structural change over the past few decades. With the introduction of economic reform in 1979, China’s T&C industries have been considered as a major source for both employment and export earnings. The 11th Plenary Session of the 16th Central Committee of China in 2005 stressed that the T&C sector should upgrade its technology in equipment production and develop the ability to achieve product differentiation so as to enhance the country’s overall performance to maintain its position as the largest exporter in the world [7].

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The effect of China’s T&C exports growth is likely to be felt most intensely by its neighboring countries given their close geographical proximity. The similarity between other Asian economies and China in terms of economic development, factor endowments, technological capability, production costs and other comparative advantages means that the former will inevitably have to compete head to head with China. Thus, to some extent, China’s emergence as may intensify the competitive pressure felt by other Asian suppliers, slowing the growth of these suppliers’ T&C exports, and more generally, challenge the sustainability of high growth of other Asian countries. This vicious cycle is the motivator behind the analysis in this paper. We explore the extent to which China’s T&C exports affect the delivery of other Asian suppliers to the EU-15, the US and Japanese markets over the period 1990–2015 by using the gravity model and an identification strategy that explicitly acknowledges the potential endogeneity of Chinese exports by applying instrumental variables with country fixed effects. We distinguish the impact of China’s T&C exports on other Asian suppliers to third markets. In contrast to previous studies [30, 31, 52] address this issue, we estimate the impacts in question by using econometric methods rather than deriving them from a simulation model where the results flow from the assumption implicit in the standardization of key parameters. Our findings show that the displacement effect caused by differs across Asian countries and is more pronounced in low-income Asian economies than high-income ones. It is concluded that the surge of China’s T&C exports has affected the export performance of its neighboring developed and developing countries at various degrees.

3 Previous Research on China’s Impact on Asia Few studies in the literature have studied the potential impacts of China’s T&C exports on its Asian neighbors. The study that is most similar to the present study is by Ahearne et al. [1]. This paper examined how exports of China and Hong Kong have affected the growth of the four NIEs; namely, the Republic of Korea, Singapore, Taiwan, and Hong Kong, as well as the ASEAN-4 members, including Indonesia, Malaysia, the Philippines and Thailand. Using a panel of annual data, the authors regressed the export growth of Asian countries on their trading partner’s income growth, movement in real effective exchange rates and China’s real export growth. While the coefficient on Chinese exports tends to be positive, suggesting complementarities between its exports and those of its Asian neighbors, the effect rarely reaches statistical significance at standard confidence levels. With this finding, the authors concluded that there is insufficient evidence to prove that an increase in China’s exports reduce the exports of other emerging Asian economies. On the contrary, it appears that China’s exports have positive correlation with the exports of other countries. The question has also been addressed in the context of China’s WTO accession. For example, Ianchovichina and Walmsley [30] calibrated and simulated a multicountry multisector model of international trade, and assumed China’s accession to the WTO

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as a liberalization of its trade regime that gives rise to its propensity to export. They proved that while increasing its own exports, China reduces the exports of Vietnam, the Philippines, Thailand, Indonesia and Malaysia, as a result of the negative impact of these countries’ T&C trades. This study summarized and suggested that a decline in exports is mainly due to T&C trades, and a reduction in GDP relative to baseline levels in East Asia’s developing countries. Similarly, Yang and Vines [52] applied a computable general equilibrium (CGE) model with differentiated products as a way of analyzing the impact of China’s growth on exports from other Asian countries and found that the exports of ASEAN countries drop slightly. The overall effect is the sum of positive effects on exports to China itself and negative effects on exports to third markets, which differ in size depending on the concerned Asian exporter. Ahearne et al. [1] examined how China and Hong Kong exports have affected the growth of four NIEs (Korea, Singapore, Taiwan, and Hong Kong) and ASEAN4 members. Using a panel of annual data for 1981–2001, they regressed Asian countries’ exports growth on trading partner’s income growth, movement in real effective exchange rates and China’s real export growth. A positive correlation was found between China’s export growth and that of other Asian countries, suggesting China’s exports do not compete with other Asian’s countries. Using a gravity modeling approach, Eichengreen et al. [19] examined how China and Hong Kong exports have affected the growth of NIEs and ASEAN members during 1990–2002. Their results showed that China crowds the less-developed Asian countries exports of consumer goods in third markets. Greenaway et al. [25] applied the same method to analyze the displacement effect on Asian exports differs when exports from Hong Kong and China were combined in comparison to the narrow case of Chinese exports only over the period of 1990–2003. Another simulation using a Computerized General Equilibrium (CGE) model designed to capture the geographical and sectoral structures of trade flows is IMF [31]. Results from this paper point to a small negative impact on the exports and output of all regions. In terms of output, this negative effect is larger for the Middle East and North Africa while the smallest for advanced economies. In this study, ASEAN economies experience a somewhat larger than average impact, while NIEs and South Asian economies face a somewhat smaller than average impact. The precise effects vary by sector and country. For example, countries that rely heavily on T&C exports and labor intensive manufactures in which China also has a comparative advantage, tend to experience particularly large negative effects.

4 The Gravity Trade Model The gravity trade model was first used in applied econometric work by Tinbergen [49] and Poyhonen [41] to explain bilateral trade between European countries. The model can be derived from a number of standard theories of trade. Anderson [2] and

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Bergstrand [5, 6], for example, showed that the gravity model can be derived under assumptions of product differentiation and monopolistic competition. Deardorff [12] justified the gravity model using two extreme cases of Heckscher-Ohlin, namely frictionless trade in homogenous goods and impeded trade in differentiated goods. Using information on technology, input costs, prices and transport costs, Eaton and Kortum [16] generated a gravity-type relationship in a Ricardian setting of trade for homogenous goods. Evenett and Keller [21] analyzed the success of the gravity model in relation to the extent of perfect and imperfect product specializations, which in turn is determined by technology differences across countries, differences in factor proportions and scale economies. Harrigan [26] conducted an extensive review of the gravity model with reference to various major trade models, including the Armington model, the monopolistic competition and the general equilibrium model and provided a theoretical underpinning for resistance and masses as the two key drivers of bilateral trade in gravity models. These approaches yielded restrictive specifications that can be used to test assumptions of a particular theoretical model. In practice, most researchers appealed to the empirical robustness of the gravity model and employed it as a general framework for analyzing the role of a wide variety of different determinants of international trade from the impact of trade unions to the impact of monetary unions rather than as an effort to capture and test a particular trade-theoretic model. For example, Rose [44] and other authors have added a host of ancillary variables to the “traditional gravity effects” as a way of estimating their impact on bilateral trade flows. According to Ricart et al. [42], the gravity model is the most systematic and successful class of attempts for integrating multiple dimensions of cross-border economic activity. Fitted relationships of the determinants explain one-half or even two-thirds of the variation in aggregate bilateral trade between country pairs. As a result, fitted gravity models have been described as supplying ‘some of the clearest and most robust empirical findings in economics’ [33]. The gravity model has been extensively used in empirical research to evaluate policy issues. These include trade impacts of currency unions [38, 43], national borders [27, 28, 35], regional trading agreements [45, 46], and multilateral agreements [43, 47], implications of WTO accession for current non-members [20, 34], calculation of trade potential [17, 37], cross-border investment [18] and China’s trade displacement effect [19, 25]. While most of the aforementioned policy issues have been widely discussed in the literature, the impact of China’s growth in T&C industries using the gravity model has yet to be fully explored.

5 Econometric Methodology Since our purpose is to explore the impact of China’s trade emergence on other countries, we adopt the following gravity specification to analyse the variables affecting the performance of China:       ln EXijt = α + β1 ln(ChEXPit ) + β2 ln GDPjt + β3 ln PCGPDjt

The Dynamics of T&C Export Performance Between China …

7

    + β4 ln(GDPit ) + β5 ln(PCGPDit ) + β6 ln Dij + β7 (POPit ) + β8 Eijt       + β9 ln LCj + β10 ln FEMALEj + β11 ln VAj + β12 Dum_EU   + β13 Dum_USA + β14 TIME_2001ij + Uijt where • T—t = 1, 2, …, 26, the time period (year) from 1990 to 2015 • ln(EXijt )—Log of export value of textile/clothing in millions of US dollars from the Asian suppliers to the EU-15, USA and Japanese markets, i denotes the suppliers’ variables, j represents the EU-15, USA and Japan • α—Unobserved or fixed effects which do not change over time and capture all unobserved time-constant factors that affect EXPij . • βs—Slope parameters, also known as the partial regression coefficient. They represent the expected increase in the outcome variable for a unit increase in the predictor variable. • ln(ChEXPit )—China’s exports to T&C exporting country i • ln(PCGDPit )—Log of per capita GDP of exporting country i in millions of US dollars • ln(GDPjt )—Log of GDP of the importing country, i.e. EU-15, USA or Japan in millions of US dollars • ln(PCGDPjt )—Log of per capita GDP of the importing country • ln(Dij )—Log of geographical distance (in km) between the capitals of the exporting country i and importing country j • ln(POPit )—Log of the population of the exporting country • ln(POPjt )—Log of the population of the importing country • (Eijt )—The real exchange rate of foreign currency per unit in US dollars • ln(LCi )—Log of labor cost of suppliers in millions of US dollars • ln(FEMALEi )—Log of number of women in the work force of the exporting country • ln(VAi )—Log of the value added amount in T&C industries of the suppliers in millions of US dollars • Dum_EU—The dummy variable equal to 1 if the importing country is a European country or 0 otherwise • Dum_USA—The dummy variable with value of 1 if the importing country is USA or 0 otherwise • TIME_2001—An intercept dummy variable to capture the effects of China’s accession to the WTO since 2001 • Uijt —Error term representing other omitted influences on T&C trade. Exports between thirteen Asian exporting countries and seventeen importing countries were considered in this study. The dependent variable is the natural log of T&C export values. The independent variables include the log exports of country i to country j, log GDPs of the two countries, log per capita GDPs of the two countries, log of suppliers’ labor wages, number of female workers, value added factors, the

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distance between importing and exporting countries, real exchange rate, population size and time dummy. The economic size of exporting and importing countries is generally measured by their GDPs. Based on the gravity principle, the per capita GDP of the exporting country was used as a proxy of capital intensity. As T&C industries are labor-intensive, the per capita GDP of Asian suppliers were utilized to indicate the capital-labor endowment ratio of T&C trade. Additionally, the income level or purchasing power of importing countries was represented by per capita GDP. Controlling for GDP, richer countries (in terms of per capita GDP) are likely to demand more choices of differentiated products which may be imported from countries specializing in the production of such products. As such, the estimated coefficients of an exporter’s per capita GDP are expected to be negative since the T&C sector is considered as laborintensive; on the other hand, the coefficients of importer’s per capita are expected to be positive. The identification of distance effects on international trade has proven to be one of the most robust empirical findings in international trade [22]. In general, longer distance demands higher trade costs so the coefficient of distance should be negative. The importing country’s population variable is expected to have a positive effect on trade because it is typically interpreted as a key determinant of import demand. However, the estimated coefficient for the exporting country’s population may be positively or negatively correlated with trade flow [39], depending on the different mix of commodities supplied and demanded by each country. According to Bergstrand [6], a negative sign for the coefficient of POPi indicates that exports tend to be capital intensive, i.e., a country with a smaller population tends to export capital intensive products such as textiles. Textile production today is more capital and technology intensive which requires sophisticated machinery and fewer workers. The real exchange rate is a key factor affecting trade flows. The depreciation/appreciation of a country’s currency against another currency stimulates/reduces a country’s exports. Thus, the positive or negative sign of real exchange rate depends on the currency change of the exporting countries against the trading partner countries. Due to the T&C trade liberalization progress after the completion of the ATC in 2005, price competition among T&C suppliers have become stronger. The working wage level of exporters is one of the key factors in the entire T&C trade flow. Nearly three quarters of workers in the global T&C industries are women, and the number is even higher in developing countries. As more female workers imply higher production capacity for T&C exports, the number of female work force is included in the list since T&C production involves a large amount of manual handling. The value-added factors refer to the additional value created at a particular stage of the manufacturing process. These enhance the value of a product and correspond to the income received by the owners. A higher value of materials and supplies added in T&C production should contribute more to exports. In addition, the continental distribution effects at the importer level are controlled by the continental dummy in model specification. The question has also been addressed in the context of China’s accession to the WTO. It is assumed that China’s accession to the WTO is a liberalization of its trade

The Dynamics of T&C Export Performance Between China …

9

regime that gives rise to its propensity to export; therefore, the value of the time dummy variable (TIME_2001ij ) is expected to be positive. It is worth noting that China’s exports to the same market are included as one of the independent variables so as to analyze the impact of China’s emergence on the T&C of other Asian countries. It is possible that the variable of interest, in particular China’s exports, may not be exogenous and it is therefore important to recognize its potential endogeneity. A number of unobservable factors are likely to affect the error term and thus, Hong Kong’s exports to the US may also affect China’s exports to the US, creating a correlation between the error term and key explanatory variable. The standard treatment for this type of problem is to estimate by two-stage least squares (TSLS) using an appropriate instrumental variable, the difficulty being the paucity of plausible instruments that is the bane of empirical macroeconomics. Fortunately, in the present context, the gravity trade model suggests instruments that are both plausible exogenous and strongly correlated with Chinese exports. The obvious instrument, in other words, is the distance between China and the country that is the destination of its trading partners.

6 Econometric Analysis As explained above, the gravity trade model framework was extended to analyze the impact of China’s T&C exports on the exports of other Asian countries and account for the effect of other variables, including market size, labour wage and workforce (number of female workers), value-added factors and exchange rate. Equations for T&C trade are estimated separately (as showed in Table 1). These cover the period from 1990 to 2015 and the analyses include export trade between Asian countries and their trading partners, Hong Kong’s exports to Belgium (members of EU-15), US, and Japan, and for China’s exports, which is treated as one of the independent variable in the model. The instrumental variable for China’s exports to a third country is China’s distance to that country. Our results show that the gravity trade model fits the data well with F-statistic of 302.415 with a less than 0.001 P-value and a strong fit with R-square value between 76 and 78% for the two-stage least square method. In particular, T&C exports increase with the trading partners’ GDP, GDP per capita, importing country’ population, labour workforce, the value-added factor, and the accession of China to the WTO while decrease with distance, real exchange rate and labor wages. The following results are obtained.

6.1 Impact of China’s T&C Exports on Its Neighbors Our findings are consistent with those from previous studies [30] in that there is an inverse relationship between the increase of China’s T&C exports and other Asian

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Table 1 The impact of China’s T&C exports on exports of Asian countries to the EU-15, US and Japan markets (1990–2015) Dependent variable: ln(EXij ) Panel two-stage least squares

Ordinary least squares

Independent variables

Coefficient (T)

Coefficient (C)

Coefficient (T)

Coefficient (C)

Constant

−27.73***

−67.28***

−27.52***

−24.48***

Ln(ChEXPi )

−0.16**

−1.29**

+0.67***

+0.29***

Ln(GDPi )

+1.10***

+0.77***

+1.01***

+0.61***

Ln(PCGDPi )

−0.03***

−0.75***

−0.05*

+0.70***

Ln(GDPj )

+1.50***

+2.26**

−0.84***

−0.18*

Ln(PCGDPj )

+1.80***

+3.42***

+1.04*

+1.65***

Ln(Dij )

−1.22***

−1.66***

−0.66***

−1.49***

Ln(POPi )

−1.03**

+1.05***

−1.08**

+1.14**

Ln(POPj )

+0.97***

+0.53***

+1.31***

+1.26*

(Eij )

−0.46**

−0.41**

−0.88***

−0.86***

Ln(LCi)

−0.20**

−0.61**

−0.08*

−0.66***

Ln(FEMALEi )

+0.33**

+1.32***

+0.31***

+1.25***

Ln(VAi )

+0.13**

+0.70***

+0.10*

+0.43**

Dum_EU

+5.22**

+4.62***

+5.00**

+3.38***

Dum_USA

+5.45*

+4.89***

+5.26*

+3.78***

Time_2001

+1.56***

+2.02***

+1.32***

+1.98***

Adjusted R2

0.78

0.76

0.75

0.74

Number of observations

5399

5399

5399

5399

* Significant at 0.10 level, ** Significant at 0.05 level, ***Significant at 0.01 level

exports. Our findings confirm that China reduces the exports of other Asian suppliers while increasing its own exports due to the negative impact on their T&C trade. Exports from China to the same market have a (negative) coefficient of −0.16 and − 1.29, showing a stronger crowding-out effect on the clothing industry than the textile sector; a 1% increase in Chinese clothing exports to its Asian trading countries results in approximately a 1.3% decline in the exports of the latter, while all other factors being equal. Similarly, a 1% increase in Chinese textile exports to its Asian trading countries results in approximately a 0.16% decline in the exports of the latter. Therefore, the clothing industry is the locus of China’s crowding-out effect. An obvious interpretation is that the growing competitiveness of China’s T&C exports is causing some consumers in other parts of the world to choose China over suppliers from other countries. Such displacement effect is caused by China’s highly effective workforce with comparatively low labor costs. High efficiency and skilled workforce help to achieve a short lead time as having the right timing in marketing is a crucial factor in the fashion business. In addition, China is highly self-sufficient in raw materials with the world’s largest production capacity for cotton and man-made

The Dynamics of T&C Export Performance Between China …

11

fibers. It also has ready access to high quality imported fabrics from South Korea, Taiwan and Japan in order to provide better quality products and open up the highend markets. For example, China’s success in Japan before 2005, a time when there was no quota with very demanding consumers shows that the former can supply high-quality clothing. As far as imports are concerned, China alone supplied 85% of the Japanese clothing import market in 2008. Some interesting observations can also made by comparing the instrumentalvariable results in columns (1) and (2) with the OLS results in columns (3) and (4) which are provided for illustrative purpose only. Clearly, instrumental variables make a significant difference. In columns (3) and (4), the coefficients on China’s exports are positive, whereas the GDP of T&C importers, and per capita GDP of textile exporters are negative. This is because of bias estimation due to commonly omitted shock, such as improved consumer sentiment worldwide, which should increase the exports of both China and other countries, thus, introducing a positive correlation between the key independent variable and error term. Since we do not derive our estimating equation from a particular model of international trade, no specific structural interpretation on this coefficient is offered. However, it is evident that the growing competitiveness of China’s T&C exports is causing consumers in other parts of the world to substitute other Asian suppliers in favor of China. However, other interpretations are also possible. For example, the pressure of China’s exports is forcing importers to impose protectionist measures that disproportionately affect other T&C suppliers. Our nonstructural specification does not identify the mechanism. On the other hand, this specification should capture second-round effects. For example, if the growth of China’s exports to the US causes the US government to invoke safeguard measures against China, this might trigger a diversion of exports of China to the EU, further displacing the exports of other Asian countries. However, the first-round and second-round effects should be captured by the formulation.

6.2 GDP and Per-capita GDP Our econometric analysis results align with those of other gravity trading model studies of bilateral trade [24], and show that the GDPs of trading partners have a positive impact on T&C trade. This conforms to the theoretical expectation: a higher GDP creates a stronger demand for T&C imports and also a larger supply for exports. The interpretation of the results indicates that with a 1% increase in GDP for the importers, there would be 1.5% and approximately 2.3% increases in their T&C imports respectively. The same phenomenon is expected as the per capita GDP of importing countries improves. This indicates that they have stronger purchasing powers, creating a greater demand for imports. In this case, they are clothing imports for the EU-15, USA and Japan. These findings suggest that when both the GDP and per capita GDP of importers increase, clothing imports will also increase.

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In terms of the results also show that a 10% increase in the GDP of the exporting country should increase its textile and clothing exports by 1.1% and 0.8% respectively. This implies that a larger quantity of exports should contribute to higher GDP growth by T&C suppliers and boost the economy of the exporting country. On the other hand, the per capita GDP of Asian countries shows a negative coefficient which matches the gravity principle since this variable is utilized to indicate the capitallabor endowment ratio of T&C trade and proves that these industries are considered as labor-oriented sectors.

6.3 Geographical Distance Consequent to the growing pressure for quick response, geographical proximity is an influential factor to T&C exports. Our findings show that the geographical distance variable (Dij ) has a negative effect on T&C trading: the longer the distance between the exporting and importing countries, the higher the logistics costs and hence, the lower the T&C trade between these countries. This is consistent with the common prediction that distance between bilateral trading destinations is a barrier for trade [3]. In particular, the results from our panel data analysis using the two-stage least squares method indicate that a one percent increase in distance reduces the trade value by 1.22–166% with all else being constant.

6.4 Exchange Rates Our results reveal that the real exchange rate plays a crucial role in determining the volume of T&C exports. The coefficient obtained is negative, suggesting a depreciation of the currencies of exporting countries against those of their partner countries, thus, promoting T&C exports. This confirms the expectation that whenever there is real depreciation or appreciation of a foreign currency against the American dollar, there will be an increase or decrease in T&C exports [7].

6.5 Population The population size of importers shows a positive effect on trade flow between countries. As shown in the analysis, T&C imports increase by 0.97% and 0.53% respectively with one percent increase in the population size of T&C importers. This supports the view that a larger population size is associated with greater import value [8, 9]. The coefficient of the exporter’s population variable is significant in both T&C estimations. However, POPi is negatively correlated with textile exports, but directly

The Dynamics of T&C Export Performance Between China …

13

proportional to clothing exports. This is consistent with Bergstrand’s [6] description where a negative sign for the POPi coefficient implies that a country with a smaller population tends to be capital intensive. Textile production today is more capital and technology intensive than in the past and requires sophisticated machinery with fewer workers. In contrast, the clothing industry is more labor-intensive, so a larger population has advantage in clothing exports.

6.6 Labor Cost For the labor cost variable, the estimate value of this coefficient is negative and only significant in the clothing trade, but not textile trade. This implies that clothing exporters with lower production costs are viewed as an attractive supply source for importers. This is particularly true for basic clothing items sold all year round and not highly time-sensitive. However, it is worth noting that although China has a higher labor cost (US$1) when compared with other Asian countries, namely, Bangladesh, India, Pakistan and Sri Lanka with an hourly wage of US$0.39, US$0.38, US$0.23 and US$0.57 respectively in 2014 [51], China maintains its comparative advantage in clothing manufacturing. On the other hand, the insignificance of the labor cost variable of the textile trade may suggest the dependence of other countries on Chinese textile as the essential input for their own clothing exports. Again, this reflects the comparative advantage of China’s textile manufacturing.

6.7 Female Workers The results show that a 10% increase of female workers in the exporting countries results in a 3.3% and 13.2% increase in T&C exports respectively. It is true that these industries depend heavily on the supply of female workers in expanding production capacity. Unlike other capital-intensive industries, the production of T&C items requires a great deal of manual handling although the use of advanced machines and equipment may help to improve productivity.

6.8 Value-Added Factors The variable (VAi ) has a positive impact on T&C export trends of Asian suppliers. The results indicate that a 10% increase in the value-added factors of suppliers would result in a 1.3% and 7% increase in T&C exports respectively to the trading partners. This reflects the importance for suppliers to embark on route to implement the full-package supply model to offer a range of high value-added services for buyers.

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6.9 Dummy Variables The location of importers may imply varying degrees of preferences to China and other non-Asian T&C exports. For instance, China exports may be more popular in the US than the EU-15. As a result, the displacement effect of China varies across importers. We treat this special feature as panel data structure in modeling such that importers located in the US and the EU belong to different groups. Two dummy variables, the US and the EU in model specification, are used to control this effect at the continental level. Compared with EU importers, the US has positive values of the estimated coefficients and that T&C exports to the US are 54.5% and 48.9% respectively higher than those to the EU with other variables remain constant. Given that the exports of China are fixed, the US remains the largest importer of T&C products from other Asian countries. The estimated coefficients of continental distribution are positively affected by the country’s international trade volume.

6.10 Time Dummy 2001 The time dummy variable, which implies the accession of China to the WTO and the gradual quota phase out, presents a significant impact on the T&C trade. Following the expiration of the phase-out schedule of the ATC, all quota restrictions on T&C products among WTO members were expected to be removed completely by 2005. Over the past decade, the average annual growth of China’s textile and clothing exports to the world is 19% and 16% respectively. China’s shares of the world T&C trade has risen from US$16 billion in textile and US$36 billion in clothing in 2000 to an export value of US$17 billion and US$37 billion in 2001. In 2005, the T&C export values of China continued to grow to US$42 billion and US$74 billion respectively. Up until now, the trade value of China’s T&C exports to the world amounted to US$105 billion and US$186 billion respectively, representing 28% and 25% of the world’s total T&C exports. China’s T&C exports to the world continued to boom remarkably particularly after its accession to the WTO in 2001. China’s T&C export market share has grown exponentially in the EU, the US and Japan between 2000 and 2015. The quota-free environment has enabled China to take up a reasonable share of T&C world exports as anticipated.

7 Sensitivity Analysis for Checking the Structural Changes in T&C Trade It would be natural to study the robustness of the regression analysis results with respect to possible structural changes in T&C

The Dynamics of T&C Export Performance Between China …

15

trade. Table 2a reports the first set of sensitivity analysis replicating the preceding analysis for every three-year period (1990– 1992/1993–1995/1996–1998/1999–2001/2002–2004/2005–2008/2009–2011 /2012–2015) to examine the impacts between different time slots and see whether there has been any significant difference in the displacement effect before and after the quota era. The second set of sensitivity analysis (Table 2b) repeats the latter part of the sample period (1995–2015). This period is chosen because international T&C trade has undergone fundamental changes under the 10-year transitional program of the WTO Agreement on T&C (ATC) since 1995. The displacement effects of China’s T&C exports in the recent period are found to be −4.6% and −14.6% respectively (Table 2c). Results from both sensitivity analyses suggest that China has improved its T&C exports in the later years. These findings basically confirm and are consistent with earlier studies except that the difference in China’s impact on Asian suppliers is even more pronounced after the quota phase out period. Shortening the observation period to three years of time has certain substantial effects on the results of the displacement effect of China’s exports before the phasing out of quota. It is evident that the introduction of the WTO Agreement in 1995 has substantially changed the market of T&C and show an increasing competitive advantage of China over the rest of Asia. From the view of exporters, previous models fail to capture a complete picture of the displacement effect. Given the evidence of the considerable impact of China’s T&C exports on the selected thirteen Asian suppliers to the EU-15, the US and Japan in the previous section, this section attempts to investigate the group of countries that are most affected by China. Asian exporting countries are classified into three income groups: high income (Hong Kong, Korea and Taiwan), lower-middle income (India, Indonesia, Malaysia, the Philippines and Thailand) and low-income (Bangladesh, Cambodia, Sri Lanka, Pakistan and Vietnam). Table 3 summarizes the displacement effects of China in terms of elasticities and magnitudes. The elasticity test shows that China’s growth has different effects on the exports of T&C industries in Asian’s high, lower-middle and low-income economies. More specifically, the results show that China is making life difficult (0.78 and 2.65 for T&C exports respectively) for its low-income neighboring suppliers as they face strong Chinese competition. This is because most low-income countries have comparative advantages in unskilled labor-intensive manufactured goods and their exports tend to focus on T&C products. For instance, T&C trade accounted for about 85%, 67% and 52% of total merchandise exports of Bangladesh, Pakistan and Sri Lanka respectively in 2015. However, as China only gained its WTO membership in 2001, its exports of T&C to industrialized countries are quota-constrained. Despite being a large exporter of T&C, these restrictions impose limitations on China’s ability to gain a substantial market share that would displace other Asian producers who might also have captured a market share over time. Yet the abolition of protectionism measures on Chinese T&C in key markets in 2009 should pose serious threats to the exports of low-income countries in future. Unless these low-income countries adjust their export structures, infrastructure, and transportation system and improve trade facilitation and the poor

−38.58*** +1.15*** +0.93*** +2.06*** −1.58*** +1.07*** +2.8*** −0.25*** −0.16**

−36.03***

+0.60**

+1.23***

−0.03***

+2.95***

+3.76***

−1.53***

−1.04***

+1.45***

−0.34***

−0.27

+0.24*

+0.70**

+0.63***

+0.87***

0.79

663

Independent variables

Constant

Ln(ChEXPi )

Ln(GDPi )

Ln(PCGDPi )

Ln(GDPj )

Ln(PCGDPj )

Ln(Dij )

Ln(POPi )

Ln(POPj )

(Eij )

Ln(LCi)

Ln(FEMALEi )

Ln(VAi )

Dum_EU

Dum_USA

Adjusted R2

Sample size

663

0.72

+3.86***

+3.79***

+0.82**

+0.95**

+2.36***

+4.17**

Coefficient (C)

1990–1992

Coefficient (T)

Year

Method: panel two-stage least squares

Dependent variable: ln(EXij )

(a)

−2.36***

663

0.72

+0.92***

+0.67***

+0.51**

+0.31**

−0.26

−0.41***

+1.38***

−1.07***

−1.23***

+3.24***

+2.32***

−*0.52***

663

0.67

+3.46***

+3.23***

+0.93***

+1.03***

−0.11**

−0.24***

+1.39***

+1.03***

−2.29***

+2.73***

+2.42***

+0.65***

+1.02***

−3.81*** +1.52***

−24.58***

Coefficient (C)

+32.07***

Coefficient (T)

1993–1995

663

0.76

+0.84***

+0.71***

+0.63*

+0.35*

−0.31

−0.37***

+1.39***

−1.13***

−1.23***

+3.14***

+2.70***

−0.35***

+1.63***

−0.60**

−34.05***

Coefficient (T)

1996–1998

663

0.71 (continued)

+3.36***

+3.18***

+0.91**

+1.12**

−0.23**

−0.32***

+1.80***

+1.07***

−1.86***

+2.32***

+2.56***

+0.93***

+1.26***

−2.95**

−26.58***

Coefficient (C)

Table 2 (a) Sensitivity analysis of T&C trade for every three years from 1990 to 2015 (b) Sensitivity analysis of T&C trade for periods 2009–2011 and 2012–2015, (c) Sensitivity Analysis of T&C trade for the latter part of the sample period from 1995 to 2015

16 Y. Lau et al.

−22.72*** −2.63** +1.14*** +0.82*** +2.46*** −1.40*** +1.08*** +1.59*** −0.38*** −0.12**

Coefficient (T)

−29.73***

−0.55***

+1.39***

−0.44***

+2.48***

+3.68***

−1.43***

−1.05***

+1.28***

−0.36***

−0.25

+0.28**

+0.57**

+0.73**

+0.79**

0.78

663

Independent variables

Constant

Ln(ChEXPi )

Ln(GDPi )

Ln(PCGDPi )

Ln(GDPj )

Ln(PCGDPj )

Ln(Dij )

Ln(POPi )

Ln(POPj )

(Eij )

Ln(LCi )

Ln(FEMALEi )

Ln(VAi )

Dum_EU

Dum_USA

Adjusted R2

Sample size

663

0.75

+3.12***

+3.03***

+0.88**

+1.02**

+2.83***

Coefficient (C)

1999–2001

Year

Method: panel two-stage least squares

Dependent variable: ln(EXij )

(a)

Table 2 (continued)

663

0.78

+0.76***

+0.69***

+0.73*

+0.32*

−0.33

−0.42***

+1.32***

−1.06***

−1.13***

+3.17***

+2.75***

−0.41***

+1.59***

−0.68**

−33.35***

Coefficient (T)

2002–2004

663

0.76

+3.24***

+3.25***

+0.97**

+1.22**

−0.29**

−0.37***

+1.62***

+1.02***

−1.76***

+2.38***

+2.61***

+0.91***

+1.32***

−2.65**

−29.58***

Coefficient (C)

663

0.76

+0.82***

+0.67***

+0.71**

+0.31**

−0.28

−0.46***

+1.31***

−1.09***

−1.27***

+3.34***

+2.42***

−0.53***

+1.54***

−0.81***

+32.07***

Coefficient (T)

2005–2008

663

0.73 (continued)

+3.36***

+3.23***

+0.93***

+1.33***

−0.19**

−0.38***

+1.41***

+1.06***

−1.90***

+2.63***

+2.68***

+0.89***

+1.22***

−2.48***

−24.58***

Coefficient (C)

The Dynamics of T&C Export Performance Between China … 17

−32.38*** +1.51*** +0.93*** +2.12*** −1.48*** +1.06*** +2.76*** −0.30*** −0.18**

Coefficient (T)

−33.33***

+0.63**

+1.39***

−0.03***

+2.74***

+3.62***

−1.63***

−1.03***

+1.44***

−0.32***

−023

+0.27*

+0.73**

+0.67***

+0.83***

0.77

663

Independent variables

Constant

Ln(ChEXPi )

Ln(GDPi )

Ln(PCGDPi )

Ln(GDPj )

Ln(PCGDPj )

Ln(Dij )

Ln(POPi )

Ln(POPj )

(Eij )

Ln(LCi)

Ln(FEMALEi )

Ln(VAi )

Dum_EU

Dum_USA

Adjusted R2

Number of observations

663

0.71

+3.76***

+3.81***

+0.87**

+0.92**

+2.15***

+4.22**

Coefficient (C)

2009–2011

Year

Method: panel two-stage least squares

Dependent variable: ln(EXij )

(b)

Table 2 (continued)

884

0.71

+0.91***

+0.71***

+0.53**

+0.37**

−0.23

−0.38***

+1.41***

−1.06***

−1.43***

+3.35***

+2.19***

−*0.52***

884

0.69

+3.38***

+3.20***

+0.91***

+1.08***

−0.14**

−027***

+1.45***

+1.04***

−2.31***

+2.63***

+2.32 ***

+0.65***

+1.12***

−2.20***

+1.25***

−24.52***

−3.62***

Coefficient (C)

+30.01***

Coefficient (T)

2012–2015

(continued)

18 Y. Lau et al.

+0.71*** +0.74*** +3.19*** −1.72*** +1.09*** +1.25***

+1.24*** −0.12*** +1.57*** +1.39*** −1.29*** −1.05** +3.45***

Ln(ChEXPi)

Ln(GDPi )

Ln(PCGDPi )

Ln(GDPj )

Ln(PCGDPj )

Ln(Dij )

Ln(POPi )

Ln(POPj )

0.75 4199

* Significant at 0.10 level; ** at 0.05 level; *** at 0.01 level

Adjusted

Number of observations

+5.87*

Dum_USA

R2

+0.25* +5.13*

Dum_EU

Ln(FEMALEi )

Ln(VAi )

+0.31*

Ln(LCi)

4199

0.74

+4.02***

+4.01***

+0.35*

+1.01*

−0.29*** −1.08*

−0.60*** −0.511

(Eij )

+1.39***

−49.19*** −1.46**

−24.3*** −0.46***

Constant

Coefficient (C)

Coefficient (T)

Independent variables

Method: panel two-stage least squares

Dependent variable: ln(EXij )

(c)

Table 2 (continued)

The Dynamics of T&C Export Performance Between China … 19

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Y. Lau et al.

Table 3 Displacement effects by China Dependent variable: China_Export_Value Method: panel least squares Independent variables

Coefficient (T)

Constant

−15.35***

Coefficient (C) −28.71***

Importer_Per_Capita_GDP(Low-income group)

+0.78***

+2.65***

Importer_Per_Capita_GDP(Lower-middle-income group)

+0.75***

+2.62***

Importer_Per_Capita_GDP(High-income group)

+0.69***

+2.58***

Exporter_Per_Capita_GDP

+0.23***

+0.14***

Exporter_GDP

+0.02**

+0.05***

Population

+1.39***

+1.13***

Adjusted R2

0.84

0.89

Number of observations

5399

5399

** Significant at 0.05 level; *** at 0.01 level

state of human capital in response to such heightened competition, the T&C sectors of these economies may stagnate or even decline. A smaller impact is observed on China’s T&C exports for the lower-middle income group, namely India, Indonesia, Malaysia, the Philippines and Thailand (0.75 and 2.62 for T&C exports respectively). Some suggest that the exports of these countries have moved hand-in-hand with that of China. This finding may reflect the ability of this group, dominated by the ASEAN-4, to adjust their export structures as they accommodate China’s growing export capacity. It may also indicate the growing integration and specialization between China and ASEAN. For the high-income economies including Hong Kong, Taiwan and South Korea, the impact of China is much less pronounced (0.69 and 2.58 for T&C exports respectively). This supports the view that the comparative advantages of the high-income group have changed from production of low-technology, low-skilled intensive T&C items to high value-added and functional products. For example, Hong Kong manufacturers have attempted to diversify from original equipment manufacturing (OEM) by moving upmarket and engaging in original design manufacturing (ODM) and brand development. Similarly, Taiwan also has a strong history in OEM production, and is evolving toward ODM and OBM, as well as expanding its marketing efforts. Taiwan has advanced competence in developing “economical” clothing items with strong technical and functional capabilities and consistent quality. Another niche area that Taiwan clothing manufacturers have recently developed is haute couture. The country’s specialties in synthetic yarns, spinning, weaving, knitting, dyeing and finishing provide advantages to its development in high fashion, which differentiates them from products made in China. South Korea has strengthened its design ability in order to gain international recognition with South Korean fashion designers presenting their work in Paris and Tokyo fashion shows.

The Dynamics of T&C Export Performance Between China …

21

8 Belt and Road Implications This section discusses the implications of the results with respect to international trade and China’s Belt and Road Initiative (BRI). The effects of China’s emergence on the T&C export competitiveness of their neighboring countries carry important implications at national, regional and global levels. It is evident that the impact of China’s T&C exports would affect the national development trajectory in Asia and elsewhere. If the annual addition of another emerging market to the global economy drives down the global market prices of labor-intensive manufactures, this will heighten the pressure of other countries to improve their competitiveness through technological innovation, research and development (R&D) and new product development, and shifting from labour-intensive to more technologically-intensive production. In order to do these, they will presumably want to invest even more in human capital. In contrast, countries that produce raw materials and capital goods utilized intensively in Chinese manufacturing, may wish to specialize in these areas. At the regional level, China’s emergence suggests that any regional free trade agreement or effort to more closely coordinate monetary and financial policies will not be attractive if it does not involve what will eventually be the region’s largest economy. One example supporting this view is the Chiang Mai initiative, a project of ASEAN+3 (ASEAN plus China, Japan, and South Korea), h in providing swap lines and credits for financially-embattled economies. The effect of the exchange rate variable suggests the importance of that this variable in T&C trade. Globally, China’s revaluation of RMB may lead its trading partners to do the same to their currency. In particular, if China’s RMB revaluation moderates the competitive pressure felt by other Asian economies, these Asian economies will then be able to revalue their currencies as well. Such realignment of Asian currencies to the US dollar could help to narrow the current account deficit of the US and relieve the competitive pressure felt by Europe without causing major disruptions to the world economy. Yet the revaluation of RMB is likely to slow down the growth of China’s exports, which may cause the exports of its neighboring countries to drop. In this case, the revaluation does not help to boost the growth of these neighboring countries but creating pressure for depreciation rather than appreciation elsewhere in the region. Thus, the general revaluation of Asian currencies seen as a solution to alleviate the problem of global trade imbalance may not happen if China’s economic growth slows down due to the tightening of domestic credit or RMB revaluation. A number of implications for the BRI can be drawn from our findings before BRI enter into full force. First and foremost, while China’s T&C exports have a displacement effect on the T&C exports of its trading partners during 1990–2015, it is expected that this effect will change over time as China becomes more industrialized. This is because China will gradually lose its T&C labour cost advantage when its labour cost and income per capita increase relative to other countries. In the case for Hong Kong, the signing of the “Arrangement between the National Development and Reform Commission and the Government of the Hong Kong Special Administrative Region for Advancing Hong Kong’s Full Participation in and Contribution to the Belt

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and Road Initiative” in December 2017, meant a number of collaborative measures were in the pipeline. Hong Kong was expected to have an even closer relationship with regional partners when the Free Trade Agreement, and a related Investment Agreement with the Association of Southeast Asian Nations was signed in November 2017, and to enter into full force in the beginning of 2018. Hong Kong had everything ready and looked forward to collaborating with B&R partners for joint success. For this reason, investment in other countries through the BRI and other forms of foreign direct investment could help to make use of its technological advantage. On the other hand, this would help make use of lower labour cost of belt and road countries (in relative terms). Second, although the effect of the distance variable found by the current study is not new, it provides an insight into the geographical locations of China’s B&R investment. With a few exceptions of investment projects in Africa and Russia, the majority of the BRI target at countries in close proximity to China. These countries can be divided into those located in the west and the south of China respectively. One final implication from this study on the BRI is that distance, exchange rate and labour cost are all crucial factors to T&C trade because of their direct connection with the final export price at the destination country. As freight and logistics costs directly contribute to export price, the BRI should help to reduce these costs. The majority of belt and road projects are set up with the intention of investing in road, railway, shipping docks, ports and logistics centres. Belt and road investment projects may also target the energy sector, i.e. power generation, oil and gas, electricity and mineral processing, as China will become more dependent on energy as it continues its road to industrialization. Investment in transport infrastructure would help expand the intermodal maritime transport network in the region. Given the causal relationship between trade and transport logistics capacity [36], such investment projects would foster China’s trade. Trade in the region will continue to depend on the globalized economy. Note that China’s quality improvement of its export products may indirectly affect its exports via the effect on export competitiveness. However, total T&C trade in the region may not be dominated by China because once the full force of the BRI sets in place, collaborative and growth opportunities will become available to other economies that are along the B&R routes.

9 Conclusions This study examines the impact of China’s growth on the T&C exports of its Asian neighbors and the tendency to crowd out the exports of the more or less-developed Asian countries from 1990 to 2015. An extended gravity trade model has enabled an aggregate analysis and adjustment for the endogeneity of Chinese T&C exports. The gravity trade model fits the data well with exports rising with the GDP, GDP per capita, population of the importing countries while falling with distance and real exchange rate.

The Dynamics of T&C Export Performance Between China …

23

The innovation of this study has been to explore the tendency of China’s increase in T&C penetration of third markets to crowd out the exports of other Asian suppliers. The results show that such effect, for the period 1990–2015 (before the BRI was in full force), was more pronounced in markets for basic items, i.e., less-developed Asian suppliers that export these products than in markets for value-added and sophisticated T&C products by the more advanced Asian economies which comprise a significant fraction of total exports. This finding is not surprising given that it has been markets for basic T&C products and affected to a lesser extent, advanced suppliers which produce functional items that have been the first to be penetrated by Chinese exporters. Both developed and developing Asian countries are affected by China. Our benchmark results suggest that an increase in Chinese T&C exports will negatively affect the exports of its Asian economies. This is especially true for the less-developed countries that seek to compete with China on the basis of labor costs that are particularly affected. However, with the implementation of the BRI which started to work in full force in 2018, one might expect to see different results. Rather than seeing China dominate the T&C trade in Asia, collaboration and even growth in T&C trade in developing Asian economies could become evident. This trend suggests there are opportunities for future research to further analyse the change in the T&C industry. Acknowledgements This paper is supported by CPCE Research Grant 4.8C.xx.EZ74.

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Hong Kong’s “Super-Connector” Role in Managing Global Clothing Supply Chains Under the Belt and Road Initiative: An Extended Gravity Model Analysis Chi Kuen Danny Ho, Eve Man Hin Chan, Angappa Gunasekaran and Tsz Leung Yip Abstract Is Hong Kong best suited for the “super-connector” role in the Belt and Road Initiative (BRI), forging stronger links among partnering countries to deepen multilateral economic cooperation? Taking clothing industry as a case in point, this study examines how Hong Kong can play that role by leveraging its strengths to enhance sustainable clothing trade and economic development of some Belt and Road (B&R) countries in Asia. This study applies an extended gravity model to analyse clothing exports from Bangladesh, Cambodia, India, Indonesia, Malaysia, Pakistan, the Philippines, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam to Hong Kong from 2000 to 2017. The panel data regression result shows that among the 11 factors examined in the model, logistics performance of exporting countries is the most influential predictor of bilateral clothing trade, whereas wages and supply of female labour have relatively lower predictive power than the value-adding factor. Serving as middlemen connecting developing countries to global clothing markets, Hong Kong clothing companies would benefit from investing in the B&R countries, transferring technology to them and trading with them. Through better coordination of production and export logistics and provision of high value-added services such C. K. D. Ho (B) Department of Supply Chain and Information Management, The Hang Seng University of Hong Kong, Sha Tin, Hong Kong e-mail: [email protected] E. M. H. Chan Department of Design, Faculty of Design and Environment, Technological and Higher Education Institute of Hong Kong, Hong Kong, China e-mail: [email protected] A. Gunasekaran School of Business and Public Administration, California State University, Long Beach, USA e-mail: [email protected] T. L. Yip Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Kowloon, Hong Kong e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5_2

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as new product and process development for clothing supply chains, Hong Kong companies could contribute to the sustainable development of B&R economies.

1 Background The Belt and Road Initiative (BRI) is a development strategy launched by China in 2013. Its main objective is to promote economic co-operation among countries in Asia, Europe and Africa that are found along the belt (the “Silk Road Economic Belt” which stretches from China to Central Asia, Russia and Europe), and the road (the “21st Century Maritime Silk Road” which spans from China to Europe through the South China Sea and Indian Ocean, and from China though the South China Sea to the South Pacific). Since 2013, over 30 B&R proposals for cooperation and implementation agreements have been developed, together with definitions of the core areas of cooperation, and well-defined details for the key framework and cooperation mechanisms. In general, the initiative contains six international economic cooperation corridors, including key transport routes and important cities [21]. Due to its strategic location with easy access to the Southeast Asia and Pacific countries, and strength in financial services and technology, Hong Kong is expected to substantially benefit from the initiative. For example, Hong Kong clothing companies could expand their markets and have better access to economies in the B&R region. Moreover, it benefits from technology transfer and investment in countries which have relatively lower labour costs. There is often a high demand from the labour-intensive industries in Hong Kong for new low-cost offshore production sites, which is particularly the case for the clothing sector. Since the 1980s, clothing companies in Hong Kong have been relocating to mainland China and expanding their production facilities there, as well as in other countries such as Bangladesh, Cambodia, Vietnam and Sri Lanka. This strategy helps to expand production at lower costs and reap the benefits from trade preferential access agreements for the EU and US markets. The strategy of relocating the production of lower-end and mass garments to places with a cheaper labour supply seems to underpin the historical development of some of these clothing companies that position themselves as the original equipment manufacturing (OEM) package contractors for foreign brand owners and retailers. On the other hand, the partnering countries of the BRI will present themselves as an attractive venue for foreign investments in trade-led manufacturing. This is because infrastructure quality and quantity affect the attractiveness of a country as an offshore production location, and thus its opportunity to integrate with global and regional production chains. In their meta-analysis of 36 empirical trade studies, Celbis et al. [7] reported that there is a significantly positive impact between export performance and infrastructure. With the use of gravity trade model, Hoekman and Nicita [19] found that domestic trading costs represent import and export bottle-necks for low income countries. Using a standard gravity trade model, Shepherd and Wilson [26] reported that “trade flows in Southeast Asia are particularly sensitive to transport

Hong Kong’s “Super-Connector” Role in Managing Global Clothing …

29

infrastructure and in-formation and communications technology”, and suggested that “the region could make significant economic gains from trade facilitation reform”. Pomfret [24] observed that Cambodia, Laos and Myanmar, as the new members of the Association of Southeast Asian Nations (ASEAN), are not able to match the performance of the earlier ASEAN members in the integrated East Asian economy. That is partly due to their high trade costs which create barriers that impede their active participation in regional value chains [24]. One can expect that the BRI has a role in helping developing countries to improve their infrastructure for trade as well as enable some of the clothing companies in Hong Kong to pursue future production relocation. However, this model of development will only encourage companies to keep relocating low-value added production processes to locations with lower costs, and put pressure on developing countries to keep their domestic production and trade costs as low as possible to attract foreign investments. As Ross and Chan [25] showed, during the transition from the NorthSouth to South-South competition in the production of labour-intensive commodities since 2000, Mexico lost its low-cost competitive advantage vis-à-vis China, and between 2000 and 2002, approximate 28,000 jobs in Mexico’s maquiladoras were lost. Competition for international capital is fierce not only at the country level, but also among provinces within a country. In their study of 2884 firms that invested in China between 1993 and 1996, Liu et al. [22] reported that foreign investors are highly sensitive to provincial wage differences in finalizing their decision on the location of clothing industries, among other labour intensive industries. It is no surprise that export-oriented manufacturers who pursue geographical relocation of low value added production processes might take advantage of the BRI. This could, on the one hand, further accelerate the “race to the bottom” in labour welfare in the clothing sectors of developing countries. On the other hand, this exacerbates the negative consequences resultant of the end of the quotas system in clothing products since 2005 [2]. There are two main objectives of this study. First, it extends the trade gravity model to analyse the development of clothing trade patterns between Hong Kong and the B&R economies. Second, the study investigates how Hong Kong can take advantage of its “super-connector” role in facilitating sustainable trade and new product development in the clothing industries in the B&R countries.

2 Extended Gravity Model of Clothing Trade Between Hong Kong and Some B&R Countries in Asia This study examined the clothing trade between Hong Kong and the Asian countries that are now member countries of the BRI by an extended gravity model of international trade. The model attributes trade between two countries to the size of their economies and distance between them, hence the ‘gravity’ model [8–10]. Moreover,

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Fig. 1 Trade gravity model. Source Polder [23]

the model performs well in empirical research [5, 15]. Apart from its use in empirical studies, the gravity trade model has been used as a means to test different trade theories, such as by Anderson [1], Bergstrand [6] and Eli Heckscher and Bertil Ohlin (in Deardorff [13]) because it can be extended to account for the effect of various factors on international trade. The extended model applied in this study covered factors that have not been considered in previous studies in the clothing sector, such as production costs, export supply chain costs, technologies, demographic factors, and the characteristics of the business environment and policies. The model made use of panel data and allowed for fixed effects over time for each scenario, thus exploring the changes and increasing the manipulation of the data quality and quantity which would otherwise not be possible with the use of cross-sectional or time series estimation alone. The analysis included the impact of transport and logistics by using the Logistics Performance Index (LPI), country-specific and social determinants as well as economic indicators influential to clothing trade (Fig. 1). Following Lau et al. [20], we proposed the following extension of the gravity model:   ln EXPijt = α + β1 ln(GDPit ) + β2 ln(PCGDPit )       +β3 ln GPDjt + β4 ln PCGDPjt + β5 ln Dij     + β6 ln POPjt + β7 ln REXRATEijt + β8 ln(VALADDEDit ) + β9 ln(WAGEit ) + β10 ln(FEMALEit ) + β11 ln(LPIit ) + Uijt where • ln(EXPijt )—log of Clothing export value in USD (millions) from B&R countries to Hong Kong, with i denoting the exporting country, j Hong Kong, and t the annual period from 2000 to 2017; • α—fixed effect that represents unobserved time-constant factors on EXPij ;

Hong Kong’s “Super-Connector” Role in Managing Global Clothing …

• • • • • • • • • • • • •

31

β—coefficient; ln(GDPit )—log of GDP of the exporting country in USD (millions); ln(GDPjt )—log of GDP of the importing country in USD (millions); ln(Dij )—log of geographical distance (in km) between the individual capitals of the importing and exporting countries; ln(PCGDPit )—log of GDP per-capita of the exporting country in USD (millions); ln(PCGDPjt )—log of GDP per-capita of the importing country in USD (millions); ln(POPjt )—log of the population of the importing country; REXRATEijt —real exchange rate in terms of value of foreign currency per USD; In(VALADDEDit )—log of the value added in the apparel industry of the exporting country; In(WAGEjt )—log of the wages of the exporting country in millions of USD; In(FEMALEit )—log of the number of women in the work force of the exporting country; LPIit —the Logistics Performance Index of the exporting country; and Uijt —error term

The dependent variable is the log of the clothing trade value between Hong Kong as the importer and B&R exporting countries including Bangladesh, Cambodia, India, Indonesia, Malaysia, Pakistan, the Philippines, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam. The independent variables include the log of GDPs of the two countries, log per capita GDPs of the two countries, log of distance between them, log of population size of importers, real exchange rate, log of value added factors, log of the number of women in the workforce, log of labour costs of the exporters, and exporters’ Logisitcs Performance Index value. The economic size of the exporting and importing countries is usually measured by their GDPs, which are considered to represent the economic masses impacting their apparel imports and exports positively. Thus, β1 and β3 are expected to be positive. Based on the gravity principle, the per-capita GDP of the exporting country is used as a proxy of capital intensity. As the apparel industry is labour-oriented, per-capita GDP is used to indicate the impact of the monetary conditions on the workforce in countries with apparel exports. Additionally, the income level or purchasing power of importing countries is represented by the per capita GDP. Controlling for the GDP, richer countries (represented by their higher per capita GDP) are likely to demand more choices in different products which may be imported from countries that specialize in the production of such products. Therefore, β2 and β4 are expected to be positive. The distance variable has proven to be one of the most significant predictors of bilateral trade [14]. In general, greater distance involves higher transport costs, and therefore would have an adverse impact on trade. Therefore, β5 should be negative. The population size of the importing country is included as a determinant of demand for clothing products. Therefore, β6 is expected to be positive. The real exchange rate is a key factor that affects trade flows; the depreciation (appreciation) of the currency

32

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of a country against other currencies (USD in this study) stimulates (reduces) the exports of a country. Thus, β7 is expected to be negative. A number of factors influential to clothing production are considered such as land, labour and capital goods. A higher value of the materials and supplies added in the apparel production should contribute more to the exports. Therefore, β8 is expected to be positive. Since trade liberalization has improved after the signing of the Agreement on Textiles and Clothing (ATC) in 2005, price competition among apparel suppliers has become more intense. The labour wages level of the exporters is a crucial, decisive factors affecting apparel trade flow. Nearly three quarters of the workers who are employed in the global apparel production industry are women. The participation rate of the female labour force in developing countries is even higher. As more female workers are providing a higher production capacity for apparel exports, β9 and β10 are expected to be positive. In addition to the above macroeconomic factors, the LPI is added as a key independent variable. Exporting countries that share similar factor endowments may differ in their logistics performance in terms of customs clearance efficiency, transport and IT infrastructure quality, ease of arranging international shipments, the ability to track and trace shipments, domestic logistics costs, timeliness in reaching destination, and competence of the domestic logistics industry. It is anticipated that the logistics performance of exporting countries contributes to their apparel exports. Thus, β11 is expected to be positive.

3 Data Analysis and Results A pooled cross-sectional (PCS) or cross-sectional (CS) ordinary-least-square (OLS) is often utilized in the gravity trade model. However, Cheng and Wall [12] showed that these estimation approaches create biased results. Since there is no heterogeneity allowed in the error term for standard CS regression equations, the gravity trade model produces overestimated results. In order to solve the problem of using the OLS, the panel data estimation method was used to determine the variables that affect the bilateral trade flows among B&R countries with time. As Baltagi [4] noted, this method increases the volume of informative data in variability but with less collinearity among the variables. Moreover, the method has more degrees of freedom and efficiency. Finally, the regression results of the OLS were compared with those of the panel data estimation with the fixed effects model in order to examine how well the models fit the data. The data were analysed by EViews, a statistical software for econometric analysis. Historical trade data at the 2-digit Standard International Trade Classification (SITC) level from 2000 to 2017 were obtained from the United Nations Comtrade Database and Hong Kong Trade Development Council, while data for per-capita GDP, real GDP, population, real exchange rate, etc. were collected from the International Financial Statistics of the International Monetary Fund, Eurostat and other

Hong Kong’s “Super-Connector” Role in Managing Global Clothing … Table 1 Panel data regression analysis result

Dependent variable: ln(EXPijt )

33 Clothing exports

Independent variable

β

Constant

−22.13***

ln(GDPit )

+1.24***

ln(PCGDPit )

+1.67***

Ln(GDPjt )

+2.19***

Ln(PCGDPjt )

+4.24**

ln(Dij )

−1.37***

ln(POPjt )

+1.78**

REXRATEijt

−1.23**

ln(VALADDEDit )

+1.64***

ln(WAGEit )

−0.81**

In(FEMALEit )

+0.76**

LPIit

+4.38***

Adjusted R2

0.71

Note *** p < 0.01 and ** p < 0.05

relevant sources. The number of female workers and wages were collected from the Industrial Statistical Database (INDSTAT) from the United Nations Industrial Development Organization (UNIDO), and LPI data were collected from the World Bank. As shown in Table 1, the extended gravity model fitted the data well, with an adjusted R2 of 0.71, and coefficients are significant with p < 0.05. The panel data regression result shows that clothing exports increase with GDP, GDP per capita of the importer (i.e. Hong Kong) and exporting countries (i.e. B&R countries in Asia), population of the importer, the number of female workers, value added factors and the LPI of exporting countries. Labour wages, distance and real exchange rate have a negative impact on clothing exports as expected. The above results suggest that clothing trade is expected to rise as a result of growth in the GDP and GDP per capita of both trading partners, population of the importer, as well as increase in female labour supply, value-added services and improvement of transport-logistics performance of the exporting countries in the coming years. These positive drivers are likely to offset the negative impact of appreciation of exporting countries’ currency and wages. As shown by our study, the detrimental effect of higher wages is not as strong as commonly expected, compared to other factors in the model. It is worth mentioning that LPI of exporting countries is shown to be the most influential predictor of bilateral clothing trade in our model, which lends support to the thesis that logistics is a major trade facilitator for clothing exports [11, 18]. Improving a country’s overall logistics performance could take a long time and great effort, as only Vietnam and the Philippines in our sample managed to increase both LPI rank

34

C. K. D. Ho et al.

Table 2 LPI rank and score 2018

2007

Country/region

LPI rank

LPI score

LPI rank

LPI score

Bangladesh

100

2.58

87

2.47

Cambodia

98

2.58

81

2.50

Hong Kong, China

12

3.92

8

4.00

India

44

3.18

39

3.07

Indonesia

46

3.15

43

3.01

South Korea

25

3.61

25

3.52

Malaysia

41

3.22

27

3.48

Pakistan

122

2.42

68

2.62

The Philippines

60

2.90

65

2.69

Sri Lanka

94

2.60

92

2.40

Taiwan

27

3.60

21

3.64

Thailand

32

3.41

31

3.31

Vietnam

39

3.27

53

2.89

Source The World Bank

and score in 2018, compared to their performance in 2007 (See Table 2). It is anticipated that the BRI, which heavily promotes infrastructure investment projects, could help to speed up the logistics performance improvement of developing countries and expand their capacity to accommodate higher export volume.

4 Implications of BRI for Hong Kong Clothing Companies Although the financial incentive for relocating existing production facilities to lowercost countries under the BRI could be high, competing on cost is just one of the strategic choices. Besides forging an efficient clothing supply chain that address mass, low-end markets, Hong Kong companies can choose to serve high-end markets with a responsive supply chain. In fact, contrary to the common view that international buyers take the lead to upgrade their supply chains, Au and Ho [3] noted that it is Hong Kong manufacturers who have played a proactive role in pursuing supply chain excellence by applying new technologies and practices over the years. This is plausible because most international brand-name retailers do not own or operate production facilities, and thus rely heavily on highly capable full-package suppliers. Rising labour cost is not necessarily an evil, if that can be considered positively as a driver for improving operations efficiency and upgrading skill levels. According to Ho [17], some clothing companies in Hong Kong have established in-house training and development programs that aim to enhance technical skills for critical production roles, with pilot programs conducted in factories in China and Malaysia and later

Hong Kong’s “Super-Connector” Role in Managing Global Clothing …

35

expanded to all factories in the Asia region. With advanced knowledge and skills, the trainees are empowered and enabled to implement different projects that boost production efficiency and quality. These practices help to reduce the pressure caused by rising labour cost and offer opportunities to pursue higher-value activities. Social upgrades in developing countries are also made possible through the transfer of successful training and development programs to new production facilities, with the aim to improve labour skills and welfare in a shorter amount of time [17]. Investment in developing new technologies and practices in the more mature and advanced production facilities to offset higher labour costs through productivity gain and better product quality can also benefit newly established factories in developing countries. This strategy offers opportunities for technology transfer and knowledge sharing with the new production base, thus contributing as industry upgrades in the host countries. At the same time, these new technologies and practices can also be highly eco-efficient. For example, the denim program of H&M aims to improve water-efficiency and thus has fewer negative environmental impacts [16]. The past few years have witnessed an increasing awareness of corporate social responsibility (CSR) and sustainable development that are tied to safety management, environmental impacts, and community engagement. As a result, large fashion companies have been managing their operations in a more socially and environmentally responsible way [16]. Some large Hong Kong clothing manufacturers have collaborated with their international buyers and non-governmental organizations to implement various training and development programs for workers, with the aim to expand their network relations as well as encourage occupational health and safety in their new factories in the Southeast Asia region [17]. It is expected that local clothing suppliers in developing countries under the BRI will also follow suit. To build a responsive supply chain, Hong Kong clothing companies need to harness their high fashion sense and rich knowledge in new product development to address higher and changing customer needs. To name a few new product trends, clothes made of stain-resistant and wrinkle-free fabrics are well received in the market. Due to the growing awareness on health and quality of life, the demand for functional clothing is climbing. Anti-UV, anti-ray, good sweat management, thermal insulation, self-cleaning are examples of how new material technologies are being applied to the garment industry. Concerns over both dressing green and product comfortability are on the rise, making clothes made of natural fibres popular among consumers, especially in the developed markets. Eco-friendly fabric made from recycled plastic bottles has also been used. Well-equipped to ride on these new trends, Hong Kong clothing companies are in a good position to forge better supply chains under the BRI.

5 Conclusion To conclude, this empirical study has examined the extent to which several key social and economic factors including logistics performance affect clothing trade between

36

C. K. D. Ho et al.

the B&R countries and Hong Kong, which can serve as the clothing distribution hub due to its strategic location. The result of the extended trade gravity model shows that GDP, income per capita, distance between importer and exporter, population, exchange rates, value added services, labour cost, and the size of the labour workforce are influential to clothing trade, albeit at various degree. The findings also indicate that logistics performance plays an important role in trade facilitation which can provide a competitive advantage and thus also constitute as a trade barrier in its own right. That is, logistics performance either enhances or reduces the chances of being integrated in global clothing supply chains. This is especially true for exporting countries in the same geographical region with similar factor endowment. If trade liberalization continues to go deeper, large lead buyers will persevere with their global search for the best mix of suppliers to forge their global supply chains. The logistics performance of the exporting countries may become a key determinant in differentiating the winners from losers among the B&R countries in the global clothing sector. The findings suggest that there are potential opportunities for Hong Kong clothing companies to benefit from investing in the B&R countries, transferring technology to them and trading with them. The accumulated knowledge of the clothing industry in Hong Kong empowers them to take on the “super-connector” role, serving as middlemen linking developing countries to global clothing markets. As a hub, Hong Kong would coordinate the production and export logistics and provide high valueadded services such as product design, new product and process development and research and development. In terms of investment, Hong Kong companies can establish joint ventures with local clothing producers in the B&R countries for investment and technology transfer and make use of its internationally-recognized technical and management knowledge. At the same time, Hong Kong clothing companies need to manage the risks associated with capacity expansion and global demand uncertainty. Acknowledgements This research is fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. UGC/FDS25/B01/17).

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7. Celbis MG, Nijkamp P, Poot J (2013) How big is the impact of infrastructure on trade? Evidence from meta-analysis. Working Paper. United Nations University, Maastricht Economic and social Research and Training Centre on Innovation and Technology, pp 2013–2032 8. Chan MHE, Au KF (2007) Determinants of China’s textiles export: an analysis by gravity model. J Text Inst 98(5):463–469 9. Chan MHE, Au KF, Sarkar MK (2008) Antecedents to India’s textile exports: 1985–2005. Int J Ind Cult Bus Man 1(3):265–276 10. Chan MHE, Chu WCA, Nguyen OHO (2016) Assessing the displacement effect of exports with gravity trade model: China’s textile and clothing case. Working paper 11. Chan MHE, Ho CKD, Yip TL, Cheung J, Gunasekaran A (2019) The belt and road initiative’s impact on textile and clothing supply chains in Asia: Views from Hong Kong industrial stakeholders. Int J Appl Bus Int Manag 4(2):9–16 12. Cheng IH, Wall HJ (2005) Controlling for heterogeneity in gravity models of trade and integration. Fed Res Bank St. Louis Rev 87(1):49–63 13. Deardorff AV (1998) Determinants of bilateral trade: does gravity work in a neo-classical world? National Bureau for Economic Research Working Papers Series, No. 5377 14. Frankel J, Rose A (2002) An estimate of the effect of common currencies on trade and income. Q J Econ 117:437–466 15. Havrylyshin O, Pritchett L (1991) European trade patterns after the transitions. PRE Working Paper Series, No. 748. World Bank, Washington, D.C. 16. Ho DCK (2014) A case study of H&M’s strategy and practices of corporate environmental sustainability. In: Golinska P (ed) Logistics operations, supply chain management and sustainability. Springer International Publishing, pp 241–254 17. Ho DCK (2016) Policies and practices of improving labour welfare of clothing supply chains: a perspective from Hong Kong manufacturers. In: The first world congress and 2016 Asia Pacific Decision Sciences Institute Conference, Beijing, China, 24–27 July 2016 18. Ho DCK, Chan EMH, Yip TL (2009) A study of countries’ logistics performance and export, POMS-HK. In: The First Production and Operations Management Society—Hong Kong International Conference, Hong Kong, China, 30 Dec 2009 19. Hoekman B, Nicita A (2011) Trade policy, trade costs, and developing country trade. World Dev 39(12):2069–2079 20. Lau YY, Chan MHE, Nguyen HO (2017) Assessing the displacement effect of exports with gravity trade model: China’s textile and clothing case and OBOR implications. J Int Log Trade 15(1):19–32 21. Lau YY, Tam KC, Ng AKY, Fu X, Zhang J, Feng J (2018) Effects of the ‘Belt and Road’ initiative on the wine import logistics of China. Mar Pol Man 45(3):403–417 22. Liu X, Lovely ME, Ondrich J (2010) The location decisions of foreign investors in China: untangling the effect of wages using a control function approach. Rev Econ Stat 92(1):160–166 23. Polder M (2000) Forecasting international trade flows: a gravity-based approach. Economet Toepass:24–28 24. Pomfret R (2013) ASEAN’s new frontiers: integrating the newest members into the ASEAN economic community. Asia Econ Pol Rev 8(1):25–41 25. Ross RJ, Chan A (2002) From North-South to South-South: the true face of global competition. For Aff 81(5):8–13 26. Shepherd B, Wilson JS (2009) Trade facilitation in ASEAN member countries: measuring progress and assessing priorities. J Asia Econ 20(4):367–383

The Belt and Road Initiative: An Entrepreneurial Perspective Garima Mathur and Navita Nathani

Abstract The Belt and Road Initiative is a very ambitious project started by the Chinese Government with a partnership of 152 countries. The countries associated with the project are benefited at various levels with lots of challenges in terms of funds. The present study selected a sample of five countries in Asia associated with the project and has strategic importance. Five countries such as China, Taiwan, South Korea, Japan and Hong Kong were considered as samples for collection of data on perceived opportunities, perceived capabilities, fear of failure and entrepreneurial intentions after the year 2013, when The Belt & Road Initiative was announced. The results indicate that perceived opportunities and perceived capabilities affect entrepreneurial intentions positively, whereas fear of failure affects entrepreneurial intentions negatively.

1 Introduction China has announced a very optimistic initiative for enhancement in trade through development of infrastructure between many countries through an ambitious project ‘One Belt One Road’ initiative. While connecting many countries, it significantly affects peoples’ perspective in associated countries like Hong Kong, Taiwan, China, Japan and South Korea. The people in these countries specifically seeking to become entrepreneurs may consider this initiative an opportunity for advancement [4]. These individuals may also carry perception of opportunities after completion of the project. Although the completion of the project is scheduled for 2049, people’s attitudes are

G. Mathur (B) · N. Nathani Prestige Institute of Management, Gwalior, MP, India e-mail: [email protected] N. Nathani e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5_3

39

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G. Mathur and N. Nathani

very much affected at the time of hearing news. For example, news about possible foreign investment in a country, individuals will look for more opportunities. Similarly, if the news was about economic break down or likewise, individuals will behave in a different manner. In the present case, when people heard news about The Belt Road Initiative, they will more likely react positively towards entrepreneurial opportunities. Social attitudes of entrepreneurs indicate their perception and attitudes towards various aspects of entrepreneurship. It includes perceived opportunities and capabilities, expectations towards creation of jobs and entrepreneurial intentions. The Belt and Road Initiative (BRI) has been in talk since the announcement was made in 2013, as the initiative will take China to a very strong position in terms of development of trade. Although the countries associated will also benefit, it is still difficult to put forward without assessment. The BRI includes 152 countries, and it is likely that the countries involved will be positively impacted from it. However, the assumption should be tested for its validity. The initiative has only been announced recently so the area still lacks significant research. To frame the literature, data has to be taken from published material and from working papers. The initiative is strengthening the position of China in a Global scenario. The BRI helps in sustainable growth, market development and creation of physical connection with other countries. The initiative seeks cooperation through five modes: (1) Policy cooperation, where the countries will jointly formulate plans, measures for cross national and regional advancements through cooperation and consultation; (2) Facility connectivity, which seeks for construction of port infrastructure facilities and modes of transportation to make transport easier through development of infrastructure; (3) Facilitate Unimpeded Trade, aimed at reducing barriers for investment and trade, and promoting regional economic integration; (4) Financial Integration, through expansion of currency exchange in multilateral and bilateral financial cooperation; and (5) People-to-people Bonds, which indicates the promotion of interaction across cultures. In January 2016, a multilateral financial institution, Asian Infrastructure Investment Bank (AIIB), was founded to bring countries together to address the huge infrastructure needs across Asia and other parts of the world. The bank was set up with the intention of financing projects in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, and urban development and logistics. Around 100 countries, including Hong Kong, were members of the bank. The countries involved a different perception to those which are not part of this ‘Silk road’ [11]. The most prominent among them is India, along with countries stepping back in fear of debt like Pakistan, Myanmar and Malaysia. This fear increased after the news of handing over a strategic port to Beijing by Sri Lanka as the country couldn’t overcome the debt issues [28]. A similar perception is also held by Japan, who initially did not support but then the Japanese Government decided to be part of the initiative and became member of AIIB. On the other hand, Taiwan was also skeptical at the beginning about joining the initiative [10], though there were both positives and negatives of joining and be part of AIIB.

The Belt and Road Initiative: An Entrepreneurial Perspective

41

Hong Kong (an administrative county of China) has also been considered as ‘Super Connector’ with strong investors and service providers. This gives competitive advantage to Hong Kong. Hong Kong is considered a facilitator for many Chinese companies because of its strategic location and a strong base of talented workforce. These companies are looking forward for further advancements in terms of infrastructure development which received momentum through the BRI. Entrepreneurship is one to most sought aspect of earnings. There are many factors determining entrepreneurial behavior, for example, personality traits such as selfefficacy [25] conditions [1], Culture [9], Socio demographic factors such as age, gender, income level, education [16, 33, 34], emotional intelligence [13], financial means, credit facilities, taxation policy and increased competition [8], perceived employability [19]. As suggested, many research have been done on the above areas but the variables considered for this study are relatively new. The data on these variables were accessed from Global Entrepreneurship Monitor (GEM) framework.

2 The GEM Framework The Global Entrepreneurship Monitor (GEM) Framework provides an international database for entrepreneurial research. The data has been divided into two parts: (1) data indicating GEM Framework including infrastructure, market data, and institutional mechanism; (2) data on entrepreneurial behavior and attitude e.g. individual attributes collected through an Adult Population Survey (APS) and National Expert Survey (NES). The APS is used for collection of data on individual attributes and the NES supports collecting Framework related data. The behavioural aspects include data on Perceived Opportunities, Perceived Capabilities, Fear of Failure Rate, Entrepreneurial Intentions, Total Early-Stage Entrepreneurial Activity (TEA), Established Business Ownership, Entrepreneurial Employee Activity, Motivational Index, Female/Male TEA, Female/Male Opportunity-Driven TEA, High Job Creation Expectation, Innovation Business, Services Sector, High Status to Successful Entrepreneurs, Entrepreneurship as a Good Career Choice. On the other hand, the Framework includes indicators such as Financing for Entrepreneurs, Governmental Support and Policies, Taxes and Bureaucracy, Governmental Programs, Basic School Entrepreneurial Education and Training, Post School Entrepreneurial Education and Training, R&D Transfer Commercial and Professional Infrastructure, Internal Market Dynamics, Internal Market Openness, Physical and Services Infrastructure, Cultural and Social Norms. Out of these behaviours, three behaviours were selected for the current study which are explained in next section.

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3 Conceptual Framework of Variables 3.1 Entrepreneurial Intention Bird [35] defines entrepreneurial intention as the state of mind directing a person’s attention and action towards self-employment rather organizational employment (p. 445). A lot of research has been done on understanding entrepreneurial behaviours, more specifically entrepreneurial intentions [6]. Entrepreneurial intentions indicate the willingness of an individual with respect to starting business on next three years. In fact, researchers suggest that entrepreneurial intentions help individuals to identify and understand entrepreneurial venture creation process [26]. The current study is an attempt to study the impact of other social attitudes on entrepreneurial intentions.

3.2 Perceived Opportunities Perceived opportunities reveal an individual’s cognition towards the conditions that facilitate the starting of new businesses. Opportunities were considered as either objective phenomenon, which exists in the environment and entrepreneurs need to identify them, or the subjective phenomenon where opportunities are to be created [22]. Peng et al. [32] found that perceived opportunities have significant impact on entrepreneurial intentions. Similarly, there exist a moderate relationship between perceived opportunities and entrepreneurial activity [2]. On the basis of the above findings the hypothesis is framed as: H1: Perceived Opportunities are directly linked to Entrepreneurial Intentions. Scholars indicated that entrepreneurial intention and behaviour involves numerous psychological factors that should be intensively studied [18, 20]. These psychological factors include cognition, motivation, emotion, and self-efficacy [3, 21, 27, 36].

3.3 Perceived Capabilities A large body of research emphasized there are different skills and knowledge possessed by individuals who wish to start a business and succeed. Here, the capabilities are measured in terms of an entrepreneur’s perception towards capabilities in order to become entrepreneurs. Entrepreneurial capabilities (EC) can be defined as “the ability to perceive, choose, shape and synchronize internal and external conditions for the enterprises exploration and exploitation” [30]. The subjective theory is based on the individuals, concerning

The Belt and Road Initiative: An Entrepreneurial Perspective

43

their knowledge, resources, skills, and the processes of discovery and creativity [14], whereas the objective theory focuses on evaluation of market conditions [7]. In a different study, Perceived capability was found positively related to entrepreneurial intention along with perceived opportunity [24]. On the other hand, Peng et al. (2012) did not find any relationship between perceived capabilities and intention to become entrepreneur. The positive relationship between perceived capabilities and intention was further supported by [2] leading to following hypothesis: H2: Perceived Capabilities are directly linked to Entrepreneurial Intentions.

3.4 Fear of Failure It is a general tendency of human beings to have a fear of unknown before getting into it. It is more prominent in entrepreneurship researches. Most of the ideas do not take shape because of fear of failure. Since starting a business has many challenges to face, from monetary aspects to infrastructure facilities and overcoming psychological fears, the concept of fear is worth studying. For example, the cost associated with financial, social and emotional breakdowns reduces the probability of an individual starting a business manifolds [37]. The problem of fear should be taken care of properly. In this regard, Wyrwich et al. [29] stated about strategic policy formulation at a nation’s level to decrease fear of failure among budding entrepreneurs. Fear of failure reduces propensity of individual to undertake risk and entrepreneurship is nothing but deals with taking risk. The fear of failure further lessens the motivation to take risk, in turn weaken the intention to take risk [5]. H3: Fear of Failure is negatively linked to Entrepreneurial Intentions.

4 Methodology The methodology used in this research is quantitative in nature, and data is collected through secondary sources. The data was collected by Global Entrepreneurship Monitor [38]. GEM includes 20 years of data based on 200,000 interviews per year and covers two elements. The first element is entrepreneurial behavior and attitudes of individuals, and the second element is national context and how that affects entrepreneurship. The research is based on a cross-country analysis and data has been collected for five countries located strategically on the Belt and Road Initiative namely China, Japan, South Korea, Taiwan and Hong Kong. Data analysis was done through SPSS 18 by applying simple linear regression analysis. The indicators were Perceived opportunities, Perceived capabilities, Fear of failure and Entrepreneurial intention. The time frame of the study is from 2013 to 2018, as

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the Belt and Road Initiative was announced in 2013 so as to measure the effect of such announcement on entrepreneurial intention of individuals in these countries. To examine the hypothesized propositions regression and bar graph were used.

5 Results The data were analysed through various methods by using both graphical representation as well as inferential statistics (see Fig. 1). On the basis of the above-mentioned chart, the perceived opportunities seem to be quite high for Hong Kong in the year 2016 and 2018. As per the report of the planning department [31], Hong Kong ranked 4th in the Global financial center index and ranked 2nd in the Global opportunity index, which again, makes Hong Kong a favorable destination for cross border investments or starting new ventures. This may be the result of the BRI introduced by China for economic and infrastructure development in 2013, which may promote overseas capital flows between southern China and Hong Kong [15]. In the case of Japan, fear of failure is reasonably visible when compared to other variables like perceived opportunities, perceived capabilities and entrepreneurial intentions. One of the most prominent reasons for this may be the family oriented organizational structure prevailing in Japan. This can be supplemented by various studies which proved that regional characteristics and family plays a significant role in determining latent entrepreneurship [23]. However, entrepreneurial intention is relatively low in Japan, which again, establishes a link that fear of failure and intentions to start a new business are negatively related. Perceived capabilities is noticeable in the case for South Korea in 2016–2018. The data belong to the selected emerging markets of Asia. Through the BRI, China can reconnect, reroute economic activities all over the world. Perceived opportunities of entrepreneurs is based on ease of starting business which picked up pace in China after the introduction of action plan proposed by the Chinese Ministry of foreign affairs in 2015.

Fig. 1 Data distribution according to proposed variables

The Belt and Road Initiative: An Entrepreneurial Perspective

45

Table 1 Regression analysis Variables

Perceived opportunities

Perceived capabilities

Fear of failure

β value

0.539

0.723

−0.469

Value of F

11.449

30.615

7.896

p-value

0.002

0.000a

0.009a

Value of t

3.384

5.533

−2.810

p-value

0.002

0.000a

0.009a

R2

0.290

0.522

0.220

Hypothesis supported/not supported

Supported

Supported

Supported

a Predictors: b Dependent

(Constant), Perceived Capabilities, Perceived Opportunities, Fear of Failure Variable: entrepreneurial intention

K-S test: To follow the first assumption of regression the standardize residuals were checked for normality and found that the dataset considered for the study was normally distributed. The normality was checked through Kolmogrov-Smirnov test and found that; H0: Test distribution is normal is not rejected and hence distribution was normal and further linear regression can be applied (See Table 1). In Regression analysis the researchers formed three hypotheses as follows: H1: Perceived Opportunities are directly linked to Entrepreneurial Intentions. The linear regression was applied in perceived opportunities (independent variable) and Entrepreneurial intentions (dependent variable). The result of regression indicates that the independent variable has a significant impact on the dependent variable. Perceived opportunities has an impact signified by beta value of β1 = 0.539, p = 0.002. Both the variables are significant and positively related. ANOVA table summary reported that f value (F = 11.44, p = 0.002) is significant and hence it can be said that the model has a good fit. The r2 value is 0.290 indicating that the independent variable explained 29% of variance in dependent variable. The results supported the hypothesis assumed earlier as both the variables are significant and positively linked [24]. Lee et al. [17] suggested that opportunities play an important role in determining entrepreneurial intent. Their study was carried out prior to the announcement of the BRI, yet they reveal that Taiwan and Hong Kong indicate entrepreneurial intent if they perceived better opportunities. In a study of South Asian countries including South Korea, Taiwan and Japan, a significant positive relationship was reported [13]. H2: Perceived Capabilities are directly linked to Entrepreneurial Intentions. To check the relationship between stated variables like perceived capability (independent variable) and Entrepreneurial intentions (dependent variable), linear regression was applied. The result predicted that the independent variable has a significant

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impact on the dependent variable. Perceived opportunities has an impact signified by beta value of β1 = 0.723, p = 0.000. Both the variables are significant and positively related. ANOVA table summary evidenced that f value (F = 30.615, p = 0.000) is significant and hence it can be said that the model has a good fit. The r2 value is 0.522 indicating that the independent variable explained 52.2% of variance in dependent variable. Hence, it can be concluded that perceived capabilities and entrepreneurial intentions are linked positively [2]. A similar study by Tsai et al. [24] indicated the role of perceived capability through perceived opportunity was higher in China than Taiwan. Perceived capability positively affects entrepreneurial intention through perceived opportunity; this indirect linkage is stronger in China than in Taiwan [12]. H3: Fear of Failure is negatively linked to Entrepreneurial Intentions. The simple linear relation was applied between fear of failure as independent and entrepreneurial intentions as dependent variable. The ANOVA table summary depicts the strong relationship between both the variables as the value of F = 7.896, p = 0.009. While the value of beta depicts significant negative relationship between these variables as the β1 = −0.469, p = 0.000, which seems to be correct because when entrepreneurs’ intentions are good fear of failure automatically vanished. Results supported the hypothesis that fear of failure is negatively linked with entrepreneurial intentions. Results augmented the assumed hypothesis that fear of failure is negatively linked with the entrepreneurial intentions. Further the findings are similar with the findings of Conroy [5] where he explained that fear of failure lessens the motivation and thereby weakens the desire to start new ventures. Khursheed et al. [13] reported that Fear of failure was negatively correlated to intent to become an entrepreneur in the economies such as Japan, Korea and Taiwan.

6 Limitations and Policy Implications The analysis was administered using the published data available on the Global Entrepreneurship Monitoring [38] website. The study considered all those countries which were part of East Asian region; the list includes China, Hong Kong, Macau, Japan, North Korea, South Korea, Mongolia and Taiwan. However, due to unpublished data on a few countries, we could only take a sample of 5 countries: China, Hong Kong, Japan, South Korea and Taiwan. Future research may be conducted by considering all three regions of the BRI of China. The study used cross country data to analyze the result and great care has been taken in investigating the results. The results of Cross-country analysis are not consistent as they have different economic, technological, infrastructure, political and cultural background. Important policy implication can be concluded from this research, where the government should conduct training programs to improve personal attributes of entrepreneurs of those countries where fear of failure is quite visible. The study proved that fear of failure decreases the intentions to start new ventures. On the other

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hand, the overall effect of national and international events should be measured prudently so that entrepreneurs may take the advantages of new policy and initiatives. Policy makers should design policies in such a way so that talent and attributes of entrepreneurs can be fully utilized. The BRI was introduced to improve regional integration, better trade facilities and connecting people, but in the absence of proper policy framework it is tricky to get appropriate results.

7 Conclusion We examined the relationship among perceived opportunity, perceived capabilities, fear of failure and entrepreneurial intentions. The study revealed that perceived opportunity and capabilities are strongly related with entrepreneurial intentions while fear of failure is negatively linked, proving the notion that those who have high fear of failure tends to avoid the urge of becoming an entrepreneur. The data for the study was collected after the initiation of the BRI in 2013 to check the effect in associated countries of China and Hong Kong. The study is a major contribution in the field as a review of the literature shows very few studies have been done on the BRI with respect to GEM data.

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30. Zahra SA (2011) Entrepreneurial capability: opportunity pursuit and game changing. University of Minnesota, Minnesota 31. HKSARG (2016) Hong Kong 2030+: Towards A Planning Vision and Strategy Transcending 2030, Consolidated Land Requirement and Supply Analysis, Planning Department. Available at: https://www.hk2030plus.hk/document/Consolidated%20Land%20Requirement%20and% 20Supply%20Analysis_Eng.pdf 32. Peng Z, Lu G, Kang H (2013) Entrepreneurial intentions and its influencing factors: a survey of the university students in Xi’an China. Creative Educ 3(08):95–100 33. P˘aunescu C, Staicu D, Pop O (2018) The propensity for entrepreneurship among rural populations. A Central and Eastern European country perspective. In: Proceedings of the international conference on business excellence, vol 12, no 1. Sciendo, pp 728–738 34. Megibaru S (2015) Socio-demographic determinants for entrepreneurial intention of university students: the case of university of gondar graduating students. Ethiop J Bus Econ 4(1):50 35. Bird B (1988) Implementing entrepreneurial ideas: the case for intention. Acad Manag Rev 13(3):442–453 36. Markman GD, Phan PH, Balkin DB, Gianiodis PT (2005) Entrepreneurship and universitybased technology transfer. J Bus Ventur 20(2):241–263 37. Ucbasaran D, Shepherd DA, Lockett A, Lyon SJ (2013) Life after business failure: the process and consequences of business failure for entrepreneurs. J Manag 39(1):163–202 38. GEM Survey (2018) Global Entrepreneurship Monitor. Global Reports. Available at: https:// www.gemconsortium.org/report/gem-2018-2019-global-report

The Belt and Road Initiative’s Impact on Textile and Clothing Supply Chains in Asia: Views from Hong Kong Industrial Stakeholders Eve Man Hin Chan, Chi Kuen Danny Ho, Tsz Leung Yip, Jenny Cheung and Angappa Gunasekaran Abstract The global supply chains in the Textile and Clothing (T&C) industry have been shaped by various forces, among them the economic development policy is one of the strongest. Amid the rollout of the Chinese’s new national development strategy—the Belt and Road Initiative (BRI), major T&C companies see both opportunities and challenges in optimizing and restructuring the networks of their production facilities. One notable and growing trend associated with the BRI is the relocation of T&C manufacturing from China to ASEAN countries and the establishment of new factories along the Belt and Road (B&R). Much has been examined about the BRI at the national level, yet little is known about how companies in the T&C industry have responded to this grand economic development plan. This study aims to explore from industrial stakeholders’ perspectives, the factors that drive and hinder synergistic, mutually beneficial development of T&C production and trade among the B&R countries. To achieve this aim, it addresses the following questions: what are the challenges and opportunities faced by T&C companies establishing E. M. H. Chan Department of Design, Faculty of Design and Environment, Technological and Higher Education Institute of Hong Kong, Hong Kong, China e-mail: [email protected] C. K. D. Ho Department of Supply Chain and Information, The Hang Seng University of Hong Kong, Sha Tin, Hong Kong e-mail: [email protected] T. L. Yip Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Kowloon, Hong Kong e-mail: [email protected] A. Gunasekaran School of Business and Public Administration, California State University, Bakersfield, USA e-mail: [email protected] J. Cheung (B) Faculty of Fashion Design and Environment, Technological and Higher Education Institute of Hong Kong, Chai Wan, Hong Kong e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5_4

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or relocating production to B&R countries, and what tangible actions have been taken by them? In-depth interviews were carried out with ten industry professionals from Hong Kong-based companies and government institutions involved with T&C trade in the Asian B&R countries, such as Bangladesh, Cambodia, Indonesia and Myanmar. The findings of this study highlight the importance of pursuing sustainable development. On one hand, there is full of potential for T&C companies to achieve cost-effective production along the B&R countries through harnessing economic policy and transport infrastructure that facilitate trade. On the other hand, T&C companies see challenges in managing culturally diversity in the workplace as opportunities for pursuing corporate development in a socially responsible manner. In sum, this study reveals mutual supportiveness of economic and social aspects of T&C production and trade.

1 Introduction China’s Belt and Road Initiative (BRI), which was put forth by Chinese President Xi Jinping in 2013, emphasises on connectivity and co-operation, and provides impetus for future regional development of participating countries. The ultimate goal is to “Collaborate for Success”, and provide a win-win situation for trade. Entering its sixth year, the B&R initiative has attracted wide-spread support from more than 80 countries and international organisations. The initiative provides impetus to the global economy in the 21st century, and creates opportunities for different sectors, particularly in the low-wage labour intensive sectors, such as the textiles and clothing (T&C) industry. As the BRI is an ongoing endeavour, more projects are being launched and business opportunities continue to materialize. Governments and businesses are actively taking advantage of promising new opportunities, yet in the practical sense, conundrums remain unanswered. How can these parties collaborate to overcome the challenges? What tangible actions have already been taken? With the Association of Southeast Asian Nations (ASEAN) destined to greatly benefit from the B&R Initiative, how will the newly signed Hong Kong-ASEAN Free Trade Agreement further mobilize collaboration? Hong Kong is a convenient city for businesses from all over the world to meet and close potential deals with businesses from China. Accessibility into China for some countries are limited (e.g. due to visa issues) and therefore becomes a barrier that prevents some business transactions from taking place; hence companies may go to Hong Kong as a meeting location to discuss potential collaborative opportunities or find business partners. This therefore also prompts us to ask, are BRI projects progressing and driving local developments? This qualitative study is carried out to show how the BRI is transforming the development landscape. Interviews, are carried out in this study because they allow us to have in-depth discussions with industrial professionals who are active participants in the researched area. It will also provide us access to current, practical, and candid information that is not readily available.

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In the next sections, an overview of the global T&C industry, the BRI and economic co-operation in Asia is provided. The determinants of trade for T&C from the literature is also reviewed to understand what has been previously researched. Next, the methodology is described, followed by the finding and discussion, and lastly the conclusion.

2 The Global Identity of Textile and Clothing Manufacturing and Trade The T&C industry is central to the global economy and it is one of the oldest and largest export industries [7]. Many countries are highly export-oriented, and is often a starter industry for countries to engage in industrialisation for low cost labour and intensive manufacturing [7], and foreign exchange [13]. Since the 1970s, the global T&C industry has been expanding and providing employment to millions of workers in less developed countries [7]. Leading export countries for T&C at the time were recognised to be the East Asian countries i.e. Hong Kong, Taiwan, Korea, and China. With time, the industry saw an increase in T&C exporting countries, extending to countries such as India, Pakistan, Malaysia, Indonesia and Thailand, in the 1990s. Some of the more recent additions in the 2000s include countries such as Cambodia, Bangladesh, Philippines, Vietnam, and Sri Lanka [13]. Consumption in the global T&C industry is concentrated in three main regions, making them the key import markets: the USA, the EU and Japan [7, 13]. China has been the world’s largest exporter for T&C since 1995 [13]. In 2017, China’s T&C exports to the world reached approximately US$ 109 billion and US$ 157 billion, representing 40.2% and 39.6% of the world’s total T&C exports respectively [5]. The growth of China’s T&C exports has been most intensely felt by its Asian neighbours, given their close geographical proximity [13]. However, as labour costs have increased in China, retailers and brands have moved T&C production to other lower cost countries e.g. Cambodia, Bangladesh and Vietnam. The shift away from “Made in China” items can also be facilitated by China’s B&R initiative, where the initiative provides opportunities for global T&C trade development, especially in less developed economies along the Belt and Road routes. The perception of T&C production being dominated by countries like China could be replaced by the thought of a network of inter-connected countries.

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3 The Belt and Road Initiative (BRI) and T&C Trade The BRI sets out to promote economic co-operation amongst the countries involved. Designed to benefit all parties, it aims to enhance the free-flow of trade, provide efficient allocation of resources across markets and thus enhance market integration. With the B&R initiative striving to improvement investment and trade facilitation, it opens up potential trading and expansion opportunities for the T&C industry, particularly for T&C manufacturing. Establishing T&C manufacturing plants or relocation to countries, especially in lower-income countries in the B&R, could offer economic and industrial growth. The T&C industry is well known to be a labour-intensive industry, where T&C companies have moved production from country to country in search for low-cost labour for cost advantages. Restrictions which made some countries less appealing for trade could be answered by participation the BRI. It not only opens up opportunities for T&C companies, but also for the country involved. For example, the creation of job opportunities can help improve the division of labour, and consequently improve the economic welfare of the country. Barriers concerning infrastructure could be broken down over time as new infrastructure projects aimed to connect the B&R countries commences. The collaborative co-operation brought about by the BRI presents unforeseeable opportunities for the countries involved, and domestic and global T&C industry.

4 Economic Co-operation in Asia The BRI enables China to set up co-operation zones across Europe, Asia and Africa. Asia is a key region for China to launch economic trade co-operation where companies from both China and Hong Kong would be more inclined to pursue development opportunities within Southeast Asia. Countries within the ASEAN region include Brunei, Cambodia, Indonesia, Laos, Myanmar, Malaysia, Philippines, Thailand, Singapore and Vietnam, who are all in the BRI. The connectivity of these countries to China means development and expansion of the T&C industry in Asia can be supported by the advantages of the BRI e.g. for resources, markets, traffic and transport, and infrastructure. Along with Southeast Asia’s existing rapid expansion of their industrial production sector and investment growth in infrastructural development in recent years [9], the Initiative can further strengthen Southeast Asian countries’ close-knit supply chain relationships with China.

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5 Determinants of T&C Bilateral Trade Identified in the Literature Studies using econometric analysis have studied the influence of various factors on bilateral trade. These studies usually examine the trade flow between countries, and factors such as GDP, distance and exchange rates are common indicators used for analysing trade performance [12]. Sousa et al. [18] outline internal and external factors to describe factors that influence export performance of countries. The former includes factors related to marketing and management strategies, and the latter concerns foreign and domestic market characteristics. Moreover, trade policies are also a key factor explored in the literature. For example, Hoekman and Nicita’s [11] examined how trade policies affect trade flow for low-income countries. They concluded that tariffs (e.g. administration and entry barriers) and non-tariff barriers (e.g. quantitative restrictions and technical product regulations), are significant factors of trade restrictiveness for low-income countries. Similarly, Akinkugbe [1] examined the export performance for Africa and found that although there were reductions in tariffs and non-tariff barriers in the African countries, many trade facilitations issues e.g. poor customs regulations and administration, and restrictive trade, continue to discourage exporting in Africa. For T&C, several authors have explored factors for the T&C industry (e.g. [3, 4]). Again, common factors which influence trade flow include GDP, distance, population size, exchange rates, and trade policies were analysed. Interestingly, these studies which were specific for the industry, measured factors such as the country’s T&C production and consumption, labour costs and regional factors. These were found to be important attributes for understanding T&C trade [21]. These measures may provide useful grounds for exploring what challenges or opportunities T&C companies may face when establishing or relocating production to new countries, such as countries along the B&R.

6 Methodology Procedure This study adopts a qualitative approach to data collection using in-depth, semistructured interviews with experts from the T&C industry in Hong Kong. Interviews were identified as a suitable method for probing discussions in order to identify and extract current and practical information [16]. Purposive sampling was used to recruit experts from the T&C industry to explore the factors that organisations value when considering to establish manufacturing firms on the B&R countries in Asia. The focus was on identifying the barriers and opportunities for trade. Industrial experts were recruited at a Belt and Road Initiative summit held in Hong Kong in June 2018. Interviews where arranged with the informants over a two-week period in July 2018.

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The interviews were designed to capture the informant’s perspectives and experiences [19]. Informants were asked to comment on the factors they consider most important and least important when considering to set up a new manufacturing base in a new country. The interviews were conducted until there were minimal generation of new information [14], lasting from 45 to 60 min. Probing technique was used where interesting comments emerged to study in more detail [14]. The interviews were recorded, transcribed and coded using an inductive, grounded-theory approach to identify trends among the responses [2]. Sample In this initial study, ten industrial experts from six private sector organisations and four governmental institutions were recruited. All informants were from organisations/institutions with involvement in T&C manufacturing with at least one B&R country in the ASEAN region. The informants included two directors, two managing directors, one deputy director, two senior managers, one production manager, one head of research and development, and one officer. For confidentiality purposes, the informants’ have been assigned a pseudonym (see Table 1).

7 Findings and Discussion The initial findings from this study gives insight to some of the barriers and opportunities for T&C trading in Asia. The results show factors which are commonly looked out for by T&C organisations trading in the ASEAN region. The findings firstly highlight the challenges followed by the opportunities. Challenges faced by T&C companies establishing or relocating production to B&R countries Adjusting to social/religious needs of workers: Cultural differences was an interesting theme which emerged from the interviews which is not a factor previously discussed in the bilateral trade literature. Informants strongly commented on the need to adjust to the social needs of workers of the country. As Informant B observed, there was a cultural shock in terms of the lifestyle and religious values held by workers in Indonesia. We did experience some cultural shock when our production first started in Indonesia. Some of the staff are Muslims and need to pray five times a day. […] We had to get the production head to redo the roster, so those staffs could have their shifts covered by those who are not from the same religion, or had no religion. We also have to hire part-time staff to manage.

With reference to an institutional theory framework, Tran and Jeppesen [20] describe that regulatory, normative and cognitive institutions influence the way how SMEs practice Corporate Social Responsibility (CSR). The cognitive institution (i.e. the shared conceptions that forms social reality and meanings) entailed religious beliefs

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Table 1 Description of informants Pseudonyms

Nature of business

Position

Countries invested

A

Trading

Senior manager

Bangladesh; China; Cambodia; Guatemala; India; Indonesia; Jordan; Nicaragua; Philippines; Sri Lanka; Taiwan; Thailand; Turkey; Vietnam

B

R&D

Head of R&D

China; Cambodia; Indonesia; Myanmar; Philippines; Thailand

C

Trading

Senior sales manager

Vietnam

D

Government organisation

Officer

Myanmar

E

Government organisation

Deputy director

Bangladesh

F

Trading

Managing director

China; Cambodia; Indonesia; Myanmar; Philippines; Thailand

G

Production

Production manager

Bangladesh; China; India; Indonesia; Sri Lanka; Vietnam

H

Trading

Director

Cambodia; Indonesia; Thailand

I

Trading

Director

Cambodia; Indonesia; Philippines; Thailand

J

Logistics

Managing Director

Bangladesh; China; Indonesia; Sri Lanka; Vietnam

and cultural practices, which Tran and Jeppesen [20] outlined, influenced the management within factories. Managers in T&C manufacturing companies in Vietnam recognised the importance of different religious and ethnic practices, and incorporated these into the work environment to contribute to the local community. In our study, Informant B further commented on how the company found temporary ways to overcome their problem, where short- and long-term strategies were addressed to over-come the cultural difference: In the short term, we provided a room in the factory for them to pray. In the long run, the company could relocate the factory nearer a temple if possible.

While the solutions presented by Informant B’s company are within the boundaries of the company, providing support to local communities and cultural organisations is a further example in which T&C companies can practice CSR in the long term [20]. Support can include monetary contributions to local religious centres, schools, and other community-based organisations in the community.

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Opportunities for T&C trade in B&R ASEAN countries Lower labour cost in neighbouring countries: Companies have already recognised developing countries (e.g. Bangladesh, Vietnam and Cambodia) with lower labour wage. Informant G comments on their company’s low-cost production goals is the reason behind their shift in production to other countries: One of our KPIs is low cost. So for us to achieve cost effectiveness, we’ve had to shift our production from China to developing countries.

Previous studies have identified that increases in labour costs reduces manufacturing activity in the long run [10]. Hodge [10] outline that if domestic labour costs increase faster than the rates abroad, the competitiveness of domestic relative to foreign manufacturing declines. Consequently, this would result in the reduction of exports but greater import activity. In T&C industry, low wage countries usually gain greater global market share in production and exports of T&C products [17]. China was a country with inexhaustible supply of low wage workers and gained global labour advantage in the 1990s, however, the country’s wages have soared rapidly with globalisation between 1997 and 2007 [23]. Consequently, there has been anxiety over rising labour costs and suggestions that China is losing its cost advantage in labourintensive industries such as T&C. The participating developing countries, such as those mentioned above, in China’s BRI may provide a gateway and easier access for China based manufacturers or companies to relocate their manufacturing to those countries. Appreciation of foreign currency: China’s rapid growth and economic development has meant the RMB has appreciated against other currencies, meaning labour cost is not the only cost which has become more expensive, but also general production costs are no longer as low as they were before. Informant F explains the impacts on T&C trading: […] because of RMB appreciation, it has led to increased production costs, rent, utility costs and labour. We needed to go to countries with a lower value of currency.

Favourable business environment: With easier access to developing countries under the B&R initiative, countries which have strong political and governmental support for Foreign Direct Investment (FDI) may offer favourable opportunities for T&C trade development. Informant C talks about the business environment, outlining the business opportunities offered by the country: Moving production to a country depends on if they provide favourable FDI, policies, tariffs and tax incentives. Like in Vietnam, in the first 2 years you can be exempted from income tax. In 4 years, you can have 50% reduction in company income tax.

At the same time, there were also informants who also mentioned the concerns for trading in a country with an unstable political environment, as Informant D notes: Having our production in a country like Myanmar, we just hoped things like political wars don’t start and just hope there is political stability.

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In some countries such as India, the government uses industrial polices to develop a support mechanism for the T&C sector in order to attract FDI, and establish a well-diversified production and export support for the country [13]. Infrastructure—road and port: The BRI encourages regional economic development in infrastructure which can thereby promote connectivity between B&R countries and allow smoother trade flows. As anticipated from the literature, infrastructure was commented on by informants, for example, Informant F outlined: If the infrastructure (road and port) is good, it means more transport choice and flexibility for us. Better infrastructure means reduced delivery time and transportation costs!

Countries with better infrastructure suggests higher trade and therefore higher exports to the country [4]. Any improvement of transport efficiency in ports, roads, waterways and air transports, can lead to the greater gains as infrastructure plays a fundamental role in trade [22]. As commented by Informant F, reduction in time and costs in transportation will be the result of accessible and quality infrastructure. The BRI will promote future infrastructure projects and thereby presents opportunities for companies already operating, or new companies to establish, T&C manufacturing in neighbouring countries. Location proximity to supplier/port: Location still remains an important factor in bilateral trade as it has been well noted in the bilateral trade literature (e.g. [4, 8, 15]. In the interviews, the distance between the manufacturing plant and supplier or port are noted to have cost implications for trade. Ideally, suppliers of raw material who are within the country is preferred as Informant A comments: Raw material suppliers needs to be close to the factory. […] We also check if the raw material suppliers are within the country, because if they are, it reduces transportation costs. It also means quicker deliveries, shorter lead times and things like shorter lead time and quick replenishment, and so forth.

In the trade literature, distance is a variable used to capture transportation costs. Ekanayake et al. [6] elaborates that distance could make trading difficult for countries to engage in e.g. time, access to market information and markets. Geographical distance is found to be a factor which impedes trade [4].

8 Conclusion China is one of the world’s leading economies and it is emerging as one of the world’s leading sources of outward investment. As China’s overseas activities will expand further under the B&R initiative, the global T&C industry will also be granted opportunities to expand. This research examined the barriers and opportunities of T&C trade by Hong Kong companies who have invested in B&R countries in the ASEAN region. The findings of this study reveal that the B&R initiative provides several areas of opportunities, particularly in the economic and political developments in

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B&R countries for trade, and infrastructure. As the BRI opens doors for opportunities, Chinese companies come face to face with social factors which were identified as a challenge for T&C manufacturing managers in ASEAN countries. Acknowledgements The work described in this paper was fully supported by grants from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. UGC/FDS25/B01/17).

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Exploring Hong Kong’s Role as a Strategic Partner for “Belt and Road” Countries—Closing the Cultural Gap Liane Wai Ying Lee, Tak-Yan Leung and Piyush Sharma

Abstract Belt and Road (B&R) is an ambitious collaborative infrastructure development initiative launched by the Chinese government in 2013, covering over 60 countries with about two-third of world population and one-third of global GDP at the time, which has now extended to over 100 countries. This makes it an unprecedented plan for long-term economic growth with a lasting impact on the fortunes of the individual partner countries and the global economy as a whole. The overall time-scale for the project has been set at roughly 35 years and the total investment value in excess of US$10 trillion. The B&R initiative aims to build a shared cross-border infrastructure to facilitate foreign policy through economic cooperation and minimization of any conflict risk. However, B&R involves significantly weaker cross-border integration than an economic union like European Union by focusing on creating shared transport links among the partner countries and China but not doing anything with the production infrastructure in each country. The public response to B&R has been rather mixed across the various partner countries because people are still not sure about how this would benefit or harm their individual and national interests. In view of the uncertainty about the potential outcomes of a huge initiative like B&R, we aim to explore how it is perceived by the managers in both China and all the B&R partner countries. In this chapter, we aim to explore the nature and extent of ‘B&R-Readiness’, which we define as the ability of the managers working in China and B&R partner countries, to meaningfully engage with each other in order to face the challenges and tap the opportunities offered by the B&R initiative. Next, L. W. Y. Lee (B) Faculty of Management, Hospitality and General Education, Technological and Higher, Education Institute of Hong Kong, Chai Wan, Hong Kong e-mail: [email protected] T. Y. Leung Lee Shau Kee School of Business and Administration, The Open University of Hong Kong, Ho Man Tin, Hong Kong e-mail: [email protected] P. Sharma School of Marketing, Curtin University, Perth, Australia e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5_5

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we introduce a self-administered structured questionnaire to help these managers and their employers to assess their level of B&R-Readiness. We also explore the impact of psychic distance (differences in cultural values and business practices) and cultural familiarity between managers in China and the B&R countries. Finally, we identify and discuss the ways in which Hong Kong government and businesses can play a strategic role to prepare the managers in China and the B&R countries to be B&R-ready.

1 Background B&R initiative began as a call from the Chinese President Xi Jinping to jointly build the Silk Road Economic Belt during a state visit to Kazakhstan in September 2013, which was followed by a call by him to build the 21st-century Maritime Silk Road during a visit to South-East Asia in October 2013 [21]. These two proposals have evolved as the One Belt One Road initiative with a 35 years’ time horizon. Since then, China and its B&R partners have been trying to translate concepts and ideas into actions using policy consultations, trade promotions, infrastructure connectivity, financial cooperation and people-to-people exchanges. Early positive results were seen with the total trade between China and the B&R countries has exceeded US$5 trillion in the last five years, which has resulted in China becoming the largest trading partner for many B&R countries. Hence, it is not surprising to see that trade among the B&R countries registers a year-on-year growth of 18.8% to reach US$605 billion in the first half of 2018. China also introduced many new measures to liberalize trade and investment, including lower import tariffs for automobiles, spare parts and many consumer goods [21]. Trade among the B&R countries has improved with the completion of many connectivity projects, such as China-Kyrgyz-Uzbekistan cross-border road freight. China-Europe railway cargo express now reaches 43 cities in 15 countries in Asia and Europe, helping realize the huge potential for trade along this route. Trading conditions have also substantially improved with the deepening of financial cooperation, such as currency swap agreements between China and 22 B&R countries, reaching about RMB one trillion (about US$150 billion). This has greatly contributed to the stability and growth of trade by facilitating settlement of bilateral cross-border transactions and avoiding losses as a result of exchange rate fluctuations. Notwithstanding the above progress, there is still a long way to go to turn the ambitious vision of B&R into reality or to reach a consensus about its perceived benefits to all the involved countries and not just China [5]. For example, 27 of 28 EU embassadors critized China used its formidable global economic power to expand its geopolitical influence to benefit Chinese firms [15]. There is also a growing feeling that China would be able to exploit the countries along the B&R corridors to power its huge manufacturing industry at home and use it to advance its national economic interests abroad. We argue that one of the main reasons for these continued negative perceptions about the B&R initiative can be a lack of understanding and readiness

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among managers of firms not only in the B&R countries but also in China itself that may be preventing them from realizing its full potential. We address this gap by conceptualizing B&R-Readiness as a construct and developing a B&R-Readiness Scale (BRS) to help managers in China and in the B&R countries to assess and improve their level of B&R-Readiness. We also extend a conceptual model from prior research on free trade agreement between China and Australia (ChAFTA) to explore the impact of differences in cultural and business practices (psychic distance) and familiarity with Chinese culture on B&R-Readiness. We conceptualize this new strategic framework to apply for managers working in a cross-section of the B&R countries. Finally, we advocate Hong Kong’s role as a knowledge hub that can help managers in both China and the B&R countries improve their levels of B&R-Readiness. As a part of this, a B&R-Readiness Index is conceptualized that can be used to rank managers, firms and even B&R countries in terms of their readiness to adopt and implement it.

2 B&R Cultural Readiness Model The B&R region historically has been trading silk and tea from China, and spices from India were exported to Europe along the old Silk-route. The recent B&R initiative has developed six economic corridors spanning across Asia, Europe and Africa (Fig. 1). Other multi-partner agreements such as free trade agreements (FTAs e.g.

Fig. 1 B&R’s six economic corridors. Source HKTDC [18]

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NAFTA—North American Free Trade Agreement), common market and economic union (e.g. EU—European Union) and customs union (e.g. EU and Turkey, SICA, CARICOM) have been around for a long time. All these agreements aim to reduce the trade barriers, allow free movement of labor and capital, as well as coordinate and harmonize economic and social policies among the partner countries, playing a strategic role in creating a level-playing field on the basis of universal rules and governance principles [21, 40]. However, the results of these agreements have been quite mixed [24] as reflected in the BREXIT vote in the UK, withdrawal of the US from TPP (Trans-Pacific Partnership) and growing rhetoric against NAFTA and EU in their constituent countries. Past studies on FTAs focus on the macroeconomic impact of FTAs [16, 28] but there is sparse research on the perceived effects of FTAs on individual organizations and managers despite their critical roles in implementing these agreements [24]. As a result, there is limited or no knowledge about the extent to which the managers and organizations in the countries likely to be affected by these agreements are either aware of or ready to face the challenges and opportunities presented by these agreements. We expect similar challenges in the B&R context. In addition, B&R also presents a unique feature, wherein unlike most existing multilateral FTAs, it is an initiative driven by a single nation, China [13]. We argue that this unique reliance on China as the main driver of B&R would pose major challenges for the managers and organizations in the partner countries, as they would need to learn about Chinese culture and business practices in order to overcome their cultural barriers and deal effectively with their Chinese counterparts [41]. In addition, there is a growing debate over social justice and welfare as potentially negative consequences of FTAs [12, 31]. As we see from recent trade-war with the US and the China administration, confusion over terms of “equilibrium exchange rate” and ignorance over the primary drivers of the US capability in innovation [30]. Recent research shows that these negative perceptions may result from cultural and ethnic distance perceived by foreign managers, and lack of understanding of the Chinese culture [22, 24, 27]. Other non-utilitarian and geopolitical factors [22] such as mutual understanding, trust and reliance also need to be taken into consideration [11, 24, 29]. In recognition of this, a “friendly cooperation” through the “People-to-people bond” initiative is recognized in the blue-print of Xi Jinping’s Belt-road policy stressing the importance of cultural exchange to win multilateral and bilateral cooperation and public support [32]. More importantly, we propose that Hong Kong can utilize its unique strategic position as a long-term business and trading partner and a gateway to the external world for the Chinese economy [17], to help the firms and managers in the B&R countries get ready to work with their Chinese partners. Hong Kong, operating under one-country-two-systems launched by the Chinese government has been called the “connector” between foreign and Chinese entities [17]. Despite this important role that Hong Kong can play in enabling firms in the B&R countries to get ready to face the challenges, to our knowledge, there is no study that explore Hong Kong’s role in facilitating businesses in this regard.

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Fig. 2 B&R cultural readiness conceptual framework

We address the above vital knowledge gap in this chapter. We begin by conceptualizing a new multidimensional construct, called ‘B&R-Readiness’ (Fig. 2), to capture a wide range of factors that can influence the ability of managers and firms in China and the B&R countries to meaningfully engage with each other, in order to face the challenges and benefit from the opportunities offered by B&R initiative. Next, we proposed a scale (self-administered structured questionnaire) to help managers in China and the B&R countries assess their levels of B&R-Readiness. We then aim to extend a recent conceptual model that explores the impact of ethnic distance and cultural familiarity on the perceived effects of free trade agreements [24] to the context of B&R by including B&R-Readiness as a key outcome in this framework. Finally, we discuss the ways in which Hong Kong government and businesses can play a strategic role to prepare the policy makers and decision-makers in the B&R countries to get B&R-ready.

3 Literature Review 3.1 Social Identity Theory and Ethnocentrism Past studies on free trade agreements (FTAs) indicate that apart from political and economic benefits that can be derived from increased trade flows [11, 16], negative/positive perceptions and attitudes held by each countries’ stakeholders could dampen or enhance their desire to engage in FTA discussions based on their perspective through their “ethnocentric lens”. Ethnocentrism is a sociological phenomenon associated with perceived superiority (or, culture supremacy) of in-group versus outgroups, wherein one’s own culture is considered superior to others who are culturally

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different. Ethnocentrism is shown to influence decision-makers’ and managers’ views on strategic decisions such as procurement and regional marketing strategies [35]. Social identity theory [38] has been used to explain the impact of managers’ and employees’ perceived ethnic identity and belonging to a particular “in-group” on their perceptions about the benefits and pitfalls of free trade agreements [14, 26]. Social identity theory is an individual’s belief about their self-identity towards a particular cultural group, shaped by individual’s view of their social-cultural, political or historical background [10, 34]. We argue that social identity theory can also help explain the attitudes and perceptions of the managers in working in the B&R countries and their Chinese counterparts, towards their levels of B&R-Readiness for and participation in B&R-related initiatives.

3.2 Psychic Distance Psychic distance reflects people’s perception of differences between their culture and others in terms of both national and individual level characteristics [36] and it is different from cultural distance [25] that only focuses on the differences in Hofstede’s [20, 19] national cultural dimensions. Moreover, prior research using cultural distance shows mixed results in a variety of business settings [2, 3, 33]; hence, we use psychic distance in this project due to its superior ability to predict business outcomes (e.g., [36, 37]). Business partners with high psychic distance may face problems in communicating with each other and developing trust [23]. In addition, the differences in cultural, sociopolitical, economic, legal environments and business practices may lack a common frame of reference for business partners which may also adversely affect their relationships with each other. We expect the psychic distance between the managers working in China and the B&R countries will face similar challenges.

3.3 Cultural Familiarity According to Byrne’s similarity-attraction paradigm [6], people with increased familiarity of other cultural value systems through reinforced behavior (e.g. through training) tend to respond more positively than those with less understanding. Similarly, in a study of intercultural competence, employees with higher levels of intercultural competence deliver greater customer satisfaction [39]. Even in the context of marketentry strategies into China, cultural familiarity with concepts like “Guanxi” are key success factors [9, 26]. However, past research on free trade agreements with China ignores these important cultural variables [24]. We address this important research gap by including familiarity with Guanxi and other similar cultural variables to measure the level of cultural familiarity between managers in the B&R countries and their Chinese counterparts.

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3.4 B&R-Readiness To conceptualize B&R-Readiness as the key outcome measure, we review extant literature on similar bilateral and multilateral free trade agreements (FTAs). We find this appropriate due to the similarities between current FTAs and B&R initiative which also involves both bilateral and multilateral relationships among the partner countries. In fact, China has already been discussing with the B&R-countries and WTO to establish free-trade agreements [21]. Conceptualizing B&R-Readiness as a multidimensional construct would help the partner countries assess their levels of B&R-Readiness to participate and reap maximum benefit from B&R and enable policy makers to consider means of negotiation when entering into talks among the B&R countries and with China. To do this we begin with a review of the perceived advantages and disadvantages of FTAs identified by Kingshott et al. [24]. According to Kingshott et al. [24], the first category of perceived advantage of FTAs relates to ‘investment and barriers’, which in the B&R context may explore how China can help the B&R countries attract more inbound investment and exports, eliminate tariffs and barriers that impede flow of goods and services etc. The second category, ‘exports and spends’, includes factors that enable the B&R-countries to enhance their competitiveness and promote economic integration along the relevant B&R corridors (Fig. 2). The third category, ‘jobs, income and competition’, involves the B&R countries increasing their productivity, income growth and jobs by building stronger ties with China and other B&R countries. In terms of perceived disadvantages of FTA outcomes, we relate the three categories introduced by Kingshott et al. [24] as follows: (1) ‘micro-economic environment’, represented by the reduced competitiveness, poorer working conditions and lower well-being for employees in the B&R-countries; (2) ‘macro-economic environment’, indicated by the possible destruction of the B&R countries’ indigenous cultures and natural resources, theft of intellectual property, and imbalance of benefits between the B&R-countries and China; and (3) ‘individual well-being’, reflected by the deteriorated mental health and well-being for the employees in the B&R-countries. Apart from these six key indicators of B&R-Readiness, few more indicators are proposed based on further literature review, such as ‘dispute settlement’, represented by the ability of China to assist the B&R countries to easily resolve and settle dispute issues [7]; ‘new trade support’, involving digital economies, green growth and social media [7]; and ‘mode of market entry’, with different levels of control ranging from wholly owned subsidiary (high control) to licensing (low control) [4]. Based on the above discussion, we put forth the following hypotheses: H1: Psychic distance between the managers of China and the B&R countries has a negative effect on their level of cultural familiarity with each other. H2: Psychic distance between the managers of China and the B&R countries has a negative effect on their level of B&R-Readiness. H3: Cultural familiarity between managers of China and the B&R countries has a positive effect on their level of B&R-Readiness.

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H4: Cultural familiarity between managers of China and the B&R countries has a positive moderating impact on the negative effect of psychic distance on their level of B&R-Readiness. H5: Perceived role of Hong Kong has a positive effect on cultural familiarity between managers in China and the B&R countries. H6: Perceived role of Hong Kong has a positive effect on the level of B&RReadiness for the managers in China and the B&R countries.

4 Research Design To examine the direct and indirect effects of psychic distance, cultural familiarity and perceived role of Hong Kong on the level of B&R-Readiness in the B&R countries, we begin by developing and testing a scale to measure B&R-Readiness using the well-established approach suggested by Churchill [8]. First, a review of literature is conducted followed by qualitative interviews with decision makers in both B&R countries and China. The target decision makers are expected to have direct responsibility for decision in entering into bilateral and multilateral relationships among the B&R countries and China. The purpose of these in-depth interviews is to identify the various aspects of B&R-China market process of services firms, their selection of B&R-China trade practices and entry modes and finally, perceived benefits and barriers in entering B&R-China bilateral trades.

5 Scales and Measures We plan to adapt existing measures for all the constructs included in our conceptual model that have well-established scales (e.g. psychic distance) and develop new scales for those constructs that do not have existing scales (e.g. B&R-Readiness). Psychic distance: We aim to use the two-dimensional psychic distance (PD) scale consisting of country and people characteristics [37]. Country characteristics include level of economic and industrial development, communications infrastructure, marketing infrastructure, technical requirements, market competitiveness, and legal regulations. People characteristics include per capita income, purchasing power of customers, lifestyles and consumer preferences, level of literacy and education, language, and cultural values, beliefs, attitudes and traditions. Cultural familiarity: Cultural familiarity is measured using the same method as that of Kingshott et al. [24], i.e., by asking the participants to what extent their firms has connections in China/B&R countries, including physical presence such as branch offices, warehoused and distribution infrastructure or ownership by China/B&R countries. We use a ten-item Guanxi scale [42] to measure the familiarity with this specific element of Chinese culture for the managers in partner countries.

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Perceived role of Hong Kong: As there is no existing scale for this construct, we develop a new scale with specific items based on the agreement signed with NDRC [32], including Hong Kong’s role as a global offshore Renminbi business hub; green finance; diversified professional services; maritime development and international legal and dispute resolution services; establishment of regional headquarters in Hong Kong; academic, cultural and arts exchanges, tourism products and lastly, stage conferences and exhibitions. B&R-Readiness: As there is no existing scale for B&R-Readiness, we adapt Kingshott et al.’s [24] 44-item scale, which consists of six dimensions, three for the perceived advantages and three for disadvantages of FTAs. Table 1 shows some sample items for each of these six dimensions. We use in-depth interviews with the managers working in partner countries to identify other dimensions of B&R-Readiness and include these in our new scale after rigorous empirical validation.

6 Scale Development and Data Analysis We combine the findings from our literature review and in-depth interviews to develop an initial list of items for the ‘Perceived role of Hong Kong’ and ‘B&R-Readiness’ scales. We then use an expert panel to review and assess these items for face validity, followed by a series of empirical studies to further purify and refine this scale using both exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). We also test their psychometric properties, such as construct reliability, face, convergent, discriminant and predictive validity as well as cross-cultural measurement equivalence. Finally, we use the two-step structural equation modelling approach recommended by Anderson and Gerbing [1] with AMOS 24 software to test all our hypotheses.

7 Findings and Discussion This chapter conceptualizes the B&R Cultural Readiness Model where the psychic distance between business firms and their managers in the B&R countries and their counterparts in China would have a negative influence on their levels of B&RReadiness. However, this negative effect of psychic distance on B&R-Readiness would be positively moderated (attenuated) by cultural familiarity that would be reinforced by the intervening efforts of Hong Kong government and businesses, which would encourage businesses in the B&R countries to actively prepare themselves and enthusiastically participate in B&R-related initiatives. The conceptual framework will help managers in both B&R countries and China appreciate the importance of getting ready to understand and implement a complex yet potentially highly beneficial initiative like B&R. Moreover, senior business leaders, public policy makers and other decision-makers in Hong Kong can also use our

72 Table 1 Proposed B&R readiness scale items

L. W. Y. Lee et al. Scale items Investment and barriers (IB) Help (B&R-country/China) attract greater inbound foreign investment Encourage greater investments by (B&R-country firms/Chinese firms) in (B&R-country/China) Enhance the attractiveness of (B&R-country/China) as an investment destination Build shared approaches to trade and investment Help (B&R-country/China) substantially expand its overall exports Eliminate trade tariffs between (B&R-country and China) Remove ‘behind the scenes’ barriers that impede free flow of goods and services between (B&R-country and China) Exports and spends (ES) Help (B&R-country/China) secure a stable export market Contribute to (B&R-country/China) GDP growth Foster freer trade flows between (B&R-country and China) Help promote regional economic integration Help build common rules related to ‘country of origin’ between (B&R-country and China) Enhance the competitiveness of (B&R-country/China) exports into the (B&R-country/Chinese) market Jobs, income and competition (JIC) Help increase the productivity of (B&R-country/Chinese) businesses Enhance cooperation between ‘value chain’ partners in (B&R-country and China) Result in income growth for (B&R-country/Chinese) businesses Help create new jobs in (B&R-country/China) Give more choices to (B&R-country/Chinese) customers Create healthy competition for local (B&R-country/Chinese) firms Help increase the international market shares of (B&R-country and Chinese) firms Create stronger ties between (B&R-country and Chinese) firms Provide (B&R-country/Chinese) businesses access to cheaper inputs Micro-economic environment (MIE) (continued)

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Scale items Lead to more jobs in (B&R-country/China) being outsourced to outside (B&R-country/China) Make domestic (B&R-country/Chinese) industries less competitive Expose local (B&R-country/Chinese) businesses to unfair competition Flood the (B&R-country/Chinese) market with cheap (B&R-country and Chinese) goods Lower the quality of service provided to (B&R-country/Chinese) consumers Result in poorer working conditions for local (B&R-country/Chinese) employees Hurt the well-being of employees in local (B&R-country/Chinese) firms Expose (B&R-country/Chinese) workers to exploitation by other (B&R-country/Chinese) employers Macro-economic environment (MAE) Increase in the theft of intellectual property by (B&R-country/China) Contribute to the degradation of natural resources in (B&R-country/China) Lead to destruction of indigenous cultures in (B&R-country/China) Reduced domestic tax revenue for the (B&R-country/Chinese) government Benefit only the big (B&R-country/Chinese) businesses Expose (B&R-country/China) to security threats from (China/B&R-country) Benefit (B&R-country/China) more than (China/B&R-country) Allow (B&R-country/Chinese) firms to avoid dealing with their problems by shifting these to (China/B&R-country) Individual well-being (IWB) Reduce the levels of workplace awareness of depression in (B&R-country/Chinese) firms Reduce the levels of workplace awareness of anxiety in (B&R-country/Chinese) firms Increase stigma of individuals with poor mental health in (B&R-country/Chinese) firms Increase discrimination towards individuals with poor mental health in (B&R-country/Chinese) firms Reduce ‘help seeking’ of individuals with poor mental health in (B&R-country/Chinese) firms

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findings to design appropriate market-entry policies and strategies to facilitate multilateral and bilateral trade in the B&R countries. Implications of this framework can be further extenuated to a B&R-Readiness Index that can be used to rank managers, firms and even B&R countries in terms of their readiness to adopt and implement it. Finally, we hope this framework would help the common public in China and the B&R countries to understand the different positive and negative facets of B&R initiative, which may help allay some of their concerns in this regard and make them respond to any news about B&R in a well-informed manner.

References 1. Anderson JC, Gerbing DW (1988) Structural equation modeling in practice: a review and recommended two-step approach. Psychol Bull 103(3):411–423 2. Berry H, Guillén MF, Zhou N (2010) An institutional approach to cross-national distance. J Int Bus Stud 41(9):1460–1480 3. Beugelsdijk S, Kostova T, Kunst VE, Spadafora E, van Essen M (2018) Cultural distance and firm internationalization: a meta-analytical review and theoretical implications. J Manag 44(1):89–130 4. Blomstermo A, Deo Sharma D, Sallis J (2006) Choice of foreign market entry mode in service firms. Int Mark Rev 23(2):211–229 5. Bulloch D (2019) After a brief silence, skeptics of China’s belt and road initiative are speaking up again. Available at: https://www.forbes.com/sites/douglasbulloch/2018/04/18/china-beltroad-initiative-obor-silk-road/#27e5e81254da. Accessed 13 Nov 2019 6. Byrne D (1997) An overview (and underview) of research and theory within the attraction paradigm. J Soc Pers Relat 14(3):417–431 7. Chia SY (2015) Emerging mega-FTAs: rationale, challenges, and implications. Asian Econ Pap 14(1):1–27 8. Churchill G (1979) A paradigm for developing better measures of marketing constructs. J Mark Res 16(1):64–73 9. Davies H, Leung TK, Luk ST, Wong Y (1995) The benefits of “Guanxi”: the value of relationships in developing the chinese market. Ind Mark Manage 24(3):207–214 10. De Ruyter K, Van Birgelen M, Wetzels M (1998) Consumer ethnocentrism in international services marketing. Int Bus Rev 7(2):185–202 11. Dixon PB (2007) The Australia–China free trade agreement: some modelling issues. J Ind Relat 49(5):631–645 12. Doumbia-Henry C, Gravel E (2006) Free trade agreements and labour rights: recent developments. Int Labour Rev 145(3):185–206 13. Ferdinand P (2016) Westward ho-the China dream and ‘one belt, one road’: Chinese foreign policy under Xi Jinping. Int Aff 92(4):941–957 14. Granovetter M (1983) The strength of weak ties: a network theory revisited. Sociol Theory 1(1):201–223 15. Heide D, Hoppe T, Scheuer S, Stratmann K (2019) China first: EU ambassadors band together against silk road. Retrieved 13 November 2019, from https://www.handelsblatt.com/today/ politics/china-Hfirst-eu-ambassadors-band-together-against-silk-road/23581860.html?ticket= ST-1569549-xBEzqbMUqqv5EKxdE2Lt-ap4 16. Hertel T, Hummels D, Ivanic M, Keeney R (2007) How confident can we be of CGE-based assessments of free trade agreements? Econ Model 24(4):611–635 17. HKSAR (2017) Arrangement between NDRC and HKSAR government on advancing Hong Kong’s full participation in and contribution to belt and road initiative. https://www.info.gov. hk/gia/general/201712/14/P2017121400551.htm. Accessed 17 Sept 2019

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18. HKTDC (2019) The belt and road initiative. http://china-trade-research.hktdc.com/ business-news/article/The-Belt-and-Road-Initiative/The-Belt-and-Road-Initiative/obor/en/ 1/1X000000/1X0A36B7.htm. Accessed 18 Sept 2019 19. Hofstede G (1983) The cultural relativity of organizational practices and theories. J Int Bus Stud 14(2):75–89 20. Hofstede G (1980) Sage Publications, Beverly Hills, CA 21. Hu YZ (2018) Seventh China round table Eurasian perspectives on the future of the multilateral trading system: accessions and the evolution of WTO rules, World Trade Organization. https://www.wto.org/english/thewto_e/acc_e/crt_07_session_1_statement_mr_ hu_yingzhi_china.pdf. Accessed 17 Sept 2019 22. Huang Y (2016) Understanding china’s belt & road initiative: motivation, framework and assessment. China Econ Rev 40(1):314–321 23. Johnston WJ, Khalil S, Jain M, Cheng JMS (2012) Determinants of joint action in international channels of distribution: the moderating role of psychic distance. J Int Market 20(3):34–49 24. Kingshott R, Sharma P, Hosie P, Davcik N (2018) Interactive impact of ethnic distance and cultural familiarity on the perceived effects of free trade agreements. Asia Pac J Manage. https:// doi.org/10.1007/s10490-018-9581-0 25. Kogut B, Singh H (1988) The effect of national culture on the choice of entry mode. J Int Bus Stud 19(3):411–432 26. Lee LWY, Tang Y, Yip LS, Sharma P (2018) Managing customer relationships in the emerging markets—Guanxi as a driver of Chinese customer loyalty. J Bus Res 86(1):356–365 27. Lee LWY, Leung PKH, Sharma P (2018) One-belt, one road—OBOR-readiness for tourism industry. In: Abstracts of the one belt, one road, one tourism international conference. committee of OBORT international conference 2018. Palembang, Indonesia 28. Li C, He C, Lin C (2018) Economic impacts of the possible China–US trade war. Emerg Mark Fin Trade 54(7):1557–1577 29. Liu W, Dunford M (2016) Inclusive globalization: unpacking china’s belt and road initiative. Area Develop Pol 1(3):323–340 30. Liu T, Woo WT (2018) Understanding the US–China trade war. China Econ J 11(3):319–340 31. Lopert R, Gleeson D (2013) The high price of “free” trade: US trade agreements and access to medicines. J Law Med Ethics 41(1):199–223 32. NDRC (2015) Vision and actions on jointly building silk road economic belt and 21st-century maritime silk road National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, 1st edn. Foreign Languages Press Co. Ltd., People’s Republic of China. http://www.ndrc.gov.cn/gzdt/201503/ t20150330_669392.html. Accessed 17 Sept 2019 33. Popli M, Akbar M, Kumar V, Gaur A (2016) Resultant cultural distance and cross-border deal abandonment: role of cultural friction. J World Bus 51(3):404–412 34. Sharma P, Tam JL, Kim N (2012) Intercultural service encounters (ICSE): an extended framework and empirical validation. J Serv Mark 26(7):521–534 35. Shimp TA, Sharma S (1987) Consumer ethnocentrism: construction and validation of the CETSCALE. J Mark Res 24(3):280–289 36. Sousa CM, Bradley F (2006) Cultural distance and psychic distance: two peas in a pod? J Int Mark 14(1):49–70 37. Sousa CM, Filipe Lages L (2011) The PD scale: a measure of psychic distance and its impact on international marketing strategy. Int Mark Rev 28(2):201–222 38. Tajfel H, Billig MG, Bundy RP, Flament C (1971) Social categorization and intergroup behaviour. Eur J Soc Psychol 1(2):149–178 39. Tam J, Sharma P, Kim N (2014) Examining the role of attribution and intercultural competence in intercultural service encounters. J Serv Mark 28(2):159–170

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Why Does China Need Belt and Road Initiative? Kashif Shafiq, Zubair A. Shahid, Yu Chen, Alishah Chandani and Atif Ghulam Nabi

Abstract Belt and road initiative (BRI) is considered one of the most important global development strategies ever made by the Chinese government. It is estimated that the worth of the belt and road is around USD 1 trillion comprised of approximately 1700 different projects. It has been stated that China is the biggest beneficiary of this initiative. This chapter is unique in the sense that it unpacks the fundamental reasons behind this potential series of projects from the economic, social and political perspectives of China only. It examines as to how China will be benefited from this initiative specially in the terms of business of its textile and clothing industries. Also, it explores the various opportunities that the country can utilize with the help of one belt and road initiative. However, with a global acclaim on one side, the belt and road initiative has been panned by the opponents who have expressed concerns about the expected problems for China while carrying out this massive initiative. This discussion and opinion based chapter examines these challenges and issues which can jeopardize situation of China and the collaborating nations and then relevant recommendations for policy makers and future researchers are made.

K. Shafiq · Z. A. Shahid (B) · A. Chandani · A. G. Nabi IQRA University, Karachi, Pakistan e-mail: [email protected]; [email protected] K. Shafiq e-mail: [email protected] A. Chandani e-mail: [email protected] A. G. Nabi e-mail: [email protected] Y. Chen Department of Product Planning Project Management, Hefei Guoxuan High-Tech Power Energy Co., Ltd, Hefei, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5_6

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1 Introduction Embarked on since 2013, belt and road initiative (BRI) is one of the most widely discussed topics now days. More than 8400 BRI related articles have been published by Chinese scholars. In fact, it is considered a remarkable venture of the century involving at least 65 nations [11]. These collaborating countries of BRI spread from South East Asia to Eastern Europe and Africa and own almost half of the total world population with a quarter of international GDP (Gross Domestic Product). Comprised of a series of projects, it has been designed to augment economic integration as well as collaboration on a transcontinental spectrum [1]. This stimulus package, comprised of a strong chain of railways, roadways, ports, pipelines, real estate, power stations etc., is destined to connect China with the rest of the world. The silk road economic belt and the 21st century maritime silk road will be used to create a connection among Asia, Europe and Africa which will result into six economic corridors. BRI has got substantial amount of internal and external funding. It is expected to receive $100 billion from Asian infrastructure investment bank. Around $40 billion will be provided by Silk road fund. Series of $100 billion will be released by a new development bank of BRIC whereas China Development bank will provide $900 billion to this “Chinese Marshall Plan”. Moreover, BRI is expected receive several loans from public banking institutions. China has deployed all dimensional human resources to provide the necessary support and assistance for BRI. Although BRI has strategic importance worldwide, it is assumed that the largest beneficiary of this initiative is China. The structure of this chapter is as follows: following the introduction, the review is presented on Chinese interest and benefits behind BRI, followed by a discussion on contextual challenges and solutions (highlighting supply chain sustainability related risks), additionally focusing on textile industry. A list of recommendations provides directions for future extensions.

2 Unpacking the Chinese Interests and Benefits Behind Belt and Road Initiative A myriad of motivations and calculations compelled China to introduce BRI. China started realizing the aftershocks of international financial crisis in 2008–09. By the end of 2010, the US government declared to plan “pivot” toward the region of Asia Pacific. Ultimately China had to reevaluate its economic policy in the light of both internal and external environments. These two events have played a significant role in the foundation of BRI. China has anticipated significant economic, political and social gains to start such a gigantic group of projects. BRI has got the potential to change the economic landscape of China. The economic growth of China has reduced since 2012 and diminished to 6.7% in 2016 which is a record level decline during last 25-year period [18]. BRI has become an indispensable tool for Chinese policy makers to respond to the declining

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trend of Chinese economy. BRI was introduced as an innovative international trade strategy in order to attain multilateral coordination. The construction of silk road economic belt and maritime silk road are likely to make this coordination possible. BRI will facilitate China’s dream to have potential Eurasian connection between Asia and Europe. It is evident that Europe purchases almost 1 billion worth of goods from China every year whereas China just import 50% of this from Europe. BRI will deepen the trade, business and investment between these two regions. For example, some national Chinese state-owned company set programs to accelerate financial support for Chinese SMEs invest (including acquisition and mergers) in European countries. A fundamental objective of BRI is to develop transport corridors to attain foreign markets and accelerate the overall turnover of goods from China to Europe and adjacent areas via central Asia [12]. China wanted to strengthen its existing supply chains and develop new globally integrated supply chains which could be extremely important for its economic growth. It has been stated by the economists that China started BRI initiative because it wanted to make sure that the excess surplus of different products is on longer a burden for the economy and the excess can be used in other regions outside China effectively [9]. Chinese products will have new and better markets outside China which will bring additional earnings for the country. The global market share is one of the motivations for firm level exploration, but at the national level, BRI is a movement of the Chinese government to open its market, businesses, and communication to the world. Thus, BRI is aiming to assist these domestic businesses to enter the world platform while they might lack of such resource/knowledge/qualification, and integrates stronger for businesses already exist in the world platform. In this way, BRI is an incubator of Chinese owned international companies. Several products manufactured by China are not viable for exports because of costs and lead time issues and once the BRI has been into operations these goods will be of high demand for other countries. China is looking at the innovative and cost saving logistics systems provided by one belt and road to facilitate and coordinate the movement of goods much more effectively. A classic logistics system resulting out from BRI will enable china to increase its revenues and provide better customer services. The new northern, central and southern corridors will certainly contribute to the effectiveness of the logistics system of China. The innovative logistics system provided by BRI will enable China to acquire natural resources effectively. China purchases copper and iron from Africa whereas oil and liquefied come from the Arabian Peninsula. Strait of Homuz, the gulf of Arden, strait of Malacca and the South China sea are often the victim of pirates. China has been concerned of the presence of US navy in the Indian and the Pacific Ocean which could have a negative impact on the supplies of China. BRI is expected to overcome these hurdles. BRI can trigger Chinese exports in US which is facing rising protectionism as well as in European union with slow economic momentum [1]. However, BRI does not only set smooth logistic system on the economic impact but also on the political influence. As Chinese government have very strong view toward South China sea conflicts and strict claim on One China policy, application

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of BRI in these areas means the acceptance with these principles too. It is a matter of international relationship between China and South Asia countries. Today, almost 60% of the oil reserves are owned by Middle eastern countries. China’s demand for energy has risen in the past and BRI is a way forward to attain regular supplies of energy from Middle Eastern countries with the lowest possible lead time. Chinese house hold electronics, telecom equipment, machinery equipment, 3D printers, online services, unmanned aircrafts can bring additional revenues for China in other countries via BRI [7] China is aimed at increasing its market share with the help of land export routes and decrease its dependency on USA. Most of the activities of BRI will be made in Yuan and the national currency of China will be promoted. Yuan, driven by capital account flows as well as trade related flows, will emerge as a strong currency in the international market in the coming years. BRI will enable China to increase the celerity of its currency’s internationalization as well as the economic influence. China introduced BRI to expand its influence in some part of Eurasia, for example, West Asia, South Asia, the Middle East and Europe. BRI is aimed at gaining Chinese power status. BRI ensured Chinese naval presence in the Indian Ocean by heavy investments in the Srilankan port (Hambantota), Pakistan port (Gwadar) and Myanmar port (Kyaukpyu). The security and the economy area connected with each other and one belt and road will bring this connection for China [4]. One belt and road initiative will integrate China with central Asia, the Persian Gulf, the Mediterranean, central and eastern Europe and then finally Germany and Netherlands. BRI is certainly a tactics to protect Chinese political stance. BRI is of prime importance as far as the development of Chinese society and government is concerned. Chinese analysts have urged that poverty and underdevelopment have been the major cause of slow economic growth, unrest and extremism in China. As Chinese companies will gain more access to international markets. It is likely to influence the existing GDP and export activity. Hence, development of BRI is expected to improve the living conditions of the people of China will bring better living conditions. China has been developing strategies to provide more opportunities to existing labor force. It will initiate several contracts in which the Chinese labor force will be given opportunities to work overseas. BRI can be significant in improving the living standards of the Chinese people.

3 Contextual Challenge of Belt and Road Initiative Despite the fact that the belt and road initiative has received acclaim worldwide, it is likely to face some hazards and uncertainties. BRI has been criticized due to the nature of its complexity [16] in context of business applications, readiness of FDI, and innovation capabilities. The projects and activities associated by BRI are defined with scope and objectives which can inhibit to achieve concert results. In order to overcome this issue Chinese government led communication strategy is recommended. China has got its own economic difficulties which can hamper the

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progress of BRI. Security and safety issues can jeopardize the architecture on which BRI is built [17]. It can be difficult to achieve the very high level of collaboration and integration required for BRI. International institutions which are involved in the cooperation and the capital seem to be too dispersed. In this connection analysis of Chinese economic strengths, weaknesses, opportunities and threats could facilitate in better understanding the economic hurdles specially those of retailing business. Additionally, securing the passage of different straits can be a challenging task [6]. Therefore, necessary surveillance is suggested to secure national assets and resources. Similarly, political instability in these countries might also create anti-BRI concerns. In our opinion the Chinese must forecast political changes and design BRI as part of world peace strategy. BRI is heavily dependent upon loans borrowed both from public and private sectors. It is rather difficult to attain loan repayments which could weaken the country’s debt position. A rigorous debt management plan will facilitate these payments. Furthermore, the hazard to the ruling markets of western oligopolies and the political governance of the G7 relates to the social norms and advancement strategies of China. Cultural differences are a barrier and each collaborating country can devise its own strategy to attain regional influence. There are different groups within these countries which might anticipate to lose their cultural identity because of hidden objectives of BRI. There is a belief that BRI’s framework is just to protect the cultural and political dominance of China only. The major participating nations of BRI are those located in Central Asia where trust is very limited. It is suspected that China might lose the trust of the partnering countries in the long run [13]. Inter-cultural and educational exchange programs will foster better understanding of cultural nuances of participants involved. Also, the challenge of effective human development can be met by development of sustained institutions to create a support system with all participating nations. A more realistic model would be establishing 1 or 2 role modeling cross cultural programs and making them as the training/resource center for following programs and businesses. It is anticipated that MNEs and SMEs from the collaborating countries lack readiness to establish business linkages with Chinese firms and markets. Additionally, their willingness to engage in this mega series of projects is limited. Lack of readiness and willingness to change could be a result of lack for information provided on BRI projects. Moreover, language barriers pose another threat as there are different languages spoken in the collaborating nations of BRI. Finding an appropriate language strategy might help firms and managers at all levels to communicate and collaborate.

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4 Supply Chain Sustainability Related Risks and Solutions for Belt and Road Initiative Understanding the thematic clusters of supply chain sustainability related hazards and risks is inevitable for effective supply chain risk management [5]. “Triple Bottom Line” considers sustainability of any supply chain activity or project at the intersection of economic, social, and environmental dimensions [14]. BRI seems a cornucopia of projects and might fail to achieve balance of these dimensions which can prevent the supply chain of China and those of collaborating nations from being sustainable. There is hardly any precedent for understanding and analyzing the environmental consequences behind such mammoth series of BRI [15]. While few studies have focused on BRI’s impact on environment, experts have raised their attention on the invasion of natural environmental concerns and the consequences of declining native biodiversity. An estimate of WWF has revealed that BRI might have damaging effect on endangered species specially because most of BRI projects are centered around the living areas of habitats. Further scientific and professional studies must be conducted in the context of environmental protection. Activities of BRI will lead to dissection of natural environment which can pose direct threat to plants. Most of the proposed tunnels, pipelines, bridges, dams and train stations are near to biodiverse areas. Alternative routes could be discovered to reduce the threats of extinction of endangered species including plants and animals. In case of absence of precautionary measures, cases of poaching and deforestation can increase. Activities of BRI can lead to dissection of natural environment. Natural resource exploitation can result from high number of road connections among Africa, northern Russia, and northern China which are being constructed to assist the facilitate infrastructure of BRI. This infrastructure will enable the developing countries to move faster and have better employment and foundation for certain industries [8]. Both urban and rural constituencies are expected to face air and noise pollution because of construction projects of BRI. Excessive or unnecessary packaging, water scarcity, natural disasters can worsen the environmental aspect. Most of the collaborating nations of BRI initiatives are under developed where the social inequalities issues are very rampant. BRI can be victim of transnational crimes. Corruption scandals related to BRI might arise. Consequently, this may not arise for the partners with stronger principles and governance structures. One school of thought has indicated that BRI has been responsible for shrinking budget on social, medical and education budget in China. A proportion of local insurgents in China has considered BRI prodigal. The question that why the funds being used for BRI could not be used for just regional development might create disturbance. Such local resistance cannot be ignored. It has been stated that BRI might not be able to justify equality of work opportunities regardless of race and origin. Selection criteria and procedure should not be biased.

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5 Textile and Clothing Industries in Focus Clothing and textile industries is crucial for Chinese economy. According to the National garment association, there are at least 100,000 major clothing producers in China. World trade statistical review has estimated that China had exported US$175 billion of clothing products by 2015. However, the growth of the industry has declined in the past and the industry has been facing a number of challenges. In certain Asian countries the cost of labor is very low. It will further allow Chinese clothing MNEs and SMEs to outsource cost effective human resource. BRI can provide better selection of textile raw material importers located in the participating countries of BRI (India, Bangladesh, Pakistan, Philippines, Vietnam and Cambodia). Additionally, leading to better sourcing decisions for Chinese firms. Guangzhou-Shenzhen-Honking Express link, Europe Western China International transit corridor project, Incheon Beihai undersea tunnel and Moscow Beijing high speed rail along with other transport projects can transform the clothing industry of China. New and faster transportation techniques and methods wills reduce the overall supply chain cost of the products manufactured in China. With increased globalization and rising trends in clothing technology and innovation. Chinese MNEs are now expected to expand knowledge markets in other countries such BRI related initiatives. The clothing suppliers are dispersed, as firms are also expected to procure raw material in different countries. BRI will further reduce the cost and lead time during the supply chain cycles. MNEs might have wider and better array of suppliers to further enhance supplier relationship management. Establishment of warehouses close to the partnering nations will improve the supply chain management for clothing industries of China. Information is biggest driver of supply chain performance [10] and particularly in context of clothing manufacturers. Enhanced information will lead to better production plans, materials management, sales and planning and capacity utilization. Indian, Pakistan and Bangladesh will play a vital role in enhancing Chinese clothing industry. Furthermore, modern fashion trends in the neighboring nations will enable Chinese MNEs to customize according to each consumer market. BRI has been used a facilitator of international collaboration for various clothing related industries of China. Successful mergers and acquisitions within the sector can bring new and better opportunities for the country. With an ability to have $300 billion exports capacity, China will be able to upgrade and rebalance its economy. It can use this ability to earn revenues and increase its economic growth in future. Many industrialized nations are in the dire need of industrialization with better capital, technology and management experience. Chinese clothing companies can use this platform of BRI to provide textile sectors in other countries with a similar platform to reap benefits of sector’s industrialization and internationalization. Developing global clothing sector without interdependence can be a daunting task. China can manage this risk through sector based integration with various countries participating

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in BRI related projects. Hence, BRI is becoming international business construct for China [3] to foster better diplomatic relations to counter US global business activities [2]. It is also useful in bridging multilayered industries such as textile which are at various developmental stages in participating countries to increase its global connectivity. Consequently, offering consumers and companies better access to markets and products.

6 Recommendations and Future Extensions In conclusion, future researchers and managers must consider the following recommendations and extensions: 1.

Start promoting BRI as a tool for world peace. Many stakeholders might be under the impression that China’s expansion might blur geographical boundaries among the countries. This impression might also be generated because of underdeveloped institutional policies in the participating countries. 2. Developing nations can become part of exchange programs among the universities, public-private institutions, think tanks to promote BRI specific research, education and vocational trainings. 3. BRI will also provide opportunities for business exchanges to enhance existing supply chains of various industries. Integration of various industries will help promotion access to better markets and industries resolving existing industrial challenges. For example, textile, clothing, tourism, oil and gas, retail, transportation, education, and other services. 4. A monitoring system or procedure related to debt management will ensure that loans are paid on time to protect Chinese financial infrastructure. 5. China must develop effective human resource management (on provincial levels) in collaborating nations with the help of purpose driven HR consulting firms. 6. Forecasting political scenarios will help China with economic expansion strategy to overcome any future related uncertainties. 7. Private funds can be generated from the collaborating governments to support social, economic and political initiatives of BRI. 8. Specific BRI supply chain sustainability standards must be drawn, communicated, and implemented across the collaborating nations and industries with specific reference to textile industry prone to various supply chain challenges and risks. 9. Chinese government must augment surveillance and monitoring of shipments, containers to protect moving products, commodities and infrastructure. 10. As Chinese MNEs will move among BRI related nations they are expected to curtail innovation gaps among clothing researchers, scientists and designers.

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Future research must take into consideration the following topics in order to promote BRI specific research: 1. 2.

3. 4.

5.

6. 7. 8. 9.

10.

11.

12. 13.

How do Chinese MNEs would deal with social, economic, political and technological intricacies of internationally integrated supply chains. If Chinese MNEs are to deal with a crises situation among BRI partners. How would these companies communicate and deal with crises management to minimize the consequences? How to determine the complexities of supply chain web among 70–80 countries that are involved in transporting products and goods from one channel to other. Another global challenge for Chinese MNEs and SMEs would be developing international human resource management systems tailored for BRI specific tasks. What frameworks Chinese companies would implement to deal with mobilizing human capital? As a result of BRI initiative, researchers must also explore what new behaviors are emerging among Chinese MNEs with regards to mergers, joint ventures, strategic alliances, corporate governance and acquisitions. How Chinese SOEs and MNEs can underpin the obstacles in the process of management of change (internally and externally)? How Chinese government and institutions may deal with global political risks associated with Chinese sovereignty. Researchers are yet to examine the environmental damages of BRI in quantitative terms. How to conceptualize and construct debt management models suited for BRI specific projects. Furthermore, investigate the consequences of internationalization of Yuan and integration of Chinese financial sector with others. As Chinese MNEs would get free access to new markets, how Chinese global brands will position and segment themselves as globally competitive entities. This will further allow dispersion of various Chinese products and services to BRI participating countries and new types of consumerism. What are the most critical criteria for international projects’ evaluation and examination? How flexible should BRI is while supporting international programs from various industry? How could BRI help China’s MNEs and SMEs improving the intellectual property and innovation capability? Why criticism about BRI exist and what could prevent BRI from achieving its objectives globally?

References 1. Chaisse J, Matsushita M (2018) China’s ‘belt and road’initiative: mapping the world trade normative and strategic implications. J World Trade 52(1):163–185 2. Cheng LK (2016) Three questions on China’s “belt and road initiative”. China Econ Rev 40:309–313

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3. Clarke M (2018) The belt and road initiative: exploring Beijing’s motivations and challenges for its new silk road. Strateg Anal 42(2):84–102 4. Farwa U (2018) Belt and road initiative and China’s strategic culture. Strateg Stud 38(3) 5. Giannakis M, Papadopoulos T (2016) Supply chain sustainability: a risk management approach. Int J Prod Econ 171:455–470 6. Haiquan L (2017) The security challenges of the “one belt, one road” initiative and China’s choices. Croatian Int Relat Rev 23(78):129–147 7. Huang Y (2016) Understanding China’s belt and road initiative: motivation, framework and assessment. China Econ Rev 40:314–321 8. Hughes AC (2019) Understanding and minimizing environmental impacts of the belt and road initiative. Conserv Biol 9. Li J, Liu B, Qian G (2019) The belt and road initiative, cultural friction and ethnicity: their effects on the export performance of SMEs in China. J World Bus 54(4):350–359 10. Meindl SCP (2016) Supply chain management—strategy, planning and operation. Tsinghua University Press. wheat soybean others land for no use 11. Shahriar S, Qian L, Saqib Irshad M, Kea S, Muhammad Abdullahi N, Sarkar A (2018) Institutions of the belt and road initiative: a systematic literature review. J Pol’y Global 77(1) 12. Silin Y, Kapustina L, Trevisan I, Drevalev A (2017) China’s economic interests in the “one belt, one road” initiative. In: SHS web of conferences, vol 39. EDP Sciences, pp 01025 13. Tang SQ, Liu DQ, Xi XIE (2017) The analysis of the “one belt and one road” for the game between China and the United States. DEStech Trans Soc Sci Educ Human Sci (ICSSM) 14. Tascioglu M (2015) Sustainable supply chain management: a literature review and research agenda. J Manage Market Logist 1–11 15. Teo HC, Lechner AM, Walton GW, Chan FKS, Cheshmehzangi A, Tan-Mullins M, CamposArceiz A et al (2019) Environmental impacts of infrastructure development under the belt and road initiative. Environments 6(6):72 16. Vangeli A (2017) China’s engagement with the sixteen countries of central, east and southeast Europe under the belt and road initiative. China World Econ 25(5):101–124 17. Zhai F (2018) China’s belt and road initiative: a preliminary quantitative assessment. J Asian Econ 55:84–92 18. Zhou W, Esteban M (2018) Beyond balancing: China’s approach towards the belt and road initiative. J Contemp China 27(112):487–501

List of Belt and Road Countries

Tables 1, 2 and 3 presents the countries in the Belt and Road Initiative as of 2019 according to HKTDC.com.

Table 1 Africa and Caribbean Region

Country

Region

Country

North Africa

Algeria

East Africa

Burundi

North Africa

Egypt

East Africa

Djibouti

North Africa

Libya

East Africa

Ethiopia

North Africa

Morocco

East Africa

Kenya

North Africa

South Sudan

East Africa

Madagascar

North Africa

Sudan

East Africa

Mozambique

West Africa

Cape Verde

East Africa

Rwanda

West Africa

Cote d’lvoire

East Africa

Seychelles

West Africa

Gambia

East Africa

Somalia

West Africa

Ghana

East Africa

Tanzania

West Africa

Guinea

East Africa

Uganda

West Africa

Liberia

East Africa

Zambia

West Africa

Mali

East Africa

Zimbabwe

West Africa

Mauritania

South Africa

Chile

West Africa

Nigeria

South Africa

Namibia

West Africa

Senegal

South Africa

South Africa

West Africa

Sierra Leone

Caribbean

Antigua and Barbuda

West Africa

Togo

Caribbean

Barbados

Central Africa

Angola

Caribbean

Cuba

Central Africa

Cameroon

Caribbean

Dominica

Central Africa

Chad

Caribbean

Dominican Republic

Central Africa

Republic of Congo

Caribbean

Grenada

Central Africa

Equatorial Guinea

Caribbean

Jamaica

Central Africa

Gabon

Caribbean

Trinidad & Tobago

© Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5

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88

List of Belt and Road Countries

Table 2 Europe and America Region

Country

Region

Country

Europe

Albania

North America

Tunisia

Europe

Austria

Central America

Costa Rica

Europe

Belarus

Central America

El Salvador

Europe

Bosnia and Herzegovina

Central America

Panama

Europe

Bulgaria

South America

Bolivia

Europe

Croatia

South America

Ecuador

Europe

Czech Republic

South America

Guyana

Europe

Estonia

South America

Peru

Europe

Greece

South America

Suriname

Europe

Hungary

South America

Uruguay

Europe

Italy

South America

Venezuela

Europe

Latvia

Europe

Lithuania

Europe

Luxembourg

Europe

Malta

Europe

Moldova

Europe

Montenegro

Europe

North Macedonia

Europe

Poland

Europe

Portugal

Europe

Romania

Europe

Russia

Europe

Serbia

Europe

Slovakia

Europe

Slovenia

Europe

Ukraine

List of Belt and Road Countries

89

Table 3 Asia, Middle East, Oceania and Island Countries Region

Country

Region

Country

Central Asia

Armenia

Middle East

Cyprus

Central Asia

Azerbaijan

Middle East

Georgia

Central Asia

Bahrain

Middle East

Iran

Central Asia

Kazakhstan

Middle East

Iraq

Central Asia

Kyrgyzstan

Middle East

Israel

Central Asia

Tajikistan

Middle East

Jordan

Central Asia

Turkmenistan

Middle East

Kuwait

Central Asia

Uzbekistan

Middle East

Lebanon

East Asia

Korea

Middle East

Oman

East Asia

Mongolia

Middle East

Palestine

South Asia

Afghanistan

Middle East

Qatar

South Asia

Bangladesh

Middle East

Saudi Arabia

South Asia

Bhutan

Middle East

Syria

South Asia

China

Middle East

Turkey

South Asia

Maldives

Middle East

United Arab Emirates

South Asia

Nepal

Middle East

Yemen

South Asia

Pakistan

Oceania

Fiji

South Asia

Sri Lanka

Oceania

Micronesia

Southeast Asia

Brunei

Oceania

New Zealand

Southeast Asia

Cambodia

Oceania

Papua New Guinea

Southeast Asia

Indonesia

Oceania

Samoa

Southeast Asia

Laos

Oceania

Tonga

Southeast Asia

Malaysia

Oceania

Vanuatu

Southeast Asia

Myanmar

Island Country

Cook Islands

Southeast Asia

Philippines

Island Country

Niue

Southeast Asia

Singapore

Southeast Asia

Thailand

Southeast Asia

Timor-Leste

Southeast Asia

Vietnam

Belt and Road Country Profiles of T&C Exporters

The following section presents the economic profiles of belt and road countries that trade in the textile and clothing industry.

North Africa Algeria Indicator

2017

Source

GDP

167.56 billion USD

HKTDC

GDP per capita

4,034 USD

HKTDC

Population

41.54 million

HKTDC

Religion

Muslims (97.9%), Unaffiliated (1.8%)

HKTDC

Language

Arabic (official), Berber (official), French

HKTDC

Currency

Algerian Dinar

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,207,678 USD

Comtrade

T&C major exporting countries (Top 5)

Tunisia; China; Turkey; UK; Germany

Comtrade

© Springer Nature Singapore Pte Ltd. 2020 E. M. H. Chan and A. Gunasekaran (eds.), Belt and Road Initiative — Collaboration for Success, Textile Science and Clothing Technology, https://doi.org/10.1007/978-981-15-1525-5

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Belt and Road Country Profiles of T&C Exporters

Egypt Indicator

2017

Source

GDP

332.35 billion USD (2016)

HKTDC

GDP per capita

3,685 USD (2016)

HKTDC

Population

92.28 million

HKTDC

Religion

Muslims (94.9%); Orthodox Christians (4.6%)

HKTDC

Language

Arabic (official)

HKTDC

Currency

Egyptian Pound

HKTDC

Approximate flight time from HKG

N/A

T&C export

2,643,086,153 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Turkey; Italy; Spain; UK

Comtrade

2017

Source

Morocco Indicator GDP

109.82 billion USD

HKTDC

GDP per capita

3,151 USD

HKTDC

Population

34.85 million

HKTDC

Religion

Muslims (99.9%)

HKTDC

Language

Arabic (official); Tamazight (official); French

HKTDC

Currency

Moroccan Dirham

HKTDC

Approximate flight time from HKG

N/A

T&C export

3,670,488,002 USD

Comtrade

T&C major exporting countries (Top 5)

Spain; France; UK; Ireland; Portugal

Comtrade

Belt and Road Country Profiles of T&C Exporters

93

Sudan Indicator

2017

Source

GDP

45.819 billion USD

HKTDC

GDP per capita

1,123 USD

HKTDC

Population

40.78 million

HKTDC

Religion

Muslims (90.7%); Catholics (3%); Folk Religion (2.8%)

HKTDC

Language

Arabic (official); English (official); Nubian

HKTDC

Currency

Sudanese Pound

HKTDC

Approximate flight time from HKG

N/A

T&C export

634,100 USD

Comtrade

T&C major exporting countries (Top 5)

Pakistan; China; Egypt; Turkey; Singapore

Comtrade

2017

Source

West Africa Cape Verde Indicator GDP

1.78 billion USD

HKTDC

GDP per capita

3,301 USD

HKTDC

Population

538,000 million

HKTDC

Religion

Catholics (78.7%); Unaffiliated (9.1%); Protestants (7.2%)

HKTDC

Language

Portuguese (official); Crioula

HKTDC

Currency

Capre Verdean Escudo

HKTDC

Approximate flight time from HKG

N/A

T&C export

9,732,808 USD

Comtrade

T&C major exporting countries (Top 5)

Portugal

Comtrade

94

Belt and Road Country Profiles of T&C Exporters

Cote d’lvoire Indicator

2017

Source

GDP

40.47 billion USD

HKTDC

GDP per capita

1,621 USD

HKTDC

Population

24.96 million

HKTDC

Religion

Muslims (37.5%); Protestants (22.3%); Catholics (21.1%)

HKTDC

Language

French (official)

HKTDC

Currency

West African CFA Franc

HKTDC

Approximate flight time from HKG

N/A

T&C export

74,285,918 USD

Comtrade

T&C major exporting countries (Top 5)

Bangladesh; Vietnam; Malaysia; Indonesia; Turkey

Comtrade

Gambia Indicator

2017

Source

GDP

1.48 billion USD

HKTDC

GDP per capita

704.7 USD

HKTDC

Population

2.10 million

HKTDC

Religion

Muslims (95.1%); Catholics (3%); Protestants (1.5%)

HKTDC

Language

English, Mandinka, Wolof

HKTDC

Currency

Gambian Dalasi

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,517,895 USD

Comtrade

T&C major exporting countries (Top 5)

Guinea-Bissau; Mali; Guinea; Senegal; Belgium

Comtrade

Belt and Road Country Profiles of T&C Exporters

95

Ghana Indicator

2017

Source

GDP

47.02 billion USD

HKTDC

GDP per capita

1,663 USD

HKTDC

Population

28.28 million

HKTDC

Religion

Protestants (60/8%); Mulsims (15.8%); Catholics (12.9%)

HKTDC

Language

English; Asante; Ewe; Fante

HKTDC

Currency

Ghanaian Cedi

HKTDC

Approximate flight time from HKG

N/A

T&C export

93,447,299 USD

Comtrade

T&C major exporting countries (Top 5)

United Arab Emirates; USA; Cote d’lvoire; Benin; Burkina Faso

Comtrade

Mali Indicator

2017

Source

GDP

17.19 billion USD

HKTDC

GDP per capita

927 USD

HKTDC

Population

18.54 million

HKTDC

Religion

Muslims (94.4%); Folk religion (2.7%); Catholics (1.6%)

HKTDC

Language

French (official); Bambara; Peuhl; Dogon

HKTDC

Currency

West African CFA Franc

HKTDC

Approximate flight time from HKG

N/A

T&C export

3,489,807 USD

Comtrade

T&C major exporting countries (Top 5)

Bangladesh; India; Indonesia; Thailand; Turkey

Comtrade

96

Belt and Road Country Profiles of T&C Exporters

Mauritania Indicator

2017

Source

GDP

4.935 billion USD

HKTDC

GDP per capita

1,271 USD

HKTDC

Population

3.881 million

HKTDC

Religion

Muslims (99.1%)

HKTDC

Language

Arabic (official); Pular; Soninke

HKTDC

Currency

Maurutanian Ouguiya

HKTDC

Approximate flight time from HKG

N/A

T&C export

24,137 USD

Comtrade

T&C major exporting countries (Top 5)

France; Cote d’lvoire; Germany; Sudan; Chile

Comtrade

2017

Source

Nigeria Indicator GDP

376.28 billion USD

HKTDC

GDP per capita

1,994 USD

HKTDC

Population

188.69 million

HKTDC

Religion

Muslims (48.8%); Protestants (37.8%); Catholics (11%)

HKTDC

Language

English (official); Hausa; Yoruba

HKTDC

Currency

Nigerian Naira

HKTDC

Approximate flight time from HKG

N/A

Textile export

14,997,857 USD

Comtrade

T&C major exporting countries (Top 5)

Ethiopia; Turkey; Djibouti; Ghana; Cameroon

Comtrade

Belt and Road Country Profiles of T&C Exporters

97

Senegal Indicator

2017

Source

GDP

16.46 billion USD

HKTDC

GDP per capita

1,038 USD

HKTDC

Population

15.86 million

HKTDC

Religion

Muslims (96.4%); Catholics (3.4%)

HKTDC

Language

French (official); Wolof; Pular

HKTDC

Currency

Communaute Fianciere Africaine France

HKTDC

Approximate flight time from HKG

N/A

T&C export

10,961,456 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Bangladesh; Mali; Italy; Mauritania

Comtrade

Sierra Leone Indicator

2017

Source

GDP

3.612 billion USD

HKTDC

GDP per capita

488 USD

HKTDC

Population

7.408 million

HKTDC

Religion

Muslims (78%); Protestants (13.6%); Catholics (7.1%)

HKTDC

Language

English (official); Mende; Temne

HKTDC

Currency

Sierra Leonean Leone

HKTDC

Approximate flight time from HKG

N/A

T&C export

173,599 USD

Comtrade

T&C major exporting countries (Top 5)

Lebanon; Zambia; Guinea; Gambia; Ghana

Comtrade

98

Belt and Road Country Profiles of T&C Exporters

Togo Indicator

2017

Source

GDP

4.767 billion USD

HKTDC

GDP per capita

611 USD

HKTDC

Population

7.801 million

HKTDC

Religion

Folk religion (35.6%); Catholics (26.1%); Protestants (16.9%)

HKTDC

Language

French (official); Ewe and Mina; Kabye

HKTDC

Currency

West African CFA Franc

HKTDC

Approximate flight time from HKG

N/A

T&C export

20,160,872 USD

Comtrade

T&C major exporting countries (Top 5)

Pakistan; Bangladesh; China; Indonesia; Malaysia

Comtrade

2017

Source

Central Africa Cameron Indicator GDP

34.99 billion USD

HKTDC

GDP per capita

1,441 USD

HKTDC

Population

24.28 million

HKTDC

Religion

Catholics (38.8%); Protestants (31.4%); Muslims (18.3%)

HKTDC

Language

English (official); French (official)

HKTDC

Currency

Central African CFA Franc

HKTDC

Approximate flight time from HKG

N/A

T&C export

6,347,381 USD

Comtrade

T&C major exporting countries (Top 5)

Bangladesh; India; Turkey; Malaysia; Vietnam

Comtrade

Belt and Road Country Profiles of T&C Exporters

99

Republic of Congo Indicator

2017

Source

GDP

8.718 billion USD

HKTDC

GDP per capita

2,005 USD

HKTDC

Population

4.347 million

HKTDC

Religion

Protestants (51.4%); Catholics (30.1%); Unaffiliated (9%)

HKTDC

Language

French (official); French Lingala and Monokutuba

HKTDC

Currency

West African CFA Franc

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,968,050 USD

Comtrade

T&C major exporting countries (Top 5)

China; Central African Republic; Congo; India; Ghana

Comtrade

2017

Source

East Africa Burundi Indicator GDP

3.40 billion USD

HKTDC

GDP per capita

312 USD

HKTDC

Population

10.87 million

HKTDC

Religion

Catholics (65.3%); Protestants 26.2%); Folk Religions (5.7%)

HKTDC

Language

Kirundi (official); French (official); English (official)

HKTDC

Currency

Burundian Franc

HKTDC

Approximate flight time from HKG

N/A

T&C export

180,377 USD

Comtrade

T&C major exporting countries (Top 5)

Congo; Tanzania; Rwanda; Zambia; Uganda

Comtrade

100

Belt and Road Country Profiles of T&C Exporters

Kenya Indicator

2017

Source

GDP

79.22 billion USD

HKTDC

GDP per capita

1,695 USD

HKTDC

Population

46.73 million

HKTDC

Religion

Protestants (59.6%); Catholics (22.1%); Muclims (9.7%)

HKTDC

Language

English (official); Kiswahili (official)

HKTDC

Currency

Kenyan Shilling

HKTDC

Approximate flight time from HKG

N/A

T&C export

356,703,936 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Uganda; Saudi Arabia; Tanzania; Nigeria

Comtrade

Madagascar Indicator

2017

Source

GDP

11.46 billion USD

HKTDC

GDP per capita

448 USD

HKTDC

Population

25.61 million

HKTDC

Religion

Protestant (45.8%); Catholics (38.1); Unaffiliated (6.9%)

HKTDC

Language

French (official); English

HKTDC

Currency

Ariary

HKTDC

Approximate flight time from HKG

N/A

T&C export

572,841,184 USD

Comtrade

T&C major exporting countries (Top 5)

France; USA; Germany; South Africa; UK

Comtrade

Belt and Road Country Profiles of T&C Exporters

101

Mozambique Indicator

2017

Source

GDP

12.59 billion USD

HKTDC

GDP per capita

426 USD

HKTDC

Population

29.538 million

HKTDC

Religion

Catholics (28.7%); Protestants (27.3%); Muslims (18%)

HKTDC

Language

Emakhuwa; Portugese (official); Xichuangana

HKTDC

Currency

Mozambican Metical

HKTDC

Approximate flight time from HKG

N/A

T&C export

7,695,061 USD

Comtrade

T&C major exporting countries (Top 5)

South Africa; Mauritius; Singapore; China; Portugal

Comtrade

2017

Source

Seychelles Indicator GDP

1.498 billion USD

HKTDC

GDP per capita

15,859 USD

HKTDC

Population

94,000 million

HKTDC

Religion

Catholics (83%); Protestants (10%); Hindus (2.1%)

HKTDC

Language

Seychellois Creole (official); English (official); French (official)

HKTDC

Currency

Seychelles Rupee

HKTDC

Approximate flight time from HKG

N/A

T&C export

92,971 USD

Comtrade

T&C major exporting countries (Top 5)

Spain; Mauritius; South Africa; UK; Sri Lanka

Comtrade

102

Belt and Road Country Profiles of T&C Exporters

Tanzania Indicator

2017

Source

GDP

51.76 billion USD

HKTDC

GDP per capita

1,034 USD

HKTDC

Population

50.05 million

HKTDC

Religion

Muslims (35.2%); Catholics (31.4%); Protestants (29.1%)

HKTDC

Language

Kiswahili (official); Catholics (31.4%); Protestants (29.1%)

HKTDC

Currency

Tanzanian Shilling

HKTDC

Approximate flight time from HKG

N/A

T&C export

179,905,916 USD

Comtrade

T&C major exporting countries (Top 5)

Cornoros; China; Kenya; USA; Burundi

Comtrade

Uganda Indicator

2017

Source

GDP

26.617 billion USD

HKTDC

GDP per capita

707 USD

HKTDC

Population

37.674 million

HKTDC

Religion

Poretestants (44.4%); Catholics (42.2%); Muslims (11.5%)

HKTDC

Language

English (official); Ganda or Luganda; Others

HKTDC

Currency

Ugandan Shilling

HKTDC

Approximate flight time from HKG

N/A

T&C export

19,262,565 USD

Comtrade

T&C major exporting countries (Top 5)

Singapore; Congo; Kenya; Switzerland; UK

Comtrade

Belt and Road Country Profiles of T&C Exporters

103

Zambia Indicator

2017

Source

GDP

25.71 billion USD

HKTDC

GDP per capita

1,491 USD

HKTDC

Population

17.24 million

HKTDC

Religion

Protestants (67.8%); Catholics (21.1%); other Christians (8.5%)

HKTDC

Language

English (official); Bemba; Nyanja; Tonga

HKTDC

Currency

Zambian Kwacha

HKTDC

Approximate flight time from HKG

N/A

T&C export

3,449,655 USD

Comtrade

T&C major exporting countries (Top 5)

South Africa; China; Zimbabwe; Malawi; Singapore;

Comtrade

2017

Source

Zimbabwe Indicator GDP

17.64 billion USD

HKTDC

GDP per capita

1,185 USD

HKTDC

Population

14.88 million

HKTDC

Religion

Protestants (67.1%); Catholics (17.7%); Unaffiliated (7.9%)

HKTDC

Language

Shona (official); Ndebele (official); English (official)

HKTDC

Currency

US Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

18,770,571 USD

Comtrade

T&C major exporting countries (Top 5)

South Africa; Mozambique; Zambia; Malawi; Namibia

Comtrade

104

Belt and Road Country Profiles of T&C Exporters

Caribbean Antigua and Barbuda Indicator

2017

Source

GDP

1.52 billion USD

HKTDC

GDP per capita

16,702 USD

HKTDC

Population

94,731 million

HKTDC

Religion

Poretestants (81.2%); Catholics (10.5%); Folk religions (3.6%)

HKTDC

Language

English (official); Antiguan Creolo

HKTDC

Currency

East Caribbean Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

13,093,646 USD

Comtrade

T&C major exporting countries (Top 5)

Bermuda; Spain; USA; Italy

Comtrade

2017

Source

Dominican Republic Indicator GDP

76.09 billion USD

HKTDC

GDP per capita

7,478 USD

HKTDC

Population

10.18 million

HKTDC

Religion

Catholics (66.5%); Protestants (20.8%); Unaffiliated (10.9%)

HKTDC

Language

Spanish (official)

HKTDC

Currency

Dominican Peso

HKTDC

Approximate flight time from HKG

N/A

T&C export

867,010,434 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Haiti; Vietnam; Germany; Honduras

Comtrade

Belt and Road Country Profiles of T&C Exporters

105

Jamaica Indicator

2017

Source

GDP

15.42 billion USD

HKTDC

GDP per capita

5,392 USD

HKTDC

Population

2.86 million

HKTDC

Religion

Protestants (72.9%); Unaffiliated (17.2%); Folk religions (4.5%)

HKTDC

Language

English (official); English Patois

HKTDC

Currency

Jamaican Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

2,738,996 USD

Comtrade

T&C major exporting countries (Top 5)

Barbados; Trinidad and Tabago; USA; Italy; Cayman Islands

Comtrade

2017

Source

Europe Albania Indicator GDP

13.18 billion USD

HKTDC

GDP per capita

4,583 USD

HKTDC

Population

2.88 million

HKTDC

Religion

Muslims (80.3%); Catholics (10.2%); Orthodox Christians (7.5%)

HKTDC

Language

Albanian (official); Greek

HKTDC

Currency

Albanian Lek

HKTDC

Approximate flight time from HKG

N/A

T&C export

495,075,739 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; Germany; Greece; Romania: France

Comtrade

106

Belt and Road Country Profiles of T&C Exporters

Austria Indicator

2017

Source

GDP

416.85 billion USD

HKTDC

GDP per capita

47,290 USD

HKTDC

Population

8.82 million

HKTDC

Religion

Catholics (72.9%); Unaffiliated (13.5%); Muslims (5.4%)

HKTDC

Language

German (official); Turkish; Serbian

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

12 h 30 min

T&C export

4,809,376,742 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Poland; China; Czech Republic; France

Comtrade

Belarus Indicator

2017

Source

GDP

52.78 billion USD

HKTDC

GDP per capita

5,585 USD

HKTDC

Population

9.45 million

HKTDC

Religion

Orthodox Christians (61.5%); Unaffiliated (28.6%); Catholics (8.7%)

HKTDC

Language

Russian (official); Belarusian (official)

HKTDC

Currency

Belarusian Rubles

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,118,424,600 USD

Comtrade

T&C major exporting countries (Top 5)

Russia; Ukraine; Lithuania; Germany; Poland

Comtrade

Belt and Road Country Profiles of T&C Exporters

107

Bosnia and Herzegovina Indicator

2017

Source

GDP

18.06 billion USD

HKTDC

GDP per capita

5,149 USD

HKTDC

Population

3.51 million

HKTDC

Religion

Muslims (45.2%); Orthodox Christians (37.9%); Catholics (14.3%)

HKTDC

Language

Bosnian (official); Serbian (official); Croatian (official)

HKTDC

Currency

Bosnia and Herzegovina convertible mark

HKTDC

Approximate flight time from HKG

N/A

T&C export

336,197,803 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Italy; Austria; Croatia; Poland

Comtrade

2017

Source

Bulgaria Indicator GDP

56.94 billion USD

HKTDC

GDP per capita

8,064 USD

HKTDC

Population

7.06 million

HKTDC

Religion

Orthodox Christians (81%); Muslims (13.7%); Unaffiliated (4.2%)

HKTDC

Language

Bulgarian (official); Turkish; Romani

HKTDC

Currency

Bulgarian Lev

HKTDC

Approximate flight time from HKG

N/A

T&C export

2,218,967,790 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Italy; Greece; France; UK

Comtrade

108

Belt and Road Country Profiles of T&C Exporters

Croatia Indicator

2017

Source

GDP

54.5 billion USD

HKTDC

GDP per capita

13,138 USD

HKTDC

Population

4.15 million

HKTDC

Religion

Catholics (88.5%); Unaffiliated (5.1%); Orthodox Christians (4.4%)

HKTDC

Language

Croatia (official); Serbian

HKTDC

Currency

Croatian Kuna

HKTDC

Approximate flight time from HKG

N/A

T&C export

978,853,123 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; Germany; Spain; Slovenia; France

Comtrade

2017

Source

Czech Republic Indicator GDP

209.65 billion USD

HKTDC

GDP per capita

19,818 USD

HKTDC

Population

10.58 million

HKTDC

Religion

Unaffiliated (76.4%); Catholics (19.2%); Protestants (3.5%)

HKTDC

Language

Czexh (official); Slovak

HKTDC

Currency

Czech Koruna

HKTDC

Approximate flight time from HKG

N/A

T&C export

5,229,878,093 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Italy; Poland; Slovak Republic; Austria

Comtrade

Belt and Road Country Profiles of T&C Exporters

109

Estonia Indicator

2017

Source

GDP

25.97 billion USD

HKTDC

GDP per capita

19,840 USD

HKTDC

Population

1.31 million

HKTDC

Religion

Unaffiliated (59.6%); Protestants (20.5%); Orthodox Christians (18.3%)

HKTDC

Language

Estonian (official); Russian

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

459,515,979 USD

Comtrade

T&C major exporting countries (Top 5)

Sweden; Finland; Russia; Latvia; Lithuania

Comtrade

Greece Indicator

2017

Source

GDP

200.69 billion USD

HKTDC

GDP per capita

18,637 USD

HKTDC

Population

10.77 million

HKTDC

Religion

Orthodox Christians (87%); Unaffiliated (6.1%); Muslims (5.3%)

HKTDC

Language

Greek (officials); others

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,276,090,443 USD

Comtrade

T&C major exporting countries (Top 5)

Turkey; Germany; Bulgaria; Italy; Cyprus

Comtrade

110

Belt and Road Country Profiles of T&C Exporters

Hungary Indicator

2017

Source

GDP

132.03 billion USD

HKTDC

GDP per capita

13,460 USD

HKTDC

Population

9.81 million

HKTDC

Religion

Catholics (59.4%); Protestants (21.2%); Unaffiliated (18.6%)

HKTDC

Language

Hungarian (official); English; German

HKTDC

Currency

Hungarian Forint

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,636,128,474 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Romania; Italy; Austria; France

Comtrade

Italy Indicator

2017

Source

GDP

1,937.89 billion USD

HKTDC

GDP per capita

31,984 USD

HKTDC

Population

60.59 million

HKTDC

Religion

Catholics (81.2%); Unaffiliated (12.4%); Muslims (3.7%)

HKTDC

Language

Italian (official); German, French

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

13 h 30 min

T&C export

35,607,625,632 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; France; UK; USA; Spain

Comtrade

Belt and Road Country Profiles of T&C Exporters

111

Latvia Indicator

2017

Source

GDP

30.32 billion USD

HKTDC

GDP per capita

15,547 USD

HKTDC

Population

1.95 million

HKTDC

Religion

Unaffiliated (43.8%); Protestants (20.2%); Catholics (19.1%)

HKTDC

Language

Latvian (official); Russian

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

504,931,226 USD

Comtrade

T&C major exporting countries (Top 5)

Estonia; Lithuania; Sweden; Russia; Denmark

Comtrade

Lithuania Indicator

2017

Source

GDP

47.26 billion USD

HKTDC

GDP per capita

16,730 USD

HKTDC

Population

2.83 million

HKTDC

Religion

Catholics (83.2%); Unaffiliated (10%); Orthodox Christians (5.1%)

HKTDC

Language

Lithuanian (official); Russian, Polish

HKTDC

Currency

euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,362,884,243 USD

Comtrade

T&C major exporting countries (Top 5)

Russia; Germany; Denmark; UK; Sweden

Comtrade

112

Belt and Road Country Profiles of T&C Exporters

Luxembourg Indicator

2017

Source

GDP

62.53 billion USD

HKTDC

GDP per capita

105,863 USD

HKTDC

Population

591,000

HKTDC

Religion

Catholics (65.9%); Unaffiliated (26.8%); Protestants (3.2%)

HKTDC

Language

Luxembourgish (official); French (official); German (official); Portuguese

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

601,664,649 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; France; Japan; China; USA

Comtrade

Moldova Indicator

2017

Source

GDP

8.09 billion USD

HKTDC

GDP per capita

2,280 USD

HKTDC

Population

3.55 million

HKTDC

Religion

Orthodox Christians (95.4%); Protestants (1.4%); Unaffiliated (1.4%)

HKTDC

Language

Moldovan/Romanian (official); Russian; Gagauz

HKTDC

Currency

Moldovan Leu

HKTDC

Approximate flight time from HKG

N/A

T&C export

358,531,410 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; UK; Romania; Belarus; Turkey

Comtrade

Belt and Road Country Profiles of T&C Exporters

113

Montenegro Indicator

2017

Source

GDP

4.76 billion USD

HKTDC

GDP per capita

7,647 USD

HKTDC

Population

623,000

HKTDC

Religion

Orthodox Christians (74.4%); Muslims (18.7%); Catholics (3.6%)

HKTDC

Language

Serbian; Montenegrin (official); Bosnian

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,111,967 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; Serbia; Bosnia and Herzegovina; Croatia; Spain

Comtrade

2017

Source

North Macedonia Indicator GDP

11.37 billion USD

HKTDC

GDP per capita

5,500 USD

HKTDC

Population

2.08 million

HKTDC

Religion

Orthodox Christian (58.9%); Muslims (39.3%); Unaffiliated (1.4%)

HKTDC

Language

Macedonian (official); Albanian, Turkish

HKTDC

Currency

Macedonian Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

604,779,833 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Netherlands; Greece; Turkey; Austria

Comtrade

114

Belt and Road Country Profiles of T&C Exporters

Poland Indicator

2017

Source

GDP

509.96 billion USD

HKTDC

GDP per capita

13,429 USD

HKTDC

Population

37.97 million

HKTDC

Religion

Catholics (92.2%); Unaffiliated (5.6%); Orthodox Christian (1.3%)

HKTDC

Language

Polish (official)l Silesian

HKTDC

Currency

Polish Zloty

HKTDC

Approximate flight time from HKG

N/A

T&C export

7,928,643,216 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Czech Republic; Ukraine; Romania; Austria

Comtrade

Portugal Indicator

2017

Source

GDP

218.01 billion USD

HKTDC

GDP per capita

21,159 USD

HKTDC

Population

10.3 million

HKTDC

Religion

Catholics (89.6%); Unaffiliated (7.5%); Protestants (1.5%)

HKTDC

Language

Portuguese (official); Mirandese (official)

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

5,824,701,456 USD

Comtrade

T&C major exporting countries (Top 5)

Spain; France; Germany; UK; USA

Comtrade

Belt and Road Country Profiles of T&C Exporters

115

Romania Indicator

2017

Source

GDP

211.32 billion USD

HKTDC

GDP per capita

10,757 USD

HKTDC

Population

19.64 million

HKTDC

Religion

Orthodox Christian (87.2%); Protestants (6.3%); Catholics (5.7%)

HKTDC

Language

Romanian (official); Hungarian; Romani

HKTDC

Currency

Romanian Leu

HKTDC

Approximate flight time from HKG

N/A

T&C export

4,514,703,156 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; Germany; UK; France; Spain

Comtrade

Russia Indicator

2017

Source

GDP

1,469.34 billion USD

HKTDC

GDP per capita

10,248 USD

HKTDC

Population

143.38 million

HKTDC

Religion

Orthodox Christian (70.6%); Unaffiliated (16.2%); Muslims (10%)

HKTDC

Language

Russian (official); Tatar; Chechen

HKTDC

Currency

Russian Ruble

HKTDC

Approximate flight time from HKG

9 h 20 min

T&C export

881,835,543 USD

Comtrade

T&C major exporting countries (Top 5)

Kazakhstan; Belarus; Ukraine; Germany; Poland

Comtrade

116

Belt and Road Country Profiles of T&C Exporters

Serbia Indicator

2017

Source

GDP

41.47 billion USD

HKTDC

GDP per capita

5,899 USD

HKTDC

Population

7.03 million

HKTDC

Religion

Orthodox Christian (85%); Catholics (5.5%); Muslims (4.1%)

HKTDC

Language

Serbian (official); Hungarian; Bosnian

HKTDC

Currency

Serbian Dinar

HKTDC

Approximate flight time from HKG

N/A

T&C export

905,194,281 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; Russia; Germany; Croatia; Bosnia and Herzegovina

Comtrade

Slovakia Indicator

2017

Source

GDP

95.94 billion USD

HKTDC

GDP per capita

17,664 USD

HKTDC

Population

5.43 million

HKTDC

Religion

Catholics (74.3%) Unaffiliated (14.3%); Protestants (9.7%)

HKTDC

Language

Slovak (official); Hungarian; Roma

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,951,648,527 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Czech Republic; Poland; Hungary; Austria

Comtrade

Belt and Road Country Profiles of T&C Exporters

117

Slovenia Indicator

2017

Source

GDP

48.87 billion USD

HKTDC

GDP per capita

23,654 USD

HKTDC

Population

2.07 million

HKTDC

Religion

Catholics (74.1%); Unaffiliated (18%); Muslims (3.6%)

HKTDC

Language

Slovenian (official); Serbo-Croatian

HKTDC

Currency

Euro

HKTDC

Approximate flight time from HKG

N/A

T&C export

867,627,435 USD

Comtrade

T&C major exporting countries (Top 5)

Italy; Croatia; Austria; Germany; France

Comtrade

Ukraine Indicator

2017

Source

GDP

109.32 billion USD

HKTDC

GDP per capita

2,583 USD

HKTDC

Population

42.33 million

HKTDC

Religion

Orthodox Christian (76.7%); Unaffiliated (14.7%); Catholics (5.6%)

HKTDC

Language

Ukranian (official); Russian

HKTDC

Currency

Ukranian Hryvnia

HKTDC

Approximate flight time from HKG

N/A

T&C export

768,663,627 USD

Comtrade

T&C major exporting countries (Top 5)

Germany; Poland; Russia; Denmark; Romania

Comtrade

118

Belt and Road Country Profiles of T&C Exporters

North America Tunisia Indicator

2017

Source

GDP

40.28 billion USD

HKTDC

GDP per capita

3,496 USD

HKTDC

Population

11.52 million

HKTDC

Religion

Muslims (99.5%)

HKTDC

Language

Arabic (official); French; berber

HKTDC

Currency

Tunisian Dinar

HKTDC

Approximate flight time from HKG

N/A

T&C export

2,593,841,785 USD

Comtrade

T&C major exporting countries (Top 5)

France; Italy; Germany; Belgium; Spain

Comtrade

2017

Source

Central America Costa Rica Indicator GDP

58.27 billion USD

HKTDC

GDP per capita

11,729 USD

HKTDC

Population

4.97 million

HKTDC

Religion

Catholics (66.7%); Protestants (22.7%); Unaffiliated (7.9%)

HKTDC

Language

Spanish (official); English

HKTDC

Currency

Costa Rican Colón

HKTDC

Approximate flight time from HKG

N/A

T&C export

122,967,617 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Guatemala; Honduras; Belgium; Nicaragua

Comtrade

Belt and Road Country Profiles of T&C Exporters

119

El Salvador Indicator

2017

Source

GDP

24.81 billion USD

HKTDC

GDP per capita

3,895 USD

HKTDC

Population

6.37 million

HKTDC

Religion

Catholics (51. 1%); Protestants (35.7%); Unaffiliated (11%)

HKTDC

Language

Spanish (official); Nawat

HKTDC

Currency

US Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

2,612,057,312 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Honduras; Guatemala; Nicaragua; Mexco

Comtrade

2017

Source

South America Bolivia Indicator GDP

37.12 billion USD

HKTDC

GDP per capita

3,353 USD

HKTDC

Population

11.07 million

HKTDC

Religion

Catholics (79%); Protestants (13.7%); Unaffiliated (4.1%)

HKTDC

Language

Spanish (official); Quechua (official); Aymara (official); Guarani (official)

HKTDC

Currency

Boliviano

HKTDC

Approximate flight time from HKG

N/A

T&C export

18,051,559 USD

Comtrade

T&C major exporting countries (Top 5)

Venezuela; Italy; USA; Chile; Denmark

Comtrade

120

Belt and Road Country Profiles of T&C Exporters

Ecuador Indicator

2017

Source

GDP

104.3 billion USD

HKTDC

GDP per capita

6,217 USD

HKTDC

Population

16.78 million

HKTDC

Religion

Catholics (83.4%); Protestants (9.6%); Unaffiliated (5.5%)

HKTDC

Language

Spanish (official); Quechua

HKTDC

Currency

US Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

89,821,419 USD

Comtrade

T&C major exporting countries (Top 5)

Colombia; Philippines; Chile; Brazil; UK

Comtrade

Guyana Indicator

2017

Source

GDP

3.561 billion USD

HKTDC

GDP per capita

4,578 USD

HKTDC

Population

778,000

HKTDC

Religion

Unaffiliated; Protestants (49.8%); Hindus (24.9%); Catholics (13.4%)

HKTDC

Language

English (official); Guyanese Creole; Amerindian languages

HKTDC

Currency

Guyanese Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

812,601 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Trinidad and Tobago; Suriname; Haiti; Grenada

Comtrade

Belt and Road Country Profiles of T&C Exporters

121

Peru Indicator

2017

Source

GDP

214.25 billion USD

HKTDC

GDP per capita

6,732 USD

HKTDC

Population

31.83 million

HKTDC

Religion

Catholics (81.2%); Protestants (12.5%); Unaffiliated (3%)

HKTDC

Language

Spanish (official); Quechua (official); Aymara (official)

HKTDC

Currency

Peruvian Sol

HKTDC

Approximate flight time from HKG

N/A

T&C export

1,167,965,881 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Colombia; Chile; Ecuador; Brazil

Comtrade

Suriname Indicator

2017

Source

GDP

3.419 billion USD

HKTDC

GDP per capita

5,870 USD

HKTDC

Population

582,000

HKTDC

Religion

Catholics (29.9%); Protestants (21.2%); Hindus (19.8%)

HKTDC

Language

Dutch (official); English; Sranang Tongo

HKTDC

Currency

Suriname Dollar

HKTDC

Approximate flight time from HKG

N/A

T&C export

557,688 USD

Comtrade

T&C major exporting countries (Top 5)

Trinidad and Tobago; Guyana; Brazil; Netherlands; France

Comtrade

122

Belt and Road Country Profiles of T&C Exporters

Uruguay Indicator

2017

Source

GDP

59.18 billion USD

HKTDC

GDP per capita

16,942 USD

HKTDC

Population

3.49 million

HKTDC

Religion

atholics (46.8%); Unaffiliated (40.7%); Protestants (6.3%)

HKTDC

Language

Spanish (official)

HKTDC

Currency

Uruguayan Peso

HKTDC

Approximate flight time from HKG

N/A

T&C export

43,556,826 USD

Comtrade

T&C major exporting countries (Top 5)

China; Germany; Italy; Argentina; Brazil

Comtrade

2017

Source

Central Asia Armenia Indicator GDP

11.55 billion USD

HKTDC

GDP per capita

3,861 USD

HKTDC

Population

2.99 million

HKTDC

Religion

Orthodox Christian (86.7%); Catholics (8.7.%); Protestants (2.2%)

HKTDC

Language

Armenian (official); Kurdish

HKTDC

Currency

Armenian Dram

HKTDC

Approximate flight time from HKG

N/A

T&C export

130,677,947 USD

Comtrade

T&C major exporting countries (Top 5)

Russia; Italy; Germany; Canada; Georgia

Comtrade

Belt and Road Country Profiles of T&C Exporters

123

Azerbaijan Indicator

2017

Source

GDP

40.67 billion USD

HKTDC

GDP per capita

4,141 USD

HKTDC

Population

9.82 million

HKTDC

Religion

Muslims (96.9%); Orthodox Christian (2.8%)

HKTDC

Language

Azerbaijani (official); Russian; Armenian

HKTDC

Currency

Azerbaijan Manat

HKTDC

Approximate flight time from HKG

N/A

T&C export

42,418,783 USD

Comtrade

T&C major exporting countries (Top 5)

Turkey; Russia; Ukraine; Kazakhstan; Georgia

Comtrade

2017

Source

Kazakhstan Indicator GDP

156.19 billion USD

HKTDC

GDP per capita

8,585 USD

HKTDC

Population

18.19 million

HKTDC

Religion

Muslims (70.4%); Orthodox Christian (20.2%); Unaffiliated (4.2%)

HKTDC

Language

Kazakh (official); Russian

HKTDC

Currency

Kazakhstani Tenge

HKTDC

Approximate flight time from HKG

5 h 50 min

HKTDC

T&C export

110,249,333 USD

Comtrade

T&C major exporting countries (Top 5)

China; Latvia; Russia; Moldova; Belarus

Comtrade

124

Belt and Road Country Profiles of T&C Exporters

Kyrgyzstan Indicator

2017

Source

GDP

7.16 billion USD

HKTDC

GDP per capita

1,144 USD

HKTDC

Population

6.26 million

HKTDC

Religion

Muslims (88%); Orthodox Christian (9.4%); Protestants (1.7%)

HKTDC

Language

Kyrgyz (official); Uzbek; Russian (official)

HKTDC

Currency

Kyrgyzstani Som

HKTDC

Approximate flight time from HKG

N/A

T&C export

124,487,978 USD

Comtrade

T&C major exporting countries (Top 5)

Russia; Kazakhstan; Turkey; Uzbekistan; Latvia

Comtrade

2017

Source

GDP

1,538.03 billion USD

HKTDC

GDP per capita

29,891 USD

HKTDC

Population

51.45 million

HKTDC

Religion

Unaffiliated (46.4%); Buddhists (22.9%); Protestants (17.9%)

HKTDC

Language

Korean (official); English

HKTDC

East Asia Korea Indicator

Currency

Korean Won

HKTDC

Approximate flight time from HKG

3 h 55 min

HKTDC

T&C export

11,881,119,170 USD

Comtrade

T&C major exporting countries (Top 5)

Vietnam; China; USA; Indonesia; Japan

Comtrade

Belt and Road Country Profiles of T&C Exporters

125

Mongolia Indicator

2017

Source

GDP

11.14 billion USD

HKTDC

GDP per capita

3,640 USD

HKTDC

Population

3.06 million

HKTDC

Religion

Buddhists (55.1%); Unaffiliated (35.9%); Folk religions (3.5%)

HKTDC

Language

Mongolian (official); Turkic; Russian

HKTDC

Currency

Mongolian Tughrik

HKTDC

Approximate flight time from HKG

4 h 35 min

HKTDC

T&C export

46,413,007 USD

Comtrade

T&C major exporting countries (Top 5)

China; Italy; UK; Japan: France

Comtrade

South Asia Bangladesh Indicator

2017

Source

GDP

250.02 billion USD

HKTDC

GDP per capita

1,532 USD

HKTDC

Population

163.19 million

HKTDC

Religion

Muslims (90.4%), Hindus (8.5%)

HKTDC

Language

Bangla

HKTDC

Currency

Bangladeshi Taka

HKTDC

Approximate flight time from HKG

3 h 45 min

HKTDC

T&C export

27,229 million USD

Comtrade

T&C major exporting countries (Top 5)

USA; Germany; UK; Spain; France

Comtrade

126

Belt and Road Country Profiles of T&C Exporters

China Indicator

2017

Source

GDP

13.407 trillion USD

HKTDC

GDP per capita

9,608 USD

HKTDC

Population

1,395.4 million

HKTDC

Religion

N/A

Language

N/A

Currency

Chinese Ren Min Bi

Approximate flight time from HKG

N/A

T&C export

267,058,936,562 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Japan; Vietnam; Hong Kong; UK; Russia

Comtrade

HKTDC

Maldives Indicator

2017

Source

GDP

4.51 billion USD

HKTDC

GDP per capita

12,527 USD

HKTDC

Population

360,000

HKTDC

Religion

Muslims (98.4%)

HKTDC

Language

Dhivehi (official); English

HKTDC

Currency

Maldivian Rufiyaa

HKTDC

Approximate flight time from HKG

6 h 15 min

HKTDC

T&C export

2,702 USD

Comtrade

T&C major exporting countries (Top 5)

China; UK; Italy

Comtrade

Belt and Road Country Profiles of T&C Exporters

127

Nepal Indicator

2017

Source

GDP

24.47 billion USD

HKTDC

GDP per capita

834 USD

HKTDC

Population

29.34 million

HKTDC

Religion

Hindus (80.7%); Buddhists (10.3%); Muslims (4.5%)

HKTDC

Language

Nepali; Maithili; Bhojpuri

HKTDC

Currency

Nepalese Rupee

HKTDC

Approximate flight time from HKG

4 h 30 min

HKTDC

T&C export

331,448,590 USD

Comtrade

T&C major exporting countries (Top 5)

India; Turkey; USA; UK; Germany

Comtrade

2017

Source

Pakistan Indicator GDP

303.99 billion USD

HKTDC

GDP per capita

1,541 USD

HKTDC

Population

197.26 million

HKTDC

Religion

Muslims (96.4%); Hindus (1.9%); Protestants (1.1%)

HKTDC

Language

Urdu; English; Punjabi

HKTDC

Currency

Pakistani Rupee

HKTDC

Approximate flight time from HKG

N/A

T&C export

13,338,450,869 USD

Comtrade

T&C major exporting countries (Top 5)

USA; China; UK; Germany; Spain

Comtrade

128

Belt and Road Country Profiles of T&C Exporters

Sri Lanka Indicator

2017

Source

GDP

83.57 billion USD

HKTDC

GDP per capita

3,906 USD

HKTDC

Population

21.40 million

HKTDC

Religion

Buddhists (69.3%); Hindus (13.6%); Muslims (9.8%)

HKTDC

Language

Sinhala; Tamil

HKTDC

Currency

Sri Lankan Rupee

HKTDC

Approximate flight time from HKG

5 h 15 min

HKTDC

T&C export

5,296,653,618 USD

Comtrade

T&C major exporting countries (Top 5)

USA; UK; Italy; Germany; Belgium

Comtrade

2017

Source

Southeast Asia Brunei Indicator GDP

12.74 billion USD

HKTDC

GDP per capita

29,712 USD

HKTDC

Population

429,000

HKTDC

Religion

Muslims (75.1%), Buddhists (8.6%), Folk religions (6.2%)

HKTDC

Language

Malay, English

HKTDC

Currency

Bruneian Dollar

HKTDC

Approximate flight time from HKG

3 h 45 min

HKTDC

T&C export

11,995,824 USD

Comtrade

T&C major exporting countries (Top 5)

USA; United Arab Emirates; Hong Kong; Malaysia; Singapore; Australia

Comtrade

Belt and Road Country Profiles of T&C Exporters

129

Cambodia Indicator

2017

Source

GDP

22.25 billion USD

HKTDC

GDP per capita

1,390 USD

HKTDC

Population

16.01 million

HKTDC

Religion

Buddhists (96.9%), Muslims (2%)

HKTDC

Language

Khmer

HKTDC

Currency

Cambodian Riel

HKTDC

Approximate flight time from HKG

2 h 30 min

HKTDC

T&C export

8,784 million USD

Comtrade

T&C major exporting countries (Top 5)

USA; UK; Germany; Japan; Canada

Comtrade

Indonesia Indicator

2017

Source

GDP

1,010.94 billion USD

HKTDC

GDP per capita

3,859 USD

HKTDC

Population

261.99 million

HKTDC

Religion

Muslims (87.2%); Protestants (6.9%); Catholics (2.9%)

HKTDC

Language

Bahasa Indonesia; English; Dutch

HKTDC

Currency

Indonesian Rupiah

HKTDC

Approximate flight time from HKG

4 h 50 min

HKTDC

T&C export

12,256,522,306 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Japan; China; Korea; Germany

Comtrade

130

Belt and Road Country Profiles of T&C Exporters

Laos Indicator

2017

Source

GDP

17.15 billion USD

HKTDC

GDP per capita

2,568 USD

HKTDC

Population

6.68 million

HKTDC

Religion

Buddhists (66%); Folk Religions (30.7%); Protestants (1%)

HKTDC

Language

Lao; French; English

HKTDC

Currency

Lao Kip

HKTDC

Approximate flight time from HKG

N/A

T&C export

133 million USD

Comtrade

T&C major exporting countries (Top 5)

Germany; UK; Japan; United Arab Emirates; Sweden

Comtrade

Malaysia Indictor

2017

Source

GDP

309.86 billion USD

HKTDC

GDP per capita

9,660 USD

HKTDC

Population

32.08 million

HKTDC

Religion

Muslims (63.7%); Buddhists (17.7%); Hindus (6%)

HKTDC

Language

Bahasa Malaysia; English; Chinese

HKTDC

Currency

Malaysian Ringgit

HKTDC

Approximate flight time from HKG

3 h 50 min

HKTDC

T&C export

6,892,804,222 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Japan; Germany; China; Turkey

Comtrade

Belt and Road Country Profiles of T&C Exporters

131

Myanmar Indicator

2017

Source

GDP

66.97 billion USD

HKTDC

GDP per capita

1,272 USD

HKTDC

Population

52.65 million

HKTDC

Religion

Buddhists (80.1%); Protestants (6.5%); Fold religions (5.8%)

HKTDC

Language

Burmese

HKTDC

Currency

Burmese Kyat

HKTDC

Approximate flight time from HKG

2 h 50 min

HKTDC

T&C export

2,496,395,196 USD

Comtrade

T&C major exporting countries (Top 5)

Japan; Germany; UK; Korea; Spain

Comtrade

2017

Source

Philippines Indicator GDP

321.19 billion USD

HKTDC

GDP per capita

3,022 USD

HKTDC

Population

106.27 million

HKTDC

Religion

Catholics (81%); Protestants (10.7%); Muslims (5.5.%)

HKTDC

Language

Filipino; English

HKTDC

Currency

Philippine Peso

HKTDC

Approximate flight time from HKG

2 h 15 min

HKTDC

T&C export

1,367,171,944 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Japan; Italy; Korea; China

Comtrade

132

Belt and Road Country Profiles of T&C Exporters

Singapore Indicator

2017

Source

GDP

305.76 billion USD

HKTDC

GDP per capita

3,880 USD

HKTDC

Population

5.68 million

HKTDC

Religion

Buddhists (33.9%); Unaffiliated (16.4%); Muslims (14.3%)

HKTDC

Language

Mandarin; English; Malay

HKTDC

Currency

Singapore Dollar

HKTDC

Approximate flight time from HKG

3 h 50 min

HKTDC

T&C export

2,219,833,486 USD

Comtrade

T&C major exporting countries (Top 5)

Indonesia; USA; Malaysia; UK; Japan

Comtrade

2017

Source

Thailand Indicator GDP

437.81 billion USD

HKTDC

GDP per capita

6,336 USD

HKTDC

Population

69.10 million

HKTDC

Religion

Buddhists (93.2%); Muslims (5.5%)

HKTDC

Language

Thai; Burmese

HKTDC

Currency

Thai Baht

HKTDC

Approximate flight time from HKG

2 h 45 min

HKTDC

T&C export

6,994 million USD

Comtrade

T&C major exporting countries (Top 5)

USA; Japan; China; Vietnam; Myanmar

Comtrade

Belt and Road Country Profiles of T&C Exporters

133

Vietnam Indicator

2017

Source

GDP

215.96 billion USD

HKTDC

GDP per capita

2,306 USD

HKTDC

Population

93.64 million

HKTDC

Religion

Folk religions (45.3%); Unaffiliated (29.6%); Buddhists (16.4%)

HKTDC

Language

Vietnamese; English

HKTDC

Currency

Vietnamese Dong

HKTDC

Approximate flight time from HKG

1 h 50 min

HKTDC

T&C export

32,236,185,282 USD

Comtrade

T&C major exporting countries (Top 5)

USA; Japan; China; Korea; Germany

Comtrade