Looking Beyond the Horizon : A Case Study of PVH’s Commitment in Ethiopia’s Hawassa Industrial Park
The story of how the PVH Corp. (referred to throughout this document as PVH) came to leada group of its top suppliers to build factories and a fabric mill in Ethiopia’s Hawassa IndustrialPark (HIP) is the study of a strong collaboration between a p...
| Main Authors: | , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/576091499710902600/Looking-beyond-the-horizon-a-case-study-of-PVH-s-commitment-in-Ethiopia-s-Hawassa-Industrial-Park http://hdl.handle.net/10986/28334 |
| Summary: | The story of how the PVH Corp. (referred
to throughout this document as PVH) came to leada group of
its top suppliers to build factories and a fabric mill in
Ethiopia’s Hawassa IndustrialPark (HIP) is the study of a
strong collaboration between a private company looking to
optimizeits business model and a government aiming to
transform its economy through global strategic
repositioning. The success of this story hinges upon the
intersection of their goals and a shared vision of
development that includes a strong commitment to social and
environmental goals.PVH was motivated to invest in Ethiopia
to respond to shifts in the global apparel sector, its
growing desire to retool its business model and to address
its concerns about compliance with social and environmental
standards in its traditional sourcing locations. PVH had
decided to rethink its business model and to look beyond the
horizon towards a new region in which tolocate its
manufacturing base. To have better oversight and
enforcement, PVH moved to adopta fully integrated vertical
supply chain, including direct investment in one of the
manufacturingfacilities.Key to Ethiopia’s success in
attracting this important investor was the government’s
ability and willingness to strategically evaluate its
foreign direct investment (FDI) needs and strategy and to
take steps to evolve into an attractive location for higher
value-added export-oriented investment.This case study
explains a private investor’s site selection process. It
assesses the elements PVH prioritized when deciding to
commit to Ethiopia, and specifically to HIP. The case study
further assesses the government of Ethiopia’s strategy,
level of readiness, interest, and commitment, and sets out
some key challenges that lie ahead for this partnership. The
case study is structured in ten sections. Section second
offers a brief background on the textile and apparel
industry, including an explanation of its value chain. It
provides a brief corporate profile of PVH and its current
global footprint and business model. Section third describes
the site selection process: PVH´s initial explorations in
Africa, its consideration of several African countries, and
its initial conversations and negotiations with Ethiopian
authorities. Section fourth discusses the Ethiopian
government’s strategy to attract and expand export-oriented
investments, including efforts to bolster the country’s
competitiveness. This section attempts to offer some
explanation why Ethiopia was the right fit at the right time
and its level of readiness to land such an investment. It
provides a brief profile of PVH’s Africa point of entry, the
HIP. Section sixth covers the challenges that lie ahead for
this-project---potential setbacks that will affect not only
the consolidation and growth of the textiles and apparel
industry in Ethiopia, but also the government’s vision of
becoming the “manufacturing powerhouse of Africa.” Section
eighth concludes with some key lessons from PVH’s decision
to invest in Ethiopia. Such lessons may be relevant to
countries or regions interested inattracting FDI and may be
of particular interest to other African countries in their
quest to attract major investments in the textile and
apparel sector. |
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