The Application Of Vetrical Integration In Textile Industry Based On Esquel Group

Vertical integration model and horizontal model are two choices presented infront of most companies in producing and running activities. Before making thechoice, the companies' leaders should have an idea of what's vertical integration,whether it's suitable to be applied in the company, its advantages and limitations.According to statistics, the sales volume of global textile and clothing industry isin the third biggest, only smaller than that of tourism industry and informationindustry. Textile products are necessary in daily life and it's also the fashion speakerof social culture and barometer of economic situation. As one of the typicallabor-intensive industries, the textile and clothing industry is also called "sunsetindustry". In recent years, China's textile and clothing industry suffers from somedisadvantages like lower technical level, lacking of innovation and unsoundmarketing net though the output and exportation value increases steadily. As theincreasing cost on raw material and labors, China's textile and clothing products arelosing price advantages and the pressure of survival increased.In textile industry, Esquel is a name with mysterious feeling and a name peopleadmire. The company becomes a giant of textile industry with its super big scale andbusiness all over the world. In the statistics for the export value of2010nationalannual men's cotton woven shirt, Esquel is on the top of the list with a value of220,000,000US dollars. In such a worrying economic circumstance in both China andforeign countries, Esquel becomes famous with such good performance.The author made a summarization of Esquel's achievements through analyzingits vertical integration strategy. The summarization includes establishing brand value,creating jobs, be active in environmental protection when focusing on benefits. Theauthor regards Esquel's vertical integration strategy a success and made it a successfulexample for textile industry. Though its integration production chain in some area bears big running risk and needs improvement, we should see that through applyingvertical integration strategy Esquel is equipped with unique competitive advantagesunparalleled by other companies. Companies should have an overall consideration onindustrial characteristics and make full use of advantages to make scientific and rightchoices when choosing supplying chain.