Moving up the Quality Ladder? EU-China Dynamics in Clothing

Vandenbussche, Hylke; Di Comite, Francesco; Rovegno, Laura; Viegelahn, Christian

doi:2013.28.2.303

Journal of Economic Integration 2013 June;28(2) :303-326.
DOI: https://doi.org/10.11130/jei.2013.28.2.303

Moving up the Quality Ladder? EU-China Dynamics in Clothing

Hylke Vandenbussche, Francesco Di Comite, Laura Rovegno, Christian Viegelahn

IRES-CORE, Université Catholique de Louvain, Louvain-la-Neuve, Belgium
European Commission, Joint Research Centre (JRC), Seville, Spain
Center of Research in Economic Analysis (CREA), University of Luxembourg, Luxembourg
International Labour Organization (ILO), Employment Trends Unit, Geneva, Switzerland

Corresponding Author: Hylke Vandenbussche ,Tel: +32 010474137, Fax: +32 010473945, Email: hylke.Vandenbussche@uclouvain.be.

ABSTRACT

We apply a simple method to study the relative quality of Chinese versus European products exported in the clothing sector after the end of the Multi-Fiber Arrangement. Based on the model of Foster et al., (2008), we interpret the change in relative export prices and quantities sold in narrowly defined product categories as an indicator of quality shifts. Using UN Comtrade data, we find that European varieties exported to the US typically sell for a higher price than identical Chinese varieties exported to the US, but this price gap is narrowing. Despite rising prices, Chinese varieties are gaining market share. This opposite movement of relative prices and quantities sold in the same destination market are a strong indication of China’s moving up the quality ladder in its clothing exports relative to the EU. While European core products in clothing are stable over time, Chinese exports show product dynamics with exit and entry of new core products every year.

JEL Classification

F12: Models of Trade with Imperfect Competition and Scale Economies
F13: Trade Policy; International Trade Organizations
F14: Empirical Studies of Trade

Keywords: Trade | Quality upgrading | Import competition | Product dynamics

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