Surviving Chinese Competition in a Post-Multi-Fibre Arrangement World

Abstract

Mauritius is a small island economy where textile and clothing firms were previously benefiting from preferential access to the EU and the US markets under the Multi-Fibre Arrangement (MFA) which imposed limits on the exports of big exporters. With the phasing out of the MFA, Mauritian textile and clothing firms now have to compete with Asian drivers, especially China, without any artificial support. This article studies post-MFA stabilization in a sample of clothing firms in Mauritius. Data are collected by means of face-to-face interviews with the senior management of 20 firms. Findings indicate that the firms have been involved in a series of changes after the phase out of the MFA. These changes include investment in technology, marketing strategies, production reorganization, rationalizing and closing down units of production, and increased specialization. Evidence also indicates that the competitive edge of Mauritian firms lies in their ability to accept small orders with short lead times, and delivering good quality on time. Institutions have also played a major role in ensuring the survival of the clothing industry through industrial policy and relevant support structures.