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Enhancing Economic Sustainability by Markdown Money Supply Contracts in the Fashion Industry: China vs U.S.A

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  • Bin Shen

    (Glorious Sun School of Business and Management, Donghua University, Shanghai 210005, China)

  • Tsan-Ming Choi

    (Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China)

  • Chris Kwan-Yu Lo

    (Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China)

Abstract

Supply chain contracts, such as the markdown money policy (MMP), are commonly adopted in the fashion industry. In this paper, we explore how fashion companies can use MMP to enhance economic sustainability from the cross-cultural perspective. We conduct case studies on two fashion firms (suppliers), one from China and one from U.S.A., that are adopting MMP in their respective supply chains. Via semi-structured interviews with staff members and some public data searching of the target companies, we find that the cultural factors, such as power distance and collectivism/individualism, affect contract selection, contract management, supplier–retailer leadership, and supplier–retailer relationship. We use the Hofstede’s national cultural dimensions theory to explain our insights. Specifically, in China, a country with a relatively high degree of power distance and collectivism, the companies tend to care more about the group interest and loyalty. The Chinese fashion companies are more willing to play the leading role in managing the relationships with their retailers, and offer MMP to them. In the U.S.A., a country with a relatively low degree of power distance and individualism, the companies are more likely to emphasize their own interest in trading. In fact, we find that American fashion suppliers tend to bargain with their retailers, and they are less willing to proactively provide the markdown money as a sponsor. Finally, managerial implications are provided, and several future challenges on MMP are examined.

Suggested Citation

  • Bin Shen & Tsan-Ming Choi & Chris Kwan-Yu Lo, 2015. "Enhancing Economic Sustainability by Markdown Money Supply Contracts in the Fashion Industry: China vs U.S.A," Sustainability, MDPI, vol. 8(1), pages 1-14, December.
  • Handle: RePEc:gam:jsusta:v:8:y:2015:i:1:p:31-:d:61477
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    References listed on IDEAS

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    Cited by:

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    2. Namin, Aidin & Ratchford, Brian T. & Soysal, Gonca P., 2017. "An empirical analysis of demand variations and markdown policies for fashion retailers," Journal of Retailing and Consumer Services, Elsevier, vol. 38(C), pages 126-136.
    3. Niu, Baozhuang & Chen, Lei & Zhuo, Xiaopo & Yue, Xiaohang, 2018. "Does buy-back induce more fashion sub-sourcing? Contract property and performance analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 113(C), pages 22-37.
    4. Zhang, Li-Hao & Li, Wen-Jing & Zhang, Cheng & Wang, Shanshan, 2023. "Outsourcing strategy of an original equipment manufacturer in a sustainable supply chain: Whether and how should a contract manufacturer encroach?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).
    5. Yue Chen & Sai-Ho Chung & Shu Guo, 2020. "Franchising contracts in fashion supply chain operations: models, practices, and real case study," Annals of Operations Research, Springer, vol. 291(1), pages 83-128, August.

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