TRIANGLE MANUFACTURING

The organization of production which involves buyers in developed countries placing orders with manufacturers in developing countries who subsequently shift the requested production to affiliated offshore factories in low-wage countries, which then ship the finished product directly to the buyer.

The Essence of Triangle Manufacturing

The essence of triangle manufacturing, initiated by the East Asians in the 1970s and 1980s, is that global buyers place their orders with the manufacturers they have sourced from in the past; those manufacturers then shift some or all of the requested production to affiliated offshore factories in low-wage countries (China, Guatemala, Indonesia). These offshore factories can be wholly owned subsidiaries, joint-venture partners or simply independent overseas contractors.
The manufacturing triangle is completed when the finished goods are shipped to the overseas buyer. […]

Triangle manufacture changes the status of ... established suppliers for retailers and designers [in the home country] [from that of original equipment manufacturers to that of] middlemen in buyer-driven commodity chains that can include as many as 50 to 60 exporting countries. […]

The performance trust built up through many successful business transactions with these U.S. buyers enabled East Asian suppliers to internationalize their original equipment manufacturing expertise through triangle manufacturing. The East Asian manufacturers became intermediaries between the buyers in the United States and hundreds of apparel factories in Asia and other developing countries."
(adapated from Gereffi , G., Outsourcing and Changing Patterns of International Competition in the Apparel Commodity Chain, 2002, visited 2011-25)

"The system of triangular trade is often used in subcontracting. Thus, a German client may supply fabrics sourced in India for garments to be made up in Bangladesh, or Malaysian fabrics may be made up in Indonesia. As in the case of United States' production sharing, European manufacturers are moving production offshore to neighbouring countries in North Africa, Eastern and Central Europe, or countries in the former Soviet Union."
(Gereffi, G. and O. Memedovic, The Global Apparel Value Chain: What Prospects for Upgrading by Developing Countries, United Nations Industrial Development Organization (UNIDO), 2003, visited 2011-09-25)