So What Club

Sourcing, trade and supply risk

Chinese or Korean fabric for a Vietnamese factory?

The prompt

A fictional European fashion brand buys 500,000 cotton T-shirts a year from a factory in Vietnam. Made with Chinese fabric, a shirt costs USD 3.80 delivered to the EU border (its CIF value). Made with Korean fabric, it costs USD 4.05. The EU duty is 12 percent without a preference and 0 percent under the EU-Vietnam agreement. Chinese fabric does not meet the agreement's rule, and Korean fabric does. Which fabric should the brand choose?

Before you reveal anything, plan your own structure and first move on paper. Then reveal one part at a time and compare.

Clarifying questions, with the interviewer's answers

Next case

Read the next worked case the same way: plan your own answer first, then reveal one part at a time.

Next case: Stay in China, move to Vietnam or move to Mexico?The lesson: Tariffs, trade agreements and rules of origin
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