Due to competition and worried about the loss of overseas market and enterprises have shift production to foreign investment, in areas with income level and technical level of the region near the homeland. The third stage is the product of recession, the product has five fingers shoes now phase, standardization, enterprise technology completely lost, product competitive advantage around the price. In order to reduce cost, the enterprise will move production to lower labor costs of countries and regions, to extend product life cycle, therefore, the industrial transfer five fingers the enterprise mainly flows to developing countries. Vernon think, in the product, the monopoly enterprises recession stage or oligopolistic status has ceased to exist, the competition between enterprises is based on prices and costs. This enterprise is most concerned about looking for the production of low cost, low labor costs and location of the developing countries, and become the best choice of multinational companies producing area. He thinks, the process vibram shoes requires a lot of labor inputs to most likely to transfer product standardization production in developing countries. In developing countries, the product or production to domestic supply domestic market or sold to other countries.
Overall, the textile industry is the eu countries and the United States is one of the advantages of traditional industries. In the majority time, Europe and the United States both in textile production and trade, technology and craft innovation on the leading position in the world. But the textile industry is labor-intensive industries, one of the high cost of labor and costs, has lost the competitive advantage, according to the product life cycle theory, the developed countries should be transferred out of the industry to obtain comparative advantage. However, the European Union and the United States still exists, the textile industry is a strong "sunset industry", but also often with China in the trade and industry back again. vibram This is the product life cycle and the theory of "the third stage theory" product conflict. Think carefully, Vernon product life cycle of the theory of "the third stage theory" includes "the manufacturer is relatively competitive oligopolistic or monopoly, not the" this hypothesis, should also include such conditions. It is (1) developed countries in "industry", the recession has started a new stage of development and production of products, and must be "sunset industry" and the production time and space on the coexistence, i.e. the adjustment of industrial structure has been completed. (note: "the sunset industry", "industry" transfer part of what is left after a part). (2) new products developed countries create new market demand, and the rest of the sunset vibram five fingers products created the remaining sum of greater market demand for products ", "to create market demand, or developed countries will suffer. Use formula is: D1 + D2 said > D3 (D1 said the new industrial market demand, said the sunset industry D2 market demand, said the original inheritance D3 market demand). From this model, we can analyze if D3 is big enough, when D1 must, D2 bigger also. If this will be transferred, namely all industries = 0, D2 will appear equation, this right side < equation of developed countries, they will shrink demand will suffer. (3) in the mixed economy, the industrial transfer must consider the factors. If these three conditions are not met, and the recession in the products of industry, developed countries phase shift out not easily.