Global competitiveness in the Datang hosiery cluster, Zhejiang

Purpose – The purpose of this paper is to examine the development and characteristics of industrial clusters in the province of Zhejiang, China with particular emphasis on the hosiery industry in the town of Datang. Design/methodology/approach – The study used case study methodology and data triangulation techniques based on archival research and reports of statistical agencies both at central and local government level. Findings – Industry clusters assist in regional economic development by increasing local competitive advantages and creating an industrial regional identity through specialisation which attracts resources, labour and capital for investment. The industrial cluster in Datang has been stimulated by the local entrepreneurial climate, effective local networks and support from local government. Practical implications – The hosiery industrial cluster in Datang is in a less‐developed rural region characterised by low‐level labour intensive industrial activity. Their ability to compete internationally is hampered by low levels of innovation. The global networks are controlled by buyers of product. Design and/or innovation capability could be improved by developing strategic alliances with Italian producers in the same industry. Originality/value – This paper contributes to our understanding of the problems facing industrial clusters in provincial China which, as yet are unable to match the design and branding capabilities achieved by clusters in similar industries in Castel Goffredo (Italy) where outstanding design and branding have enabled them to build a dominant position in the European market in higher added‐value products.