The Internet at the Global Economic Margins
The Internet at the Global Economic Margins
Abstract and Keywords
As access to the Internet spreads to corners of the world previously defined by their lack of connectivity, there has been much talk about the potential for digital media to have transformative and revolutionary effects of access to information, services, and markets. The chapter begins by focusing on some key hopes about what the Internet can effect at the world?s economic margins. Anchored in an extensive case study of how new connectivity was, and was not, used in the remote nodes of the Thai silk industry, the chapter argues that many of our expectations about digital change may never be realized. One reason is that hope about what the Internet can do in some of the world?s economic margins often rests on unrealistic assumptions about what the Internet is. By reframing the Internet itself, Graham sees an opportunity to build more effective strategies for shaping desirable and achievable outcomes.
Information and communication technologies have inspired hopes, fears, and expectations of social, political, and economic change.1 Specifically, it is the technologically mediated reconfigurations, and speeding-up of movements of information that have led many to talk about the transformative and even revolutionary effects that ICTs can have (Kleine, 2013, Unwin, 2017, Heeks, 2018).
(p.266) This chapter focuses on the overlaps between the Internet and economic networks in traditionally marginal parts of the world. A pervasive idea exists that the Internet can liberate economic information from many of its traditional geographic constraints, and so ultimately benefit the world’s poor by removing frictions, barriers, and intermediaries that stand between producers of goods and services in the Global South and consumers of those things in the Global North (cf. Nambisan, 2017, Graham, 2015).
Such ideas are examined through a case study of Internet use in the Thai silk industry. Thai silk is a high-cost product typified by long commodity chains connecting producers and consumers, in which the actual producers of silk receive very little of the value of the fabric that they produce. The case study demonstrates that while the Internet is allowing sellers of silk to expand their markets and reach out to new customers, few of these benefits are being accrued by the actual producers of silk. The benefits provided by Internet-enabled mediations and reconfigurations of commodity chains are therefore not being captured by those most in need.
The chapter concludes by arguing that many of our often unrealistic expectations of the power of ICTs in the contexts of marginal economies are based on particular spatial ontologies of, or ways of imagining, the Internet. The Internet is undoubtedly an important transformative tool for many at the margins of the world’s economy, yet there are ultimately many entrenched social, economic, and political relationships and obstacles to change that cannot be easily dispelled by removing barriers to the flows of information.
Hopes for ICTs in the World’s Economic Margins
Hopes for the transformative power of ICTs have been especially pronounced in the poorest parts of the world for a few interconnected reasons. First, the South has traditionally faced the biggest barriers to the transmission and communication of information non-proximately. ICTs can alter the relationships between people and information in key ways: they can change the speed at which information is transmitted over space (thus altering geographic frictions), they can change the cost of transmitting information (altering economic frictions), and they can change the accessibility of information and communication networks by altering barriers to entry.
In the poorest parts of the world, the time–space paths of most people have traditionally been highly constrained by distance. Simultaneously, they have also been lacking in the technological mediations that have the potential to alter either geographic or economic frictions. Because of this, the potential of the Internet to reconfigure time–space paths of people and information in global cores will be different than at global peripheries. It has followed that (p.267) many governments and development agencies have seen broadening access to ICTs in the Global South as a way to “leapfrog” stages of economic development. This has led some prominent voices such as Jeffrey Sachs to claim that “mobile phones are the single most transformative technology for development” (quoted in Etzo and Collender, 2010: 661).
Second, and relatedly, is the idea that ICTs in the Global South will be able to radically reconfigure flows of cash and commodities. For many policy-makers, the reduction of geographic frictions that techno-mediated changes in connectivity are thought to bring about can allow for both better functioning markets and better access to markets: the idea being that both changes will ultimately result in economic development and tangible benefits for people currently excluded from selling their goods and services.
The UK’s Department for International Development (DFID), for instance, claims that “weak, inefficient or non-transparent markets and societal institutions, including governments, hinder economic growth, deter private sector innovation and investment, and weaken the ability of society to respond to the needs of the poor.” In markets characterized by opaque economic information and significant barriers to non-proximate information flow, sellers often only know local prices and can thus be locked into selling to middlemen and intermediaries who have local footprints. This could mean village weavers selling their goods cheaply to a local intermediary rather than to a buyer in the nearest city, owing to lack of knowledge about the urban market value of their cloth, or fisherpeople similarly selling their catch for a low price in one port, not knowing that the price for their fish is significantly higher just a few miles away (Coyle, 2005 in Carmody, 2012). Further exacerbating the poor position of producers is the issue of clientelization (Eggleston et al., 2002). In an environment of high information search costs, producers of goods (such as farmers) are not just pushed into dealing with intermediaries, but are also often locked into long-term relationships with those dealers. This can be problematic because sellers are thus unable to “independently assess the integrity of the dealer, or the reasonableness of the prices he offers, by comparing purchase prices across many markets and many dealers” (Eggleston et al., 2002: 67).
Many of these examples of what economists refer to as weak, inefficient, or non-transparent markets are enacted because of a paucity of information. Because of their geographic positionalities (i.e., their non-proximate position to relevant information sources), many sellers are unaware of demand, and many buyers are unaware of supply, allowing the lion’s share of value to be captured by intermediaries rather than producers and farmers (who are often the poorest in society). But in markets with efficient and transparent flows of information, it becomes difficult for intermediaries to capture excessive amounts of value in the chains of commodities that exist between producers and consumers (UNCTAD, 2003: 163).
(p.268) Poon and Jevons (1997: 34) state that “because the Internet creates a ‘borderless’ virtual business platform on which suppliers, customers, competitors, and network partners can freely interact without going through the pre-defined channels on the value chain, members of the same business network or of different networks can bypass the traditional interaction patterns and form virtual value chains.” As such, “the Internet has diminished many of the information asymmetries (and hence power asymmetries) between sellers and buyers” (Gereffi, 2001: 1628). Firms in “developing nations” can use transparency brought about by the Internet to find new customers in order to “escape local de facto monopolies” (UNCTAD, 2005). In a borderless world, it is argued that historical competitive advantages such as firm size become irrelevant because the Internet can “level the competitive playing field by allowing small companies to extend their geographical reach and secure new customers in ways formerly restricted to much larger firms” (OECD, 1999: 153), such as by allowing villagers to better understand the market price for their crops in nearby towns (Anderson, 2005).
There are important counterarguments to some of these positions. Some of the most sustained criticism is leveled by those who see the spreading of ICTs as ways of enabling and giving shape to processes of neocolonialism and exploitation (Gurumurthy and Singh, 2009). Early dependency theorists observed that the integration of “Third World” economies into first world markets created a state of dependence. Dos Santos (1970: 231) describes such dependence as “a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected.” Drawing on the work of dependency theorists and postcolonial theorists, commentators such as Sardar (1996) see the Internet “as a new phase in a long history of the West’s attempt to colonize not only the territory and the body but also the mind of the Third World ‘other’” (Schech, 2002: 18).
From this perspective, by taking places out of their isolation and placing them in a global village, such places are thrust into the hegemony of Western knowledge and capitalism (Pieterse, 2001). Producers then grow dependent on unstable market conditions and distant consumer preferences (Dahles and Zwart, 2003). Profitable elements of local cultures (such as silk making) are packaged and integrated into the network, while others are potentially ignored, both by distant consumers and by local people. This dynamic can also have harmful effects on the crafts being produced: “the decline of craftsmanship, their simplification, the denigration of aesthetic and material culture and the loss of their symbolic and functional value, […and] the subjection of indigenous groups to the external exigencies of the commercialization process” (Dahles and Zwart, 2003: 146).
Nonetheless, this chapter mostly concerns itself with the hopes rather than the fears of ICTs in the world’s economic margins. The arguments that have (p.269) been presented (for both the hopes and the fears), interestingly move beyond viewing the Internet as a tool for disintermediating commodity chains, to seeing it as a technology with the power to accomplish an unfettered geographic expansion of markets. Purcell and Toland (2004: 241) claim: “ICT[s] offer the opportunity to reduce the barriers of distance, and give…countries better access to the global economy.” According to the International Telecommunication Union, the Internet “provides developing countries with a unique opportunity to compete in market places that were beyond their reach” (Ntoko, 2007: 1).
The ideas that the Internet will allow for geographic expansion and that it will allow for disintermediation are deeply intertwined, and rest on a particular spatial ontology. For both geographic expansion and disintermediation to occur, the Internet needs to bring consumers and producers into the same online marketplace. To do this, the Internet needs to take on an ontic (i.e., a physical or material) role. The assumption here is that the Internet can bring into being both an ethereal alternate dimension that is infinitely accessible (from any connected portal on the planet), and fixed in a distinct (cyber-) location (the virtual marketplace in which all producers and consumers transact with one another). Using the Internet to transport producers and consumers into co-presence in a virtual marketplace thus means that both physical barriers and the intermediaries who throughout history have served as a bridge over physical distance are rendered largely irrelevant (to the transactions that are supposed to happen between producers and consumers).
With the assistance of ICTs, many governments and development organizations therefore see the potential for significant change and an ability to bring development to the poor by bypassing entrenched economic power relations. For such reasons, there are substantial hopes vested in the potential for information and communication technologies in the Global South. ICTs are able to reconfigure time–space paths of people and information, and fundamentally alter economic flows and the functioning of markets; in doing so, they potentially provide benefits to the most marginal and disconnected in society.
Digital Divides in the Thai Silk Industry
It is useful to ground some of these important expectations in a concrete example of the intersections between ICTs and marginal economies. As such, this section reviews some of the results of my research into the role of the Internet in the Thai silk industry (Graham, 2010; 2011a; 2011b; 2013a).
The Thai silk industry has existed for thousands of years and remains an important part of the Thai economy and Thai social practices. Many unique (p.270) weaving patterns have been handed down from mothers to daughters for generations. For instance, when interviewing a weaver in Khon Kaen province, I was told, “I have been weaving some of these designs since I was born.” The weavers sitting next to her laughed at the statement, but then agreed that they too have been producing certain distinct styles since they were taught to weave. Almost any weaver in the northeast can point to unique designs and patterns that they have seen and woven all of their lives and that originate in their village, town, or province.
The Thai silk industry is distinct in Southeast Asia in its predominant use of handlooms (see Figure 15.1). Reeling and weaving are most often performed by hand by rural women and elderly household members. But Thai silk producers are currently in a worrying economic position. Thailand’s National Economic and Social Development Board and the World Bank (2005) warned that Thai silk is highly uncompetitive in comparison to Chinese and other imported fabrics. They estimate that large reductions in labor costs or increases in productivity are needed.
Although Thai silk tends to be expensive, labor costs in the silk industry are paradoxically already extremely low (silk weavers are some of the lowest-paid workers in the country). In the northeast, stories abound about mothers being unable to persuade their daughters to take up weaving because of the relative allure of factory work in Bangkok and Central Thailand. It is the many intermediaries and merchants that instead tend to capture much of the value of any particular piece of cloth.
Policy-makers are then faced with a dilemma: saving an industry that is economically important for thousands of people without undermining the unique cultural practices and traditions associated with silk that are important (p.271) for many Thais. It is this moment of crisis and worry that has given rise to many in government, in civil society, and in the private sector seeing the Internet as a partial solution to these issues.
The Internet could, in theory, reinvigorate the Thai silk industry in two ways. First, it could allow sellers to use new types of visibility afforded by the Internet to move beyond traditional time–space paths and networks of Thai silk to reach out to new and distant consumers. Second, it could increase economic transparency in the market for Thai silk, ultimately allowing producers to sell to consumers without the need for long chains of intermediaries.
Much effort has been spent trying to use the Internet to save the Thai silk industry. The former Prime Minister of Thailand, Thaksin Shinawatra, recognizing that Thailand could not compete with China on mass-produced products, often argued that Thailand needed to blend its unique heritage with ICTs in order to thrive in a global economy. These ideas were put into practice in Thailand’s ten-year ICT policy framework which included the setting up of a large government economic stimulus program to market and sell Thai handicrafts in trade fairs and through the Internet.
My research, therefore, was designed to study this coming together of the Internet and a dying craft industry. I spoke to 126 silk producers and merchants and analyzed the websites of 139 Thai silk sellers and explored key research questions. These questions were designed to help me to understand the intersections of the Internet and the Thai silk industry, and identify some of the real potentials and barriers of the Internet for people in the world’s economic margins.
The study asked: (1) how people in the silk industry imagine and envision the effects of the Internet, and how they use new types of visibility afforded by the Internet to represent their businesses and their work on the Internet; (2) whether sellers are actually using the Internet to sell to new and distant customers; (3) whether the Internet is being employed to disintermediate commodity chains and allow more direct links between producers and consumers; and (4) whether the Internet and integration into new commodity chains are altering the types of silk produced by weavers and ultimately reshaping the ways in which cultural practices are reproduced.
The work found that many sellers choose to portray the Internet as a tool that has brought about significant benefits to actors in the Thai silk industry. Many of these portrayals centered on the notion of “directness” or distintermediation that could be enabled by the Internet. Some sellers focused on the benefits of this directness to consumers:
Most [pieces of silk] are acquired directly from the artists or workshops that produce them. This allows us to offer lower pricing and provides greater control over the quality and designs of the products. [<www.asianartmall.com>]
(p.272) The crafts that you see on our site are supplied direct from source which helps us to keep our prices very competitive, against other Thai and non-Thai suppliers. [<www.chiangmaicraft.com>]
Others chose instead to highlight the benefits to the producers of silk:
World of Thai Silk online fabric shop connects you directly to Thailand’s rural village weavers as well as the wholesale fabric of the largest weaving mills. No matter how distant you are from these villages, now you have access to them online. [<www.bangkok-thailand.com>]
We also aim to provide a platform for the skilful Thai craft people. Many of those live in remote villages and do not have access to the world market. [www.thailandfashion.net]
It is hoped that an expanded market for their silk craft can be developed. We are encouraging the female weavers to produce more of their “folk art” silk for a market previously beyond their reach. [<www.thaivillagesilk.com>]
In both cases, there is an idea that the Internet can bring into being direct connections and a form of proximity between producers and consumers that didn’t exist before. These claims about altered commodity-chain topologies and imagined proximities are then used as a basis for powerful arguments that they then result in an accrual of economic and cultural benefits for producers and/or consumers (i.e., lower prices and the sustainability of the industry).
However, most of these statements about directness, new positionalities, and disintermediation actually come from intermediaries, rather than producers of silk who are disintermediating commodity chains. Northeastern producers have, for the most part, been unable to establish online presence, and it is merchants located primarily in Bangkok or outside of Thailand who have instead positioned themselves as virtual bridges in the buying and selling of silk. It is conceivable that proximity to markets (in terms of positions on a commodity chain) plays a factor in encouraging Bangkok merchants to create websites, as they adapt to the needs or desires of their customers.
Not only are intermediaries more likely to use the Internet to sell silk than producers, but both producers and merchants who use the Internet often see no noticeable change in the topological length of their commodity chains. Firms that use the Internet are actually more likely than those that do not to sell silk to intermediaries and are more likely to buy silk from intermediaries. In the Thai silk industry, instances in which the Internet is being used to shorten commodity chains are exceptions and aren’t representative of common experiences with the Internet.
This isn’t to say that the Internet has no geographical effects: Internet users are actually more likely to sell both non-locally and non-proximately. Specifically, amongst producers and merchants who do not have websites, there is a (p.273) distance–decay pattern that can be seen: Thai customers are by far the most important, followed by customers elsewhere in Asia. No such statement can be made about producers or merchants that use websites, as their important customers are far more geographically dispersed. In some ways, then, the Internet seems to be altering the manner in which distance is experienced by firms in the Thai silk industry. Absolute distance is made less relevant and less of a barrier for firms with an online presence.
Pak Thong Chai
Why then is the Internet being used so well in expanding markets geographically and yet at the same time being so ineffective at breaking down existing commodity chain structures? One reason is most likely a lack of economic transparency throughout the commodity chain. Intermediaries limit knowledge about weavers to customers, and limit knowledge about customers to weavers.
An example of this can be seen in the town of Pak Thong Chai in northeastern Thailand. Pak Thong Chai is one of the hubs of the production of plain silk in the region (see Figure 15.2). Location A on the map is the center of town (p.274) and contains a cluster of fifteen to twenty shops like the one shown in Figure 15.3. Most of these shops are designed for a comfortable shopping experience: they are sometimes air-conditioned, have polished wood interiors, and bilingual staff who offer visitors water and coffee.
Location B is where much of the actual weaving of silk occurs. It is an altogether different place. For outsiders, many of the weaving groups in this area are extremely challenging to find. They are sited on small side streets devoid of signs to indicate that people could buy silk from there. The purchasing experience is also an entirely different one: there is no polished furniture, no air conditioning, and no pretty displays of products (Figure 15.4). The weavers here rarely interact with end customers; something evident from my conversation with the group leader in location B. He told me:
I don’t know much about the shop that buys from me; they show up here at my house when they need more. I just know that they want the silk in long pieces. The price always varies, but sometimes if I really need money I have to sell it for 100bt a yard and lose money on the sale.
This conversation is reprentative of many other stories recounted to me in the area. In very few cases, in the northeast of Thailand, do the actual weavers (p.275) of silk ever communicate directly with the consumer, and because of this there is very little transparency within, and a lack of knowledge about, distant nodes on the commodity chains of Thai silk.2
For instance, I asked all silk sellers that I spoke with to tell me about what their customers do with their silk. A large number of people told me that not only did they not know, but they also didn’t care as long as they kept buying from them. The head of another weaving group in Pak Thong Chai that sells large amounts of silk to local merchants told me:
There is such a long chain of people, and I really just don’t know where it goes. I don’t know if the retailers that buy from us export our silk.
I know that some of the people who buy from me export my silk, but I have no idea to where.
The example of Pak Thong Chai succinctly illustrates that the problem people in the silk industry face is not remoteness or distance from markets. Both places in Figure 15.3 are equally far removed from important and distant markets. In other words, the issue faced by many is not distance from markets, but rather a lack of transparency and an absence of functional information about markets.
More broadly, in the Thai silk industry, the Internet is undoubtedly allowing a few people and firms (most of whom are merchants in Bangkok) to sell in new markets, and is enabling some reconfigurations of economic positions. It is helping some people to reach out to customers all over the world (e.g., the merchants with websites described earlier in this chapter). But, while the Internet can theoretically allow people like the weavers in Pak Thong Chai to bypass existing nodes in commodity chains, it is difficult to see how that would work in practice. The actual producers of silk have little experience of marketing to distant consumers. Furthermore, this unfamiliarity with selling to other nodes on the commodity chain seems to have made many people skeptical about ever using the Internet for business purposes.
Some had never used the Internet, but nonetheless had an understanding of its potentials. One seller noted, “The reason I don’t have a website now is because of copying. I will probably do it in the future, but I will decide which silk to show online.” Others also had no direct experience with the Internet, but instead were pessimistic about its benefits. The head of a weaving group told me, “I prefer selling face to face so that people can touch. If I had a website, people might not buy anything. We had some people come around and tell us that they were putting our silk on a website. I don’t know the name of it though…They never call though so it doesn’t matter.” Finally, others still were hostile to the idea of using the Internet. One shook her head in disgust when I asked what she thought about the Internet and told me: “Other people have told me that colors are different on the Internet. It is not sure for selling and people might not pay money. What would I do then?”
In sum, there are three important points to take away from the case of the Thai silk industry. First, many sellers with websites choose to highlight the idea that the Internet brings about transparency and directness in the commodity chains of Thai silk. Ironically, it is primarily intermediaries (as opposed to producers) that use the Internet to sell silk. Sellers with websites are more likely to sell their silk internationally, but also more likely to sell to other (p.277) intermediaries. The second key point is therefore that the Internet does not appear to be facilitating a process of disintermediation in this industry. Finally, relationships in the silk industry tend to be opaque, not because of an inability to communicate information and economic signals non-proximately, but because of a range of other microlevel barriers. Producers who are functionally illiterate, monolingual, and inexperienced in basic mathematics necessarily rely on intermediaries to do the work of brokering transactions.
We need to then ask why there are such powerful assertions about the disruptive and disintermediating potentials of the Internet and yet the benefits have been mostly captured by people and firms that the Internet was supposed to make irrelevant. Why do we expect the Internet to bring about transparency in the commodity chains of silk, when economic transparency is clearly reliant on so much more than the technologically mediated ability to transmit information? I assert that many of the hopes that we have for benefits that can be accrued to the underprivileged and disempowered through disintermediations, directness, transparency, and the bringing into being of virtual marketplaces all rest on a very particular ontology of space.
Reimagining the Internet
Development discourse is replete with suggestions that the Internet can connect you directly, make the work smaller, and expand markets. More broadly, much of the power embedded in discourses about the “digital divide” lies in the fact that they are able to postulate movement across space.
In some cases, much of the spatiality embedded into rhetoric about the “digital divide” refers to the geography of the divide itself. That is, a divide can be thought to exist between the North and South, East and West, urban and rural, etc. But to many people who talk about “digital divides,” the Internet takes on an ontic role. The Internet is conceived to be enabling an ethereal, alternate dimension. This “online” space is simultaneously infinite and everywhere (because everyone with an Internet connection can enter) and fixed in a distinct location, albeit a non-physical one (because despite being infinitely accessible, all participants are thought to arrive in the same marketspace, civic forum, and social space) (Graham, 2013b). The Internet then turns into Marshall McLuhan’s (1962) idea of a global village.
When we ermploy this “global village” conceptualization of the Internet, this ontology that sees the Internet as bringing into being a space that is simultaneously infinite and fixed, then the “digital divide” becomes, not a statistical divide between people or places, but rather an existential divide (p.278) between those who can access a shared cyberspace, and those who remain rooted to the material world and constrained by traditional barriers of time and space (Graham, 2015; Graham et al., 2015).
It is then easy to see how expectations and claims about the Internet rarely seem to have matched up to its effects in the Thai silk industry. Ideas of transparency, directness, and proximity all appear to be grounded in the type of ontology that has been described. By rendering material time/space paths and barriers less relevant, and by providing a new virtual space in which goods and information can be exchanged, the Internet was thought to offer an effective solution to the silk industries’ woes that are based on persistent barriers of long commodity chains and distances between producers and consumers. However, use of the Internet in the Thai silk industry has not had the expected effects.
First, the Internet appears to be partially fulfilling its geographical potentials. Absolute distance is made less relevant and less of a barrier for firms that have an online presence, with Internet users more likely than others to sell internationally. But at the same time, despite facilitating trade with new markets, the Internet doesn’t appear to be facilitating the transparency and directness that so many hoped that it would.
It is important to note that the Internet is actually not being used by most producers of silk. Many of the people interviewed saw either too many difficulties or no economic value in attempting to use the Internet to sell silk. Instead, it is more often employed in this way by merchants in Bangkok and abroad. Furthermore, merchants found most success selling to other companies rather than to end customers. This means that many people are effectively using the Internet to add commodity-chain positions, rather than disintermediating those chains: a point which runs counter to much that is written about the potentials of the Internet.
In the places where it is being used by producers, it is rarely an effective tool. The producers of silk who had used the Internet were quite unfamiliar with the requirements or tastes of any distant markets. This is because intermediaries often occupy a crucial (and useful) organizational position on the commodity chains of silk. Put another way, the Internet changes the relative spatial positionalities of intermediaries, yet does little to alter their economic, cultural, and educational positionalities.
This chapter has argued that because of very specific ontologies that we tend to use when thinking about the Internet and its social and economic effects, we can often have unrealistic expectations about the transformative potentials of the Internet in the world’s economic margins. Reducing a digital divide does not automatically bring a virtual, transparent, and direct marketplace into being that can transcend the distance between producers and consumers. The ability to engage in non-proximate trade in most cases requires an (p.279) Internet connection, but is also clearly contingent on a range of other economic, cultural, political, and technological positionalities, barriers, and costs. Not everyone has the education, experience, linguistic knowledge, willingness, or desire to innovate, and the interpersonal networks necessary to reconfigure commodity chains; and Internet access alone is rarely sufficient to fundamentally reconfigure entrenched, and often unfair, economic networks and relationships in the world’s economic margins.
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(1) This chapter is a revised version of the chapter that appeared in the first edition of this book: M. Graham (2014). “A Critical Perspective on the Potential of the Internet at the Margins of the Global Economy,” in M. Graham and W. H. Dutton (eds), Society and the Internet: How Networks of Information and Communication are Changing our Lives. Oxford: Oxford University Press, 301–18.
(2) As an example, there is a pervasive myth among Thai consumers outside of the northeast that most Thai silk comes from Chiang Mai and the northern region of Thailand (hundreds of miles away from the northeast). On numerous occasions when I told Thais about my project, they insisted that I should be spending more time in Chiang Mai. What actually happens is that many merchants from Chiang Mai travel to cities in the northeast, buy silk, and rebrand it in their shops.