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The clothing industry, by virtue of its labour intensity and low barriers to entry and exit, is at the forefront of the processes of integration in a global network of production and distribution. During the 1970s and 1980s ‘intermediate' regimes (such as Greece) benefited from the diffusion in clothing production from advanced industrialized countries (such as Germany); however, this trend was reversed during the 1990s. This is because of the intensification of competition from both developed countries (for high quality products) and less developed countries (for price competitive items), as well as the new threat posed by competitors from post-socialist economies that are trying to find a role in the ‘Newer' International Division of Labour. Within this context, this article sets out to analyse to what extent collaborative forms of diffuse manufacture, and particularly triangular manufacturing, may be used in the context of south-eastern Europe. This article argues that ‘triangular manufacturing' between the industrialized core of the European Union (EU) (and especially Germany), Greece and the Former Yugoslav Republic of Macedonia (FYROM) was the outcome of spontaneous entrepreneurial decision-making. In the main, it was parent enterprises in Germany and to some extent Greek intermediaries who were the main beneficiaries of the emerging triangular relationships. Enterprises and workers in FYROM remained vulnerable and dependent. However, there were also a handful of instances of ‘good practice', where relationships were beneficial to all the participating parties. We argue that these examples provide lessons for policy intervention both nationally and locally (in both Greece and FYROM).