2020-08-11
Based on an empirical study on 18 developing market, we find that international mechanical product specialization has a significant positive effect on upgrading value chain. However, such effect is mainly from the contribution of high-level cooperation and needs to meet some preconditions such as human capital, service and institution. Based on study on industrial product specialization within international industry, China has upgraded value chain obviously. Improvements on transport services and the policies focused on high level specialization and made in china play the more important roles in international market.
As shown in below table, it has conducted study of 9 value chain increasing countries and 9 value chain decreasing countries, it can compare the difference of these major indicators among these countries. At the same time, in terms of the advantages and disadvantages of the major indicators, it can address that which indicators have potential to be explored, how to make policy to help these countries to improve its roles in participating in international division of labor. The data comparison on these two groups has shown that there are increasing trend in most indicators of influencing factors, and the conditions of human capital, service capabilities, and institutional environment have been significantly improved among the 9 value chain increasing countries. In contrast, there is only slightly improved in human capital and financial service among the 9 value chain decreasing countries, while the other indicators have all experienced significant degradation.
Table 1: Indicators of 9 value chain increasing countries and 9 value chain decreasing countries
|
| ΔESI | Human | Transportation | Δ Banking | Δ Institution | Δ Division | Δ PC |
| Latvia | 0.1217 | 0.0265 | 0.0975 | 0.7285 | 0.9937 | -0.0528 | -0.0016 |
| Jordan | 0.114 | 0.0161 | 0.2375 | 0.2886 | 1.1043 | -0.0866 | -0.0364 |
| Romania | 0.1137 | 0.0148 | -0.4273 | 0.1432 | -0.537 | 0.0174 | 0.0509 |
| India | 0.0932 | 0.0042 | 0.8941 | 0.2196 | 0.9968 | -0.646 | 0.0037 |
| Lithuania | 0.0833 | 0.0211 | -0.1813 | 0.375 | 2.5591 | -0.0447 | -0.008 |
| China | 0.0824 | 0.0083 | 3.7868 | 0.0482 | 1.2313 | 0.002 | 0.0838 |
| Tunisia | 0.0736 | 0.0168 | -0.0088 | 0.096 | 0.0456 | -0.018 | 0.0278 |
| Indonesia | 0.0671 | 0.0006 | 0.7975 | -0.2934 | -0.4118 | 0.0058 | -0.0045 |
| Vietnam | 0.0645 | 0.0095 | 0.5892 | 0.5109 | 2.2045 | 0.1097 | 0.0659 |
| Average | 0.0904 | 0.0131 | 0.6428 | 0.2352 | 0.9096 | -0.0146 | 0.0202 |
| Peru | -0.0022 | 0.0036 | 0.1211 | -0.1000 | 0.1667 | -0.0146 | -0.0319 |
| Mexico | -0.0055 | 0.0047 | -0.8448 | -0.0400 | -0.3870 | -0.0255 | -0.0172 |
| Argentina | -0.0072 | 0.0073 | -0.5104 | -0.1098 | -0.6710 | 0.0241 | -0.0182 |
| Algeria | -0.0140 | 0.0120 | 0.0303 | 0.0762 | 0.1667 | -0.1163 | -0.0407 |
| Azerbaijan | -0.0297 | 0.0027 | 0.2140 | 0.0855 | -0.6398 | -0.2558 | -0.0137 |
| Turkey | -0.0310 | 0.0080 | -0.5709 | 0.0875 | 0.5899 | -0.1742 | -0.0669 |
| Belarus | -0.0548 | 0.0177 | -0.5231 | 0.0338 | 0.5300 | -0.1396 | -0.0538 |
| Chile | -0.0636 | 0.0009 | -0.3101 | 0.1000 | 0.7575 | -0.0029 | -0.0331 |
| Venezuela | -0.0885 | 0.0084 | 0.4069 | 0.1000 | -1.1729 | -0.1674 | -0.0398 |
| Average | -0.0329 | 0.0073 | -0.2208 | 0.0185 | -0.0553 | -0.0969 | -0.0350 |
China's advantage in upgrading value chain in international market mainly lies in Transport and PC. In the past 20 years, China has invested a lot of money in the field of logistic infrastructure, which is able to provide the most complete and convenient transportation services in developing countries, laying a solid foundation for participating in a high-level division of labor. At the same time, China has consciously guided the division of labor and cooperation into high-level areas by adjusting restricted and encouraged commodities for promote trade, reducing tariffs on mechanical products, and introducing industrial policies for foreign investment, making important contributions to upgrading value chain. These empirical research also shows that effective policy incentives not only promote trade, but also increase the technical content of export products, which has significant positive significance for upgrading value chain.
Here we have two cases study on Chinese brand in value chain upgrading in international market
Case 1: Liaoning Censcience Industry Co., Ltd
Leading product: shield tunneling machine
Story:
In the past, one set of shield tunneling machine costs 100 millions USD from European, due to large market volume of Chinese market,local Chinese companies have to localization and produce their own tunneling machine in order to lower cost and meet with demand of local emerging market. Through the effort of conquering difficult in technical and application, it has research and developed first made in china shield tunneling machine in 2004. Through successful merge and acquisition on Caterpillar Canada division, NFM, Censcience is now leading in tunnel shield tunneling machine, now company can successfully enter to developed market like European.
Case 2： Shanghai Zhenhua Heavy industry Co.,Ltd
Leading product: port machinery
Story:
ZPMC was found by Mr. Guan Tongxian at his 59 year old, port machinery products of ZPMC was firstly exporting in 1992, it has became world leading one port machinery provider in 1997. ZPMC’s quayside container cranes occupied 70% world market shares.Through effort of research and development, it has broken the ongoing foreign technological monopoly. From first crane export to Canada port, it is now distributed to more than 230 container terminals in 97 countries and regions around the world, and its market share has ranked first within port machinery industry.
Key successful factors for this two cases in upgrading value chain in global market
- Strong back up and test by Chinese market
- Acquisition on new technology and know-how
- Keeping on lowering the cost for end user and improving practical value
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