The processing trade, which is dominated by foreign investment and participates in global value chain production, has rapidly changed the export structure of China products and promoted GDP growth and labor employment. However, some industries are in a very embarrassing situation. Foreign investment in these industries has formed a closed production network in the mainland, which is basically separated from local parts suppliers. In the process of globalization, foreign-funded enterprises have taken advantage of their cost advantages and obtained industrial upgrading, while domestic-funded enterprises are facing greater obstacles to upgrading due to the shielding effect of closed production networks. Taking the closed production network of notebook computers in Taiwan Province Province as an example, this paper analyzes the constraints of processing trade on domestic industrial upgrading.
In 200 1 year, the authorities of Taiwan Province Province changed their investment policy to the mainland, and the competition in the notebook computer production and processing market in Taiwan Province Province became increasingly fierce, and enterprises in Taiwan Province Province moved their notebook computer production bases to the mainland one after another. This migration process is also the formation process of electronic industry clusters in the Yangtze River Delta and the Pearl River Delta, especially in the Yangtze River Delta where major notebook computer manufacturers are concentrated. According to the statistics of Suzhou Customs, in 2006, Suzhou alone exported 22.074 million notebook computers with a value of 157 1 billion US dollars, accounting for 42.5% of the national trade volume and about14 of the world. However, almost all of these "Made in Suzhou" laptops equipped with global equipment are manufactured by processing trade, and their R&D design, special materials, key components and product sales are heavily dependent on Taiwanese businessmen. Parts for assembly are mainly purchased and allocated by multinational groups, so it is difficult for local enterprises to enter the supporting system of materials and parts.
The Yangtze River Delta region has a good industrial base, high quality producers and developed service industries. Taiwan Province 12 notebook computer OEM enterprises will move to their destinations, mainly in the Yangtze River Delta region. At present, the mainland's production capacity has accounted for 60% ~ 100% of these companies' production capacity, and gradually formed the advantages of industrial clusters. When Compal, Wistron and other notebook computer enterprises and other electronic information enterprises settled in the Yangtze River Delta, they gradually formed the advantages of industrial clusters. In order to take advantage of this advantage, more notebook computer enterprises in Taiwan Province Province began to choose to settle in the Yangtze River Delta. The headquarters and R&D center in Taiwan Province Province are mainly responsible for product design and business strategy.
The rapid development of technology, the rapid change of demand and the continuous expansion of income scale have led to a great degree of specialization in every link of notebook computer value chain. In the specialized division of labor, brand-oriented enterprises and first-class suppliers become the key factors, which determine the layout and location of participating enterprises.
The development and manufacture of notebook computers are divided into many links. Product design and final sales are carried out by brands such as Dell, Hewlett-Packard, Sony and Toshiba. Notebook computer enterprises in Taiwan Province Province are mainly engaged in R&D and production of products and parts.
In the early days, made in taiwan enterprises had limited production capacity. They mainly accept customer orders in the value chain and produce according to the design requirements of leading enterprises in the United States and Japan. With the improvement of technological capability and industrial upgrading of enterprises in Taiwan Province Province, leading brands focus on brand promotion, product design and sales with core competitiveness, and hand over product research and development to enterprises in Taiwan Province Province. Enterprises in Taiwan Province Province turned from OEM to ODM, and became the first-class suppliers in notebook computer industry. Since 1998, the proportion of OEM/ODM business has remained above 80%, while the proportion of OBM business is very low.
In the value chain of notebook computer industry, the key participants are leading brand enterprises and first-class suppliers. In the sales process, brand leaders have strong brand advantages and global sales network, and brand owners have strong influence on value chain governance and income distribution. Their orders determine the survival and profitability of manufacturers to a certain extent. In the production process, the first-class suppliers directly accept orders from leading brand enterprises, develop products by using their own advantages in technical ability, and organize production by using the formed production network. Due to the technical ability of first-tier suppliers in research and development, second-tier suppliers need to produce corresponding parts according to their design. The rapid progress of technology shortens the life cycle of products and requires frequent changes in product design and research and development. Brand-leading enterprises are faced with great time pressure when promoting products, which requires them to establish close and mutually beneficial relations with suppliers at all levels to meet market demand and flexible production.
In the notebook computer industry, first-class suppliers play an important role, taking orders directly from leading enterprises of international brands and forming a second-class production network. Their competitive advantage lies in having exclusive assets, such as customer resources and key technologies; Sub-suppliers accept orders from first-tier suppliers and provide spare parts and components according to their requirements. Their competitive advantage lies in low cost, fast and flexible delivery.
In order to effectively meet the production needs of the first-tier suppliers, most of the second-tier suppliers are located in the Yangtze River Delta region, which has obvious synergistic positioning effect. Leading enterprises can improve their suppliers' technical capabilities through technology diffusion in the production network and information exchange with suppliers.
However, among the major sub-suppliers of notebook computer industry, there are almost no local enterprises, and most of the main components are produced by Taiwan-funded enterprises or other foreign-invested enterprises. In other words, notebook computer enterprises in Taiwan Province Province have formed a closed production network in mainland China, and even if local suppliers join, they often provide the lowest-end products. For example, in 2006, the total export of notebook computer products of Mingshuo Computer (Suzhou) Co., Ltd. was 2.938 billion US dollars, but the supporting domestic raw materials were only 88 million US dollars, and most of them were low-tech accessories, accounting for only about 0.3% of the total export.
There are several reasons for the notebook computer industry to form a closed production network in the mainland: First, the technical ability of local supporting enterprises is poor.
Lack of technical ability is the key factor that hinders the innovation and upgrading of domestic enterprises.
The notebook computer industry is a typical high-tech industry, but there is a big gap between domestic electronic information enterprises and the world's technological frontier in terms of technical level. In addition, leading enterprises have brand advantages, and if the products have quality defects, it will cause huge losses, so there are strict requirements for product quality, and the quality of parts and components has become the key factor for suppliers to obtain orders. First-tier suppliers are also extremely strict with the technical capabilities of sub-suppliers. If Taiwan-funded enterprises form a production network with local enterprises at the beginning of investment, they will inevitably bear huge costs and risks in the notebook computer industry with rapid technological development.
Second, the local supporting enterprises are small in scale.
Due to the high degree of specialization and remarkable economies of scale, cost advantage is the main profit source of suppliers, which has very high requirements for the production scale of suppliers.
Most electronic enterprises in the Mainland are small and medium-sized private enterprises, lacking financial support from the government, with small scale, slow growth, difficulty in obtaining bank credit, underdeveloped venture capital industry and imperfect capital access channels, which leads to limited financing channels for these enterprises. The difficulty of external financing leads to the development of enterprises can only rely on their own capital accumulation, which is difficult to meet the requirements of Taiwan-funded enterprises to increase production capacity rapidly.
Third, the external governance of the value chain is insufficient.
Value chain governance includes not only internal governance, but also external governance.
External governance mainly comes from economic entities outside the value chain, such as government agencies and industry associations, which formulate, supervise and implement the rules of the value chain. Such as the formulation of environmental standards, labor security regulations and intellectual property protection regulations, the formulation of quality standards, and supervision and implementation. When the institutional environment in the mainland is difficult to ensure effective external governance, leading enterprises and first-class suppliers need to spend more money on internal governance and strictly control the product quality and delivery time of lower-level suppliers. In order to save internal governance costs, Taiwan-funded enterprises prefer to maintain the previous supplier governance relationship, improve efficiency through informal agreements, and meet the requirements of timely delivery.
Informal agreement can reduce the cost of value chain governance, which needs the support of trust and reputation among enterprises. If we change the suppliers and enterprises in the production network, we need a clearer agreement to ensure the smooth progress of the transaction, which will inevitably lead to an increase in governance costs.
Fourth, social networks have been formed among Taiwan-funded enterprises.
Notebook computer enterprises are mainly concentrated in Hsinchu Science and Technology Park in Taiwan Province Province. According to the data, in 2004, the park owned 70% of the world's notebook computer production, and it is a global electronic information industry cluster with international competitive advantages. Mature industrial clusters have formed a stable social network among enterprises in Taiwan Province Province. As an informal contract, the same cultural background, social norms and codes of conduct can help reduce the transaction costs between enterprises, and the reputation formed in previous transactions can help enterprises avoid opportunistic behaviors such as default, thus reducing risks.
The fifth is to determine the characteristics of products manufactured according to customer needs.
Although the parts of notebook computers have a high degree of standardization, they have not yet formed the same high degree of standardization as desktop computers, and they are typical products customized according to customer needs. In order to improve product quality and performance, suppliers at all levels need long-term close cooperation. In the past, the supporting enterprises in Taiwan Province Province formed a stable relationship with first-class suppliers, which met the requirements of convenience and cost.
The closed production network makes it difficult for domestic enterprises to upgrade.
Upgrading here refers to the process that local enterprises join the global value chain, learn from international enterprises to improve their competitiveness and correspondingly improve their position in the global value chain. Among them, the key factors are innovation ability and ensuring the sustainable development of products and processes.
The ways in which a country's industries are embedded into the global value chain can be divided into low-end paths and high-end paths. The embedding mode of value chain affects the sustainable profitability and potential upgrading ability of enterprises.
The low-end path is a growth path to get rid of poverty. With more and more developing countries joining the global production network in pursuit of economic development, the degree of specialization is getting higher and higher, and enterprises are facing increasingly fierce competition. While the level of export or output is increasing, the income is decreasing.
The high-end path is to achieve sustained income growth with the increase of joining the global value chain. Due to the weak technical ability, small scale and limited financing channels of domestic enterprises, Taiwan-funded notebook computer enterprises have formed a relatively closed production network in the mainland, and local suppliers are mainly engaged in labor-intensive production links in technology-intensive industries. Although joining the global value chain led by foreign capital can rapidly increase GDP, increase employment and improve the structure of export products, local enterprises have not benefited much from global specialized production.
First, the backward foreign capital with weak correlation and poor embeddedness drifts for profit.
Due to the lack of integration between foreign capital and local enterprises, local suppliers are at the low end of the notebook computer value chain, and the industrial chain has a low degree of backward extension. In the OEM/ODM business of Taiwan-funded enterprises, the added value from local enterprises is low, which has a weak backward driving effect on local enterprises.
For example, with the technical monitoring and support of Taiwan-funded enterprises, local enterprises can only upgrade their processes and products to a considerable extent, and it is difficult to rely on the market access channels of Taiwan-funded enterprises to enhance the functions of core technologies. Coupled with the technical complexity of the notebook computer itself, the technical demonstration effect is not obvious.
Due to poor embeddedness, when the labor advantage is gradually lost, foreign capital may transfer its production base to other regions and drift for profit. For example, some enterprises in the Yangtze River Delta have moved to Bohai Bay and even some underdeveloped countries in Southeast Asia.
Second, the entry threshold is low, and domestic enterprises are caught in poverty-stricken growth.
With the continuous improvement of the overall technical level, the entry threshold of the production link is constantly lowered, and more and more other developing countries participate in the production assembly process, and the income of this link is increasingly dissipated, resulting in the continuous reduction of the added value of the production link. Therefore, the fields that can generate higher income are increasingly divorced from the specific production process and turn to intangible parts, such as research and development, marketing, branding and other non-productive high-end links, because these links are usually technology-intensive or knowledge-intensive, which will form a higher entry threshold. Long-term protection of intellectual property rights, such as 70 years of patent technology protection and almost permanent brand effect, is an important source of income in the value chain. Domestic enterprises rely on labor-intensive production, which will inevitably lead to only weak income in value chain distribution. Insufficient income in turn restricts enterprises from investing in R&D and improving their technological capabilities, thus forming a vicious circle, and domestic enterprises are prone to immiserizing growth.
Third, the crowding-out effect is strong, and the "enclave" of foreign capital restricts the upgrading of domestic industries.
The closed production network makes Taiwan-funded enterprises self-sufficient in mainland China. The main purpose of investing and building factories in mainland China is to make use of the abundant local labor resources, reduce costs and be close to the sales market. This new type of "enclave" of foreign capital has absorbed high-level technical talents and ordinary labor in the mainland, which will inevitably make the high-level technical talents of mainland enterprises further scarce, limit the development of technological capabilities of local enterprises, and make the competition faced by domestic brands more intense. The crowding-out effect of Taiwan-funded enterprises on local enterprises will affect the possibility of functional upgrading of local enterprises in the value chain.
Fourth, there is little knowledge flow, and technology transfer is difficult to spill over to domestic enterprises.
The process of industrial upgrading is the process of knowledge transfer and the formation of local enterprises' technical capabilities. However, the technology transfer of foreign-invested enterprises in the mainland mainly occurs between the parent company and its subsidiaries, and it is difficult for local enterprises to obtain explicit knowledge and tacit knowledge. According to the data, among the 34 technology import contracts in Suzhou Industrial Park in 2003, the transaction amount of patent technology, proprietary technology transfer and license fee introduction exceeded 85%, mainly because foreign-invested enterprises in the park imported technology from their parent companies. In the 189 technology export contract, the buyers are generally foreign-funded parent companies and domestic branches. This shows that although multinational companies have more and more R&D centers and R&D departments in China, they only undertake the R&D work of their parent companies and basically do not export them to other domestic enterprises. The technology importers are mainly foreign-invested manufacturing enterprises, and the technology introduction of local enterprises in the park only accounts for 2%.
The fifth is the simplification of production, which limits the synergistic effect of domestic enterprises.
Highly specialized production makes local enterprises at the bottom of Taiwan-funded production network face the problem of single production structure, which limits the scope economy and synergy in production activities.
Enterprises engaged in multi-product or multi-business activities can make use of the complementarity between their public resources and business activities to obtain synergy. At present, local suppliers can only produce relatively single products according to customer requirements, and the synergistic effect is difficult to play.
In addition, a single production structure. It also limits the source of enterprise learning, and the knowledge obtained through learning by doing or technology transfer is narrow, specific and narrow, which further limits the improvement of enterprise R&D ability. However, the unilateral knowledge specificity makes enterprises at a disadvantage in bargaining, and it is difficult to realize their desire to upgrade their industries through processing trade.
Sixth, the path dependence is heavy, which limits the ability of industrial upgrading.
Different industrial clusters show a certain degree of path dependence when facing external shocks, and the ability of clusters to overcome path dependence determines the degree of upgrading. If domestic enterprises are satisfied with producing simple labor-intensive products, they will not be able to acquire or master the core technology and form a path dependence on technology. If local enterprises can't overcome the influence of path dependence through multi-party cooperation, they are constantly excluded from the production network, or only engage in the production of simple supporting products, which will inevitably limit their future upgrading ability.