Industrial Networks between China and the Countries of the Asia-Pacific Region

This paper investigates the changes in the structures of industrial networks that have occurred in the Asia-Pacific region in line with the rapid growth of the Chinese economy. Analyses using international input-output tables revealed that during the 1990s, there was a significant increase in the dependence of Asian countries’ manufacturing industries, such as textiles and electronics, on China’s industries, though industries in Japan and the United States remain important as the main suppliers of industries in Asian countries.

Integration versus Outsourcing in Stable Industry Equilibrium with Communication Networks

For the selection of a firm's structure between vertical integration and arm's-length outsourcing, the importance of the thickness of the market had been emphasized in the previous literature. Here we take account of communication networks such as telephone, telex, fax, and the Internet. By doing so, we could illustrate the relationship between communication networks and the make-or-buy decision. With communication network technology differing in each type of firm, both vertically integrated firms and arm's-length outsourcing firms coexist, which was never indicated in the previous literature. However, when common network technology is introduced, such coexistence generically does not occur.

Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City

This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.

A Divergent Path of Industrial Upgrading: Emergence and Evolution of the Mobile Handset Industry in China

Starting from almost null in the late 1990s, China's mobile phone handset industry has grown to account for more than 40 percent of the current world production. While export growth has been overwhelmingly led by multi-national corporations (MNCs), increasingly fierce competition in the domestic market ignited by the advent of local handset makers has induced unique industrial evolution: (1) outgrowth of independent design houses specialized in handset development and (2) emergence of IC fabless ventures that design core ICs for handsets. In the background of this evolutionary industrial growth there are factors such as, the scale and increasing diversity of China's domestic market that advantages local firms vis-a-vis MNCs; modularization of handset and semiconductor technologies; policy interventions that supports local startups. The emergence and evolution of China's handset industry is likely to have international implications as the growth of the global demand for low-cost and multi-function mobile phone handsets is expected to accelerate. Thus, our case suggests that the conventional view of latecomer industrialization and upgrading that emphasizes the key role of international production networks organized by MNCs needs to be modified in order to accommodate China's rise into perspective.

Asian Industrial Development from the Perspective of the Motorcycle Industry

This paper discusses the diversity of industrial development among Asian countries that emerges through an investigation of the motorcycle industry despite its uniform industrial attributes. The paper then explores factors that generate diversity, focusing attention on the differences in knowledge-based assets accumulated in each country. It finds that diversity is brought about through the differences in domestic industrial resources and the capabilities of local firms. The analysis underscores each country’s intrinsic logic in industrial development, contrary to the current trend of stressing assimilation through the global production networks of multinational corporations.

Innovation networks in China, Japan, and Korea : evidence from Japanese patent data

The growing importance of innovation in economic growth has encouraged the development of innovation capabilities in East Asia, within which China, Japan, and Korea are most important in terms of technological capabilities. Using Japanese patent data, we examine how knowledge networks have developed among these countries. We find that Japan's technological specialization saw little change, but those of Korea and China changed rapidly since 1970s. By the year 2009, technology specialization has become similar across three countries in the sense that the common field of prominent technology is "electronic circuits and communication technologies". Patent citations suggest that technology flows were largest in the electronic technology, pointing to the deepening of innovation networks in these countries.

Innovation networks in China, Japan, and Korea : further evidence from U.S. patent data

The growing importance of innovation in economic growth has encouraged the development of innovation capabilities in East Asia, within which China, Japan, and Korea are most important in terms of technological capabilities. Using U.S. patent data, we examine how knowledge networks have developed among these countries. We find that Japan's technological specialization saw gradual changes, but those of Korea and China changed rapidly since 1970s. By the year 2009, technology specialization has become similar across three countries in the sense that the common fields of prominent technology are electronics and semiconductors. Patent citations suggest that technology flows were largest in the electronics technology, pointing to the deepening of innovation networks in these countries. Together with our prior work, the Japanese and U.S. data produce similar conclusions about innovation networks.

Production networks in the Asia-Pacific region : facts and policy implications

Production networks have been extensively developed in the Asia-Pacific region. This paper employs two micro-level approaches, case studies and econometric analysis, using JETRO's firm surveys which investigate Japanese affiliates operating in Southeast Asia. These two approaches found that production networks have extended, involving suppliers, across various nations in the Asia-Pacific region, and that production bases in host and home countries have different roles. A home country serves as a headquarters with services such as R&D, international marketing, and financing. A high tariff policy in a host country may foster domestic industries through the expansion of procurement from domestic suppliers, either indigenous or foreign, but it may discourage a country from becoming an export platform.

Firm-level impacts of natural disasters on production networks : evidence from a flood in Thailand

In this paper, we explore the firm-level impacts of flooding in Thailand in 2011, specifically those on the procurement patterns at Japanese affiliates in Thailand. Our findings are as follow. First, the damaged small firms are more likely to lower their local procurement share, particularly the share of procurement from other Japanese-owned firms in Thailand. Second, damaged young firms and damaged old firms are more likely to raise the shares of imports from Japan and China, respectively. Third, there are no impacts on imports from ASEAN and other countries. These findings are useful for uncovering how multinational firms adjust their production networks before and after natural disasters.

Boundaries of firms and catching up by latecomers in global production networks : the case of a Mexican auto-parts manufacturer

For manufacturing firms in developing countries, there are high barriers to entry and to catching up with competitors in their global production networks (GPNs). This paper examines the case of a Mexican auto-parts manufacturer that succeeded in catching up in the automotive GPN. The author proposes that the door to GPNs is open thanks to frequent changes in the boundaries of firms, and also stresses the importance of the necessary conditions that generate opportunities, including institutional settings that facilitate market entry and catching up, and capability building by firms hopeful of entry.

Industrial deepening in East Asia

Structural transformations are an indispensable element of sustained economic growth. Within the context of East Asia, this study focuses on industrial deepening, which refers to the formation of local linkages and the creation of a robust local supplier base. To investigate the progress of industrial deepening, this study introduces two kinds of domestic procurement measures in addition to the previously developed local content measures. Specifically, two kinds of vertical specialization measures are used to demonstrate the degree to which respective East Asian economies are specialized within their vertical production networks. The results clearly show that the advancement of production networks is likely to reduce domestic procurement ratios, even if local supplier bases are strengthened in the respective countries. Moreover, the trend of domestic procurement ratios differs depending on the characteristics of particular industries and the industrial policies adopted by individual countries.