Domestic Market-based Industrial Cluster Development in Modern China

China’s huge domestic market is constantly expanding, and is low-end demand oriented and highly dispersed. The domestic market-based development of China’s industrial cluster, however, is not only a quantitative expansion, but has also been accompanied with remarkable qualitative upgrading. Specialized markets are a microcosm that clearly indicate this paradoxical phenomenon. By analyzing three typical cases of industrial clusters that have specialized markets, this paper will make the case that under modern China’s market conditions, the local public sector is the crucial driving force for upgrading industrial clusters, which organize complicated transactions, promote quality control, and stimulate the division of labor.

Is the Vietnamese garment industry at a turning point? : upgrading from the export to the domestic market

Vietnam’s garment industry has been loosely characterized by the duality based on market orientation: export and domestic. Export-oriented garment suppliers were typically SOEs and foreign invested firms, while those producing for the domestic market have been mostly small, private companies. With a booming economy, other industrial sectors have emerged, and the garment industry is no longer the sector most favored by workers. Wage rates have been increasing, and a supplier’s ability to cope with this through successful upgrading has been the key determinant of whether it can further grow and flourish. Those who fail to cope are finding themselves in an increasingly difficult position. This paper looks at both the export- and domestic-oriented garment suppliers, and attempts to highlight how the industry can further develop by examining the bottlenecks that vary depending on the type of supplier. It suggests that in the long run, upgrading and value addition in the domestic market will be the key strategy.

Differences in market-oriented behaviour levels across firms' domestic and export marketing operations:a study of antecedents and consequences

Researchers are beginning to recognise that organisations often have different levels of market orientation across different aspects of their operations. Focusing on firms involved in export marketing, this study examines how market-oriented behaviour differs across firms' domestic and export marketing operations. In this respect, the study is the first of its kind since it investigates three main issues: (1) to what extent do differences exist in firms' levels of market-oriented behaviour in their domestic markets (i.e., their domestic market-oriented behaviour) and in their export markets (i.e., their export market-oriented behaviour), (2) what are the key drivers of such differences, and (3) what are the performance implications for firms of having different levels of domestic and export market-oriented behaviour. To shed light on these research questions, data were collected from 225 British exporting firms using a mail questionnaire. Structural equation modelling techniques were used to develop and purify measures of all construct of interest, and to test the theoretical models developed. The results indicate that many of businesses sampled have very different levels of market orientation in their domestic and exporting operations: typically, firms tend to be more market-oriented in their domestic markets relative to their export markets. Several key factors were identified as drivers of differences in market orientation levels across firms' domestic and export markets. In particular, it was found that differences were more pronounced when: (i) interfunctional interactions between domestic marketing and export marketing are rare, (ii) when domestic and export marketing follow asymmetric business strategies, (iii) when mutual dependence between the functions is low, (iv) when one or other of the functions dominates the firm's sales, and (v) when there are pronounced differences in the degree to which the domestic and the export markets are experiencing environmental turbulence. The consequences of differences in market-oriented behaviour across firms' domestic and export markets were also studied. The results indicate that overall sales performance of firms (as determined by the composite of firms' domestic sales and export sales performance) is positively related to levels of domestic market-oriented behaviour under high levels of environmental turbulence in firms' domestic markets. However, as domestic market turbulence decreases, so to does the strength of this positive relationship. On the other hand, export market-oriented behaviour provides a positive contribution to firms' overall sales success under conditions of relatively low export market turbulence. As the turbulence in export markets increases, this positive relationship becomes weaker. These findings indicate that there are numerous situations in which it is sub-optimal for firms to have identical levels of market-oriented behaviour in their domestic and exporting operations. The theoretical and practical implications of these findings are discussed.

Trade Liberalization and the Profitability of Domestic Mergers.

It is often thought that a tariff reduction, by opening up the domestic market to foreign firms, should lessen the need for a policy aimed at discouraging domestic mergers. This implicitly assumes that the tariff in question is sufficiently high to prevent foreign firms from selling in the domestic market. However, not all tariffs are prohibitive, so that foreign firms may be present in the domestic market before it is abolished. Furthermore, even if the tariff is prohibitive, a merger of domestic firms may render it nonprohibitive, thus inviting foreign firms to penetrate the domestic market. In this paper, we show, using a simple example, that in the latter two cases, abolishing the tariff may in fact make the domestic merger more profitable. Hence, trade liberalization will not necessarily reduce the profitability of domestic mergers.

Productivity, demand and the home market effect

The causality between international trade and industrialization is still ambiguous. We consider a model of international trade with the Home Market Effect - with differences in income and productivity between sectors and between countries - in order to identify additional channels for determining the effects of international trade on industrialization. Introducing non-homothetic preferences and differences in productivity aids in the interpretation of any apparent paradoxes within international trade, such as the commercial relations between more populated countries like China and India and large economies such as the U.S. Population size, demand composition and productivity levels constitute the three main channels for determining the effects of international trade. Interactions among these channels define the results obtained in terms of industrialization, while welfare levels are always higher in relation to autarky.

Implications of recent Australian wheat industry developments for overseas and domestic prices

This study is motivated by the proposition that the objectives of the AWB Ltd have changed since semi-privatisation of the Australian Wheat Board under the Wheat Marketing Act, 1989. Conceptualising this change of objectives as a shift from revenue maximization to profit maximization, this study examines the impact of such a change on the pricing policies of a multi-market price-setting firm. More specifically, this paper investigates, using two hypothetical objective functions, a risk averse AWB�s price-setting behaviour in an �overseas� and a �domestic� market in response to recent wheat industry developments. In the analysis these developments manifest themselves as differing price elasticities, differing transport costs and uncertain demand functions, and their implications particularly for the prices paid by domestic consumers are explored.

Transformation of the Rice Marketing System and Myanmar's Transition to a Market Economy

Creating a rice marketing system has been one of the central policy issues in Myanmar's move to a market economy since the end of the 1980s. Two liberalizations of rice marketing were implemented in 1987 and 2003. This paper examines the essential aspects of the liberalizations and the subsequent transformation of Myanmar's rice marketing sector. It attempts to bring into clearer focus the rationale of the government's rice marketing reforms which is to maintain a stable supply of rice at a low price to consumers. Under this rationale, however, the state rice marketing sector continued to lose efficiency while the private sector was allowed to develop on condition that it did not jeopardize the rationale of stable supply at low price. The paper concludes that the prospect for the future development of the private rice marketing sector is dim since a change in the rice market's rationale is unlikely. Private rice exporting is unlikely to be permitted, while the domestic market is approaching the saturation point. Thus, there is little momentum for the private rice sector to undertake any substantial expansion of investment.

Gazprom's position on the Russian gas market weakening. OSW Commentary No. 70, 2012-02-23

As the difficulties Gazprom has faced in recent years on the European market have multiplied1, so more and more symptoms have appeared which may suggest that the company’s dominant position is deteriorating. The decision made by the Russian government in June 2011 to double the tax Gazprom has to pay on the extraction of gas, which was later approved by parliament, was the first time in many years when the company’s fiscal privileges were withdrawn. The process of Gazprom’s assets being taken over by private companies and business partners from within Vladimir Putin’s closest circle is underway. More and more frequently attempts are being made to challenge the company’s monopoly in areas of key importance for the functioning of the entire gas sector, such as Gazprom’s exclusive right to dispose of the Russian gas transportation system and its exports monopoly. Competition from independent gas producers on the domestic market is growing, and Gazprom is gradually being pushed out of some of that market’s most profitable segments (industrial clients). The emerging tendencies in the Russian gas sector derive from a number of factors – from the situation on the European gas market, through difficulties hampering the development of the sector in Russia itself, to the private interests of the current ruling class and its business partners. The plans for a structural reform of the monopoly (including isolating gas transportation system from Gazprom), presented since 2000 by the Ministry for Economic Development and since 2003 by the Russian Association of Industrialists and Entrepreneurs (RSPP), suggest a direction for the changes necessary to stimulate the sector’s development and improve the efficiency of Gazprom itself. However, the monopolist’s current business model gives the government full control over this strategic enterprise, which is a core of Putin’s concept for developing Russia as a global energy power. Despite Putin’s recent statement that he “does not rule out privatising Gazprom in the future” (made at a meeting with political scientists in Moscow on 6 February this year), any structural reform of Gazprom (and consequently, a weakening of the state’s control over it) seems unlikely in the foreseeable future. Still, the developments on the domestic market – growing pressure from other gas companies (oil corporations and independent producers) and changes on the European market2 – may result in the weakening of Gazprom’s monopoly privileges and a gradual deterioration of its special status within Russia.

The Market for Tractors in the EU: Price Differences and Convergence. Factor Markets Working Documents No. 35, February 2013

This study evaluates the degree of segmentation of the market for agricultural machinery and equipment in the EU. We focus on agricultural tractors, the most common and biggest investment in machinery and equipment in the agricultural sector. By using country price data for individual tractor models, we test the law of one price, i.e. the existence of a common price for tractors across EU member states. We find that significant price differences exist, yet unlike most other studies we find that large price deviations are penalised within a short time. The study also shows that transport costs are an important source of price differences, as domestic production leads to lower prices on the domestic market and as price convergence is negatively correlated with distance. Finally, price differences should not solely be understood from a geographical perspective, as evidence supports the idea that farmers’ buying power is significant in explaining price differences within countries.

The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored.

Re-evaluation of central America drug market where to start?

Atral is a Portuguese Pharmaceutical firm devoted to the production of finished drugs. Due to domestic market hurdles, Atral is now, more than ever, focused in the world. The Central America region seams alluring due to its context alignment with firm’s resources bundle. As Atral should approach one regional country at a time, the purpose of this thesis is to find out the most suitable country to approach now. Hence a tailored scoring model was applied, based on contexts analysis and importance of benchmarking indicators to both firm and industry. Upon analysis of the highest scored country, the most appropriate entry modes were assessed.

Manufacturing challenges with fabrication of large size mechanical harmonic drives

In truck manufacturing, the exhaust and air inlet pipes are specialized equipment that requires highly skilled, heavy machinery and small batch production methods. This paper describes a project to develop the computer numerically controlled (CNC) pipe bending process for a truck component manufacturer. The company supplies a huge range of heavy duty truck parts to the domestic market and is a significant supplier in Australia. The company has been using traditional methods of machine assisted manual pipe bending techniques. In a drive of continuous improvement, the company has acquired a pre-owned CNC bending machine capable of bending pipes automatically up to 25 bends. However, due to process mismatch, this machine is only used for single bending operation. The researchers studied the bending system and changed the manufacturing process. Using an example exhaust pipe as the benchmark, a significant drop of manufacturing lead time from 70 minutes to 40 minutes for each pipe was demonstrated. There was also a decrease of material cost due to the multiple bends part in one piece without cutting excessive materials for each single bend like it used to be.

Internationalization of Chinese and Korean firms

This article compares and contrasts the growth of Chinese and Korean multinational enterprises (MNEs). The article identifies the similarities and differences between Chinese and Korean MNEs in terms of motivations for internationalization, expansion strategies, and paths. The goal of this article is to contribute to the literature by shifting focus on host-country conditions to home-country conditions in explaining the drivers for firms' internationalization. We conclude that firms are motivated to expand abroad when faced with domestic competitive disadvantages resulting from absence or deficiency of one or more of Porter's Diamond attributes in their domestic market. Implications for further studies are also explored.

Inward exporting of professional services : lessons from an exploratory study of Australian educational firms

Inward export activities for services companies have been largely neglected in the literature. Little is known about how professional service firms export to overseas consumers who travel to the domestic market of the firm. This study utilizes a resource-based perspective (RBV) to explore the main barriers and drivers of export performance for professional education services. A case study of Australia’s education industry, as well as interviews with executives from four Australian education institutions, was conducted. Findings show that inward exporters confront most barriers in the domestic market where the service is provided, and drivers of export performance combine firm- and country-specific resources.