Promoting the Upgrading of China Industrial Clusters Up the Global Value Chain

Topics: Guangdong, Brand, Brand management Pages: 5 (891 words) Published: July 5, 2013
Promoting the Upgrading of China Industrial Clusters up the Global Value Chain Gu Qiang, DCID of Duke Nov 10, 2006

Background
Mfg and/or Service Sector
• No clear boundary

Dynamic Competition
• No forever competitiveness

Outsourcing
• No do-them-all in house

Globalization
• No domestic company

Made in China
Made in China (export 1 trillion $) Made in Chian’s SMEs Made in China’s industrial cluster (supply chain cities, Gary)

The type of China’s clusters
Small scale craft industries Low tech, labor intensive industries Large scale manufacturing industries (export-oriented) High technology agglomerations Business and financial services Fashion and creative industries

The type of China’s clusters
Garments Textiles Footwear Silk products Travel goods Housewares Pens and pencils Toys Cutlery Hardware Furniture Pianos Watches and clocks Consumer electronics Electronic components Notebook computers Home appliances Power tools Bicycles Motorcycles Containers Ships Cranes Etc., etc., etc.

The type of China’s clusters
Type Ertrepreneurial clusters. (nature born) Export-oriented clusters. Resource-driven clusters. Market-driven clusters. Gradual progress form large -scale enterprise. High-tech industrial cluster. Typical clusters Wenzhou Leqing low-voltage electrical appliances, Zhejiang Shaoxing Datang sock clusters, Zhejiang Shenzhen watches and clocks, Guangdong Dongguan computer and related product, Guangdong Quanzhou Jinjiang quarries, Fujian Tangshan pottery and porcelain, Hebei Zhengzhou apparel, Henan Zhuzhou Luosong apparel, Hunan Xinxiang Changyuan crane, Henan Changzhou Qishuyan cutler, Jiangsu Zhongguancun information industry, Beijing Zhangjiang chip manufacture, Shanghai

A increasing role
An increasing role for clusters: to speed up China industrialization and urbanization process Fueled the growth of industrial capabilities, local industrial clusters create 50% manufacture output in east-south of China A growing percentage of cluster’s production is functionally integrated into global systems of supply to global market.

Textile and clothing cluster
In textile and garments sector, 108 national textile and garment industrial clusters base city, county and town denominated by CNTAC until May, 2006 (Du yuzhou, 2006). China National Textile & Apparel Council (CNTAC), is the national Federation of all textile-related industries, since 2002, denominated national textile and garment industrial clusters base city, county and town, it include textile-related industries, e.g. underwear, printing, man-made fiber and so on.

Transnational structural forces at the global-level an increasing domination of few giant corporations & retailers Giant corporations and retailers dictate the production, trade and finance, and shipment rhythm of supplying manufacturers at the low-end Worker rights? A manager of a big garment factory in Dongguan, Guangdong province “We are under enormous stress, customers place late orders, they change their orders part way through manufacturing and they pay their bills late. At the same time they ask us to provide better training for our staff, better health and safety and better accommodation. We just cannot do it all.”

General Merchandisers (Fortune 500,2006)
store Wal-mart Target Sears holdings Federated dept Revenues rank 2 29 33 87 Revenues rank J.C. Penney 118 KoH’s Dollar General NORDSTR OM 166 268 293 store

Where do the profits go?
For a typical garment retailing for $100: • the retailer would take $50 •the manufacturer would take $ 35 • the contractor would take $ 9 And the garment workers who sewed this dress? She, and all the other garment workers who worked on the dress, would each take a share of the remaining $6!

CA

What percentage of retail price is labor cost? Cost of labor is typically 2-5% of the retail price. While the example is in terms of Hong Kong dollars, similar ratios of labor to retail cost exist for...
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