Global Production Networks And The Upgrade Of China’s Enterprise Value Chain

As an important part of a national industry, the growth of the manufacturing industry promotes the progress of human society modernization and has a significant impact on the development of human society. Thus, the international division of labor is an important source of a nation’s manufacturing enterprise’s growth. Economic globalization has a great revolution to the form of the international production organization. Therefore, multinational companies prefer a global production network instead of the vertical integration production organization form. By participating in global production networks, a great opportunity is provided for developing countries and regions via embedding the global production system quickly to realize the product upgrades and enhance the technical abilities. Since the last century in the late 90’s, China has been playing a more and more important role for the quick participation of international vertical specialization. By joining the division of labor of global production networks, China has become a powerful country in the manufacturing industry and also has made China the world’s second-largest economy. However, at the same time, the division of labor of global production networks has also brought China’s manufacturing industries some certain risks. Consequently, to attain the biggest development interests, making reasonable use of division of labor of the network becomes China’s enterprise’s biggest strategy of internationalization.In view of this, this paper, basing on the global production networks, aims at the upgrades of China’s enterprise value chain, sets the efficiency as the breakthrough point and makes a further study of the global production network, which has an influence on the enterprise innovation behavior in developing countries by explaining the embedded heterogeneity productivity of the comparative advantage theory; Furthermore, this paper aims to seek out the basic process and the way during the upgrades of enterprise value chain in developing countries under the background of global production networks and connects with the international successful experience and the actual development of China’s manufacturing industries to explore the strategic measures of the upgrades of China’s enterprise value chain.The full text is divided into seven parts and the structure is arranged as following:The first chapter: introduction.The background and the significance of this paper are discussed in this chapter. It also introduces the research status at home and abroad, the research methods, main contents and structures of this paper. Finally, the paper’s main innovation points and deficiencies are discussed.The second chapter: related theories of global production networks and upgrades of value chain.Previous researches assume that the enterprises are under homogeneous conditions on discussing the influences of global production networks on value chain, while the reality is often that the enterprises are heterogeneous. Companies in technology, product cycles and resources vary greatly and the responses to participating in global production networks differ as well. In view of this, this paper is aimed at finding the fulcrum of influencing the upgrades of China’s enterprise value chain under the background of the global production networks. By explaining the traditional upgrading theories of industrial structures—the comparative advantage theory and the product life cycle theory and considering the theories of the global production networks, the heterogeneous firms are divided into the global production networks under the comparative advantage model to provide theoretical support for the subsequent empirical research.The third chapter: measures of enterprise’s value chain.Considering the innovation output can improve further through improving or transforming the innovation process. This paper hopes to find the influences of the international division of labor to enterprise’s innovation output from the perspective of innovation efficiency. Combining with the concept of common boundary and non-cooperative game model, this paper designs a DEA model of non-cooperative game for two-stage-common(group)borders to measure the innovation efficiency(overall efficiency, technical efficiency and production efficiency)during the different value chain stages under the assumption of technological heterogeneity. These indexes are as the measures of the chain of global innovation in Chinese enterprises. The results show that there is still a big room for Chinese enterprises to improve in term of technology innovation or product innovation and different types of enterprises differ greatly from the perspective of innovation efficiency.The fourth chapter: the empirical analysis of the nonlinear impact of the global production networks on Chinese enterprise’s value chain.Innovation efficiency is brought into the analysis framework of the global production networks. Thus, through empirical researches from two dimensions of horizontal and vertical adjustments, this paper discusses the effect of the global production networks on Chinese enterprise’s value chain and studies the effect and its mechanism of the division of global production networks to enterprise’s technology progress and the upgrades of value chain. The study finds that: in the face of value chain management of western multinational companies, a significant relationship with inverted "U" type curve is presented of the impact about participating in global production networks to the upgrades of value chain. Besides, the influence varies in different types of industries and different periods. The innovation efficiency has significantly increased to technology intensive enterprises after participating in global production networks, mostly by means of improving production efficiency—the backend of the value chain.The fifth chapter: the threshold effect analysis of the impact of the global production networks on Chinese enterprise’s value chain.Considering the great differences of enterprises in such aspects as elements, technical characteristics and the features in different periods of the value chain, it is possible that there is a nonlinear relationship between the global production networks and enterprise’s value chain. In this section, a nonlinear threshold panel model is used to investigate "threshold effect" of the global production networks on Chinese value chain. On the base of this, it confirms the best vertical division of labor of the different types of enterprises and different periods. Thus, the results show that whether making a breakthrough or not depends on a series of comprehensive indexes, like the dividend effect, the absorption effect and the crowding-out effect. Consequently, the key factor whether Chinese enterprise’s value chain can make a success or not lies on the intensity of independent research.The sixth chapter: the strategies of the upgrades of Chinese enterprise’s value chain under the background of the global production networks.To speed up the upgrades of Chinese enterprise’s value chain, Chinese enterprises should make full use of the global production networks and break through the bondage of traditional static compare. Hence, it matters to make a change from the global value chain to the global value chain and to form a new dynamic compare by embedding the global production networks. Finally, advancing the more profitable link in the vertical specialization instead of focusing on the labor intensive cycle helps a lot.The seventh chapter: conclusions and prospects.Including the main conclusions drawn in this study, the lack of existing and the future direction for further research.