Research On International Production Decision Of Chinese Manufacturing Enterprises In Specialization Of Global Value Chains

Technological revolution has brought about reforms not only in the world economic structure,but also fundamental changes in the global production organization paradigm.The labor division mode characteristic of Global Value Chains(GVCs)has dominated current economic process of globalization and patterns.As an important part on the global value chains,China has occupied a critical seat in the world economy by way of transforming from the early foundry production to current direct investment aboard.China's manufacturing industry has integrated into the world production network and shared interests from GVCs through the international production and management.While China has made a contribution of 60%to the world's manufacturing industry,the earnings left for China is only 20%.Therefore,it is of important theoretical research value and practical significance to implement economic development strategy and the construction of new international order by doing researches in Chinese manufacturing industries participating in international division of labor,selection and upgrade of international production mode in GVCs.Focusing on GVCs,this dissertation defines the relationships between trade and investment,non-equity mode and trade,FDI and equity mode as well as outsourcing and non-equity mode on the basis of different conceptions concerned.It clearly sorts out the inherent logic of basic theory based on the analysis of such relations and gives explanations about the comparisons and selections of national and international equity and non-equity modes.Meanwhile,this paper also discusses theoretical and empirical research on equity and non-equity(outsourcing)from such respective point of views as incomplete contract,GVCs and international production organizations.Summing up the classic literatures related to the development of GVCs in manufacturing industries in developed countries,developing countries as well as in some emerging economies,we have got four new research ideas.Firstly,it is to expand multinational companies' international production decision set and integrate non-equity mode into company's international production decision model;Secondly,it is to set assumed conditions of incomplete contract into such decision model;Thirdly,it is to build up a continuous production function characterized by whole-process production mode on the basis of GVCs;Fourthly,it is to apply micro-data gathered from enterprises to make empirical test on the international production decision making.Starting from the perspective of international division of GVCs,or,the inherent requirements of the intensification of production factors and the improvements of production efficiency,we establish a general analysis framework for Chinese manufacturing enterprises participating in international division of GVCs according to the new economic development paradigm of international production.In the aspect of theoretical research,partial equilibrium method is employed to analyze the operating mechanism as well as the profit distribution of multinational manufacture's equity and non-equity modes.Dynamic equilibrium method is used to study the general equilibrium of the choice of two kinds of activities.And influence of the change of external variables upon equilibrium decision making is also analyzed.In the aspect of empirical research,a five-point scale questionnaire,the quantitative theoretical model and the binary choice model(Logit model)are applied jointly to analyze the questionnaire in the way of making qualitative factors quantitative study to reveal the degree of interaction between those elements which have influenced the choice of companies' internationalized production modes.At the same time,data collected from the World Bank Enterprise Survey database and OECD-STAN database are used to build up the linear regression model and a nonlinear binary options Probit model respectively to verify Chinese corporations participating in international production decision making in GVCs.Through these studies,we gain independence views as following:1.Based on the fact of comparative advantage of labor intensive and low technology products,and on the fact of foreign dependence on the export of high technology products and the path dependence formed in long-term processing trade,we make analysis on the main reasons for the formation of the lock to the lower end of GVCs of Chinese manufacturing industry.We put forward the geographic shift opportunities of the low end of factor endowment lock,the functional upgrading opportunities for transformation from the "export processing zone" to "free trade zone",the product upgrading opportunities for the formation of the middle class consumer market,the value chains comprehensive upgrading opportunities for China's"going out" strategy.2.A dynamic equilibrium model for the company's international production decision making is established based on GVCs.From the research,we find that manufacturers prefer to apply equity mode for the upper stream suppliers when investments can be substituted;they prefer non-equity mode when investments are complementary.And the higher degree of the technological complementary of intermediate inputs is,the more equity mode will be favored.On the contrary,the higher degree of substitution of intermediate inputs is,the more popular non-equity modes will be.Similarly,when the headquarters service intensity is high,it is more likely for the final manufacturers to use non-equity mode to the lower level of the suppliers,or equity-mode will be preferred.3.Quantification theory II is employed to make empirical analysis about the main effects on Chinese on-shore corporations in selecting international production modes.The result shows that companies will prefer the equity mode for those areas with larger markets and higher technology supports.And enterprises will prefer the non-equity mode in entering into GVCs for those areas with higher dependency on technology,production scale and management risks.4.Quantification theory III and the binary choice model(Logic model)are employed to make empirical analysis about the effects on Chinese off-shore corporations in selecting international production modes.Results show that the profitability,convenience as well as the risks is the key elements in making the decision.The further analysis shows that companies will prefer to choose non-equity modes like the contract production and so on if the investment risk is high in host countries.The probability for enterprises to choose equity mode will be increased significantly with the improvement of the convenience in investment.Earning index is an important factor for enterprises to carry on the international production,but it is not a significant index to distinguish between the enterprise's equity investment or non-equity arrangement.5.With the maturity of the enterprises and the improvement of the markets and policies,ways for enterprises to participate in the GVCs are also transferred gradually from the mode of on-shore equity production,onshore undertaking non-equity production to that of offshore equity integrated production and offshore non equity production.And under certain conditions,the equity and non-equity modes can go in parallel.6.We have made empirical analysis on Chinese manufacturing enterprises in international production decision by using data collected from the World Bank Enterprise Survey database and OECD-STAN database.The following conclusions are verified:when the product substitution elasticity is small and the upstream and downstream investments are substitutes,the upstream index of enterprises' and the probability of equity production will be positively correlated.The higher the upstream index is' the more likely the equity mode will be and the higher the proportion of equity allocation will be,vice versa.When the product substitution elasticity is relatively big and the upstream and downstream investments are complementary,the upstream index of the firm and the probability of equity production is in negative correlation.The higher the upstream enterprise index reaches,the lower degree of the host country's technology dependence will be,the greater possibility of non-equity production mode,the lower proportion of equity allocation,vice versa.7.From the newly interactions between GVCs and international trade,investment,employment and economic growth,it reveals the general rule of the internal selection mechanism of the equity and non-equity modes in the integration of GVCs for Chinese manufacturing enterprises.And it expounds the status of Chinese manufacturing enterprises in GVCs and the realization of appreciation and upgrade in GVCs.According to the objective requirements for the upgrading of procedure,function and value chains as well as the realistic requirements for profitability,convenience and risk brought by factor combinations in GVCs,we come up with several suggestions to improve the conditions of international trade,to optimize the investment and operation environments like policies and their implications concerning about trade,investment and GVCs.