Study On The Effect Of The Trade Network Of Neighboring Firms On The Import Decision Of Chinese Firms

As China accelerates the building of a new development pattern with the domestic cycle as the main body and domestic and international dual cycle promoting each other,the potential of the Chinese market will be increasingly unleashed and the role of importing in Chinese economic development will be urther highlighted.To actively expand imports and promote high-quality trade development is a requirement for Chinese economy to shift from high-speed to high-quality development.At present,international trade frictions have intensified,the global industrial and supply chains have been significantly disrupted,thus the prospects of the world economy have become more uncertain.Information asymmetry in international trade activities is becoming more and more serious.Network is helpful for firms to overcome cross-border information barriers and thus promote the development of international trade.The trade network of neighboring firms is one of the important external networks affecting international trade.It is of great practical and theoretical significance to study the influence of the trade network of neighboring firms on the import decision of Chinese firms.Review the existing literature on Internet,information barriers and international trade,this paper puts forward that the trade network of neighboring firms refers to the trade network formed by the agglomeration of firms within a certain geographical distance.The trade network of neighboring firms is a network system in which firms search for information by taking advantage of trade experience of other firms within a certain geographical distance and through the established trade relations of other firms.According to the types of trade activities,the trade network of neighboring firms can be divided into the following three categories:neighboring importers network,neighboring exporters network,and neighboring intermediaries network,which respectively refer to the trade network formed by the aggregation of importers,exporters,and trade intermediaries within a certain geographical distance.In this paper,on the basis of summarizing the existing research,using Chinese firms’ data from the National Bureau of Statistics of China(NBS),China’s General Administration of Customs(GAC),and World Bank’s 2012 survey,based on the empirical fact that the trade network of neighboring firms helps firms overcome cross-border information barriers,this paper analyzes the influence of the trade network of neighboring firms on the import decision of Chinese enterprises.In this paper,we identify the influence mechanism of neighboring firms’ trade network to effectively alleviate information friction and promote firms’ import:professional labor sharing and firm absorptive capacity,and conduct empirical tests.Mechanism analysis shows that the trade network,which formed by the aggregation of importers,exporters,and trade intermediaries within a certain geographical distance,accelerates the flow and sharing of professional labor force,improves firms’ absorptive capacity,and thus promoting the spillover of knowledge,especially tacit knowledge.As a result,the neighboring firms’ trade network effectively reduces firms’ information asymmetry,and thus promotes firms’ imports.In this paper,the effect of the trade network of neighboring firms on the import decision of Chinese firms are investigated systematically.Different from the existing literature on firms’ import extensive margins,this paper mainly investigates the influences on the probability of entry of firms which have not started importing yet.The results show that the three different types of trade network of neighboring firms,which including the neighboring importers network,the neighboring exporters network,and the neighboring intermediaries network,significantly increase the probability of firms’ entry,respectively,and this conclusion remains robust after dealing with endogenous problems.Heterogeneity analyses show that,compared with domestic firms,non-export firms and inland firms,the three different types of trade network of neighboring firms have more significant promoting effects on the probability of starting import of foreign and Chinese Hong Kong,Chinese Macao and Chinese Taiwan firms,export firms and coastal firms,respectively.In this paper,we examine the effect of the trade network of neighboring firms on the import amount of the first year.The results show that the three different types of trade network of neighboring firms,which including the neighboring importers network,the neighboring exporters network,and the neighboring intermediaries network,significantly increase the import amount of the first year,respectively.This paper examines the effect of neighboring intermediaries network on firms’imports,including not only direct imports but also indirect imports.The results show that neighboring intermediaries network significantly improves the probability of intermediate imports,and has a significantly greater effect on indirect imports than direct imports.This conclusion remains robust when using alternative estimation methods or a more credible sample.Heterogeneity analysis shows that,compared with small and micro firms and non-export firms,the neighboring intermediaries network has a greater promoting effect on medium and large firms and export firms,respectively.In this paper,we examine the effect of neighboring importers network and neighboring exporters network on the expansion of import source,respectively.The results show that both the neighboring importers network and the neighboring exporters network positively affect the import amount of the first year.The neighboring importers network has a positive effect on firms’ decision to expand import source.Compared with firms with no export experience in a specific market,the neighboring importers network has a greater promoting effect on firms with export experience in a specific market.The neighboring exporters network has no significant effect on the expansion of enterprises’ import source countries.However,if a firm has export experience in a particular market,The neighboring exporters network has a significant positive promoting effect on the probability of the firm expanding the market as a new import source.This paper analyzes the effect of neighboring importers network on the expansion of import products.This paper uses firm-product level data to measure the cognitive distance between imported products.By introducing cognitive distance,the neighboring importers network is decomposed into three different types of agglomeration:the same products,related products and unrelated products,so as to better distinguish the sources of agglomeration economy and agglomeration diseconomy.Empirical studies show that the influences of the same products,related products and unrelated products agglomeration on the expansion of import products are no significant,significantly positive and significantly negative,respectively.This is consistent with the view of the proximity school in economic geography that cognitive proximity should not be too far or too close,and appropriate cognitive distance is beneficial to effective knowledge spillover.Based on the research on the effect of the trade network of neighboring firms on the import decision of Chinese firms,this paper puts forward the following policy suggestions from the perspectives of firms,governments and industry associations and chambers of commerce:(1)From the perspective of firms,it is necessary to promote high-quality development of self-generated trade network,strengthen communication with neighboring firms,and improve their absorptive capacity;(2)From the perspective of the government,on the one hand,it is necessary to promote high-quality development of labor market,optimize regional industrial layout,promote regional coordinated and balanced development,and encourage,support and guide the dissemination and diffusion of trade information,so as to build an effective regional trade network;On the other hand,it is necessary to promote the development of cross-border trade intermediary services in the direction of specialization,marketization and transparency,support the high-quality development of cross-border e-commerce,and guide traders to achieve high-quality regional agglomeration,so as to promote the high-quality development of trade intermediary services;(3)From the perspective of industry associations and chambers of commerce,it is necessary to give full play to the role of non-governmental industry associations and chambers of commerce,strengthen communication and cooperation among firms,and help firms to discuss,build and share the trade network.