A Study On The Upgrading Momentum Mechanism Of Guangdong's Processing Trade

Nearly 30 years development of processing trade in Guangdong, despite important steps taken to upgrade, this industry still lies in the bottom of global value chain. With the rising costs of labor, land and resource, Guangdong's comparative advantage is gradually losing. Especially after the financial crisis, a sharp decline of market demand, RMB appreciation and many other negative factors highlighted, processing trade is facing enormous challenges so that transformation and upgrading is necessary.This paper, around the perspective of micro-enterprise's benefits, builds a theoretical model for upgrading momentum mechanism of processing trade, and then analyzes it based on the logic "benefits-momentum-momentum factors-influenced factors-momentum mechanism". We use multi-dimensional analysis, including theoretical analysis, qualitative analysis for the status of processing trade in Guangdong, correlation analysis of listed companies, panel data model estimation, combined with structural analysis of different types of businesses and cases study. This paper attempts to reveal the power mechanism and benefits system of active upgrading, trying to develop some countermeasures for reference.The paper holds that most of processing trade enterprises in Guangdong lack of the momentum for upgrading. Although large enterprise seems to be easier to obtain upgrading resources, however, under the same conditions, upgrading effect of small businesses seems to be more significant. To enhance the upgrading power and to break the bottleneck for upgrading, we should emphases four factors (entrepreneurship, government influence, resource base, social capital) which influenced upgrading momentum, coordinate the relationship between factors and make full use of their roles and positive interaction.