Study On The Upgrading Of International Subcontracting In Jiangsu Manufacturing

With globalization, taking part in the international division of labor by its comparative advantage through international trade to accumulate capital, knowledge and technology, has become the only way for a country to promote economic growth and optimize the industry. In this context, Jiangsu, located in the Yangtze River Delta region, with its advantage on labor, region, policy, transaction cost and industrial base, actively joins in the international division of labor and gradually forms an export-oriented economy development pattern based on the form of international subcontracting. Jiangsu develops very fast, both in foreign trade and GDP is leading the way, has become a strong international subcontracting province in China.This paper describes the theoretical basis of international subcontracting in the first place, and then summarizes the research results of scholars at home and abroad on the international subcontracting of Chinese manufacturing. Afterwards, analyzing the current situation of international subcontracting in Jiangsu manufacturing with descriptive statistics, we find that international subcontracting in Jiangsu manufacturing is in the low-end of global value chain with low profit; foreign enterprises dominate the market, while domestic enterprises are weak; regional development is not balanced, south Jiangsu and north Jiangsu have an enormous gap. To further illustrate the necessity of upgrading the international subcontracting in Jiangsu manufacturing, the paper uses the game analysis to reveal the truth that profit margins of subcontracting continue to be squeezed and the intrinsic motivation to upgrade; indicates that international subcontracting is a double edged sword which may form self-reinforcement and solidification of trade patterns and comparative advantages through lock-in effect which leads to Jiangsu’s path dependence on international subcontracting mode; confirms the fact that the outer environment for international subcontracting in post-crisis era is deteriorating. Moreover, we combine theoretical research with empirical research to find the influential factors and their mechanism to international subcontracting in Jiangsu manufacturing. These findings lay the groundwork for policy recommendations. Finally, on the basis of research above, strategy and tactics to upgrade manufacturing are given, and also all aspects of the support and efforts that the government should provide for the local enterprises are pointed out.