The Study On The Wage Effect Of Global Production Networks In China’s Manufacturing

As the streamlined International Labor Division way, Global ProductionNetworks is infiltrate into every countries in this world, in the context ofWorldwide Economy Integration, which is the unavoidable trend. Thebasic model is, the Multinationals which is the Flagship in the net, dividethe production into different segments according to their own developmentstrategy. In order to maximize the profits, the divided production segmentsare outsourced to different locations where there are the best comparativeadvantages, these production nodes are connected by procurement ofintermediate product, and combined with the R&D activities upstream aswell as the distribution downstream, all of these are composed of thestructure of Production Networks. The build of Production Networks cantake full advantages of resources and elements globally, and realize theoptimal allocation and cooperation, then, induce the maximum output andprofits and improve the collective welfare. But, the profit shared bydifferent countries contingent upon their node status in the Net, whicheven result in unfair profit distribution problem inside the country,especially influence a lot in labor’s employment and wage.This issue starts from presenting the formation, development andevolution process of Global Production Networks, then elaborates thedevelopment and status quo of main roles in the Net, which areMultinationals and Intermediate products’ trade, especially analyzes theinfluence and penetration exerted by Global Production Networks toChina’s manufacturing, sequentially explains the profit sharing systemand generated effects. Ultimately, the issue uses the econometricmethods to do the relevant quantitative analysis.Participate in Global Production Networks is the inexorable trend, so onlyif China takes part in this Net more, the more China can promote economic growth and improve technology in production. Consequently, according tothe analysis above, China should pay more attention to developintermediate product trade, but more in high technology products, that is,China should improve technology further, then the node status in the Net,increase profit sharing and finally enhance the income of labor virtually.