The Effect Of Destination Market On Export Quality

Since reform and opening-up,China’s export scale continues to grow at a high speed and has become the largest export country in 2009.As the basic and strategic industry,the export of equipment manufacturing has occupied half of the volume of Chinese International Trade in goods.However,in terms of export quality,Chinese equipment manufacturing industry has been remaining at a lower level and the quality upgrade is particularly difficult.There is still a huge gap between China and the trading powers.Although the factors such as the export country’s industrial development are the important factors which affect the quality of the export products,however,a large number of practical and theoretical studies have shown that the effect of the quality and the quality of products exported to different destinations are different.Cause brand construction of the quality of equipment manufacturing is the key to promote the improvement of the brand construction of entire manufacturing industry,and the mechanical equipments are different in product properties and trade characteristics as capital goods and consumer goods,based on Chinese equipment manufacturing,this paper analyzes the impact on the quality of export products which export to different destinations.Based on Piveteau&Smagghue’s(2017)method which uses instrumental variables to resolve product price measurement errors and possible endogenous problem with export quality,this paper uses the trade data from 2002 to 2015 to measure export quality and it finds that the quality of export of Chinese equipment manufacturing industry is increasing slowly as a whole.Further analysis finds that the quality of the products exported to developed countries is significantly higher than that of developing countries,but exports to developed countries has been continuously decreasing,so does the product quality,while exports to developing countries of the product quality is on the rise.The product quality gap between exporting to developed countries and developing countries has remained stable since 2011.Secondly,this paper analyzes the mechanism of the effect of destination market on export product quality.On this basis,the paper makes an empirical analysis on the regression of the full sample and sub-samples which is the developed and developing countries(regions).The empirical results show that high quality products will "self-select" into high-income countries,but the quality of products exported to both high-income countries and low-income countries will not increase as the host country’s income level increases.Market size,geographical distance,institutional environment,as well as market competitiveness can bring learning effect,threshold effect and competition effect,thereby having a significant impact on the quality of Chinese equipment manufacturing export products.Finally,based on the conclusion of theoretical analysis and empirical analysis,this paper puts forward some policy suggestions from the breakthrough of key areas,international cooperation,brand building and business environment.