Sony Diamond Porter Essays and Term Papers

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Hongji Zhu Moustgaard (study nr. 20060671)

Mike-B, 2008 Master Thesis

Supervisor: Prof. Esben Sloth Andersen

Contents

1 Introduction4
1.1 Problem Background4
1.2 Problem Formulation6

2 The Literatures Review8
2.1 Globalisation9
2.1.1 The Concept of Globalisation9
2.1.2 Pros or Cons? Evaluating the Impact of Globalisation10 2.1.3 The Growing Importance of Global Value Chains (GVCs)12 2.1.4 Globalisation as Open Gates for Regional Development14 2.1.5 Towards a Knowledge-Based Economy: Local Networks of Innovation15 2.2 Increasing National Competitiveness16

2.2.1 Upgrading Comparative Advantage to Competitive Advantage16 2.2.2 Processing Upgrading17
2.3 The key elements of GVC20
2.3.1 The different types of GVC21
2.3.2 Upgrading in GVCs23
2.4 Regional Development26
2.4.1 A presentation of Porter’s Diamond model27
2.4.2 Dependent and developmental linkage structures29 2.5 Innovation31
2.5.1 Positive Externalities31
2.5.2 Intercultural Property Rights (IPRs)33
2.6 Summary34

3 Methodology36
3.1 The selection of social paradigm38
3.2 The process of analysis40
3.3 The source of data42

4 The governmental level43

5 The Case Study47
5.1 The city of Jin Tan: Jiang Su Province 48
5.2 The city of Ping Hu: Zhe Jiang Province 51
5.3 The town of Tao Yuan in the city of Wu Jiang: Jiang Su Province 54 5.4 Summary55

6 The cluster level56
6.1 The Jin Tan City57
6.1.1 Factor conditions58
6.1.2 Demand conditions58
6.1.3 Related and supporting industries59
6.1.4 Company strategy, structure, and rivalry59
6.1.5 Chance & Government Role59
6.2 The Ping Hu City60
6.2.1 Factor conditions60
6.2.2 Demand conditions62
6.2.3 Related and supporting industries63
6.2.4 Company strategy, structure, and rivalry64
6.2.5 The government role64
6.2.6 Intellectual Property Rights (IPPs)65
6.3 Tao Yuan Town66
6.3.1 Factor conditions66
6.3.2 Demand conditions67
6.3.3 Related and supporting industries67
6.3.4 Company strategy, structure, and rivalry67
6.3.5 Other predicaments68
6.4 Summing up: Cluster Catch - up69

7 The firm level71

8 Conclusion76

Bibliography:80

1 Introduction

1.1 Problem Background

China’s textile industry has the significant influence towards the national economy, which keeps the GDP (gross domestic product) for being sustainable and rapid growing. According to the input-output analysis, which has been conducted by National Bureau of Statistics in year 2000, shows that each time one unit input into the textile industry will accompanied by an influencing coefficient with 1.25, which is 25% higher than the average rate of all industries.[1]

In China today 1 out of 1.6 billion are farmers, and however the production link of textile industry has formed the industry supply-chain from farming to the end product, which is the main channel in raising the international competitiveness of agriculture products.[2] Since 1978, the Chinese government has made the policy to encourage farmers to take over the arable lands by making contract. Under the system, the efficiency of farming has increased significantly that has lead to the situation of manpower surplus. Many farmers instead of leaving their hometown have chosen to build their own enterprises locally in consuming the extra manpower for profitability, and many of these enterprises have targeted the textile industry because it has low entry barriers such as low requirements towards technology and capitals. So the Chinese textile industry has strong regional distinctiveness. The half of China’s textile...
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