Service-oriented Transformation in Manufacturing and The Deepening of Corporate Value Chains

Qi Zhang

doi:10.54097/ynb91298

Authors

Qi Zhang

DOI:

https://doi.org/10.54097/ynb91298

Keywords:

Efficiency of business, Enterprise value chain climbing, Servitization of manufacturing.

Abstract

This paper examines the challenges and opportunities faced by China's manufacturing industry in the context of global value chain division and technological revolution. It explores the impact of manufacturing servitization on enterprise value chain advancement, aiming to address how this transformation affects climbing the enterprise value chain. Drawing on data from Chinese industrial enterprises between 2003 and 2013, this study employs micro-level empirical analysis using a two-way fixed effect regression model and 2SLS instrumental variable method to establish a causal relationship between manufacturing servitization and enterprise value chain advancement. The findings reveal that manufacturing servitization has a significant positive impact on climbing the enterprise value chain, particularly for technology-intensive, capital-intensive, and resource-intensive enterprises. By providing empirical evidence and policy implications for China's manufacturing industry transformation and upgrading efforts, this research enriches existing literature on both manufacturing servitization and value chain advancement.

Downloads

Download data is not yet available.

References

Xu, L-F., (2014). On the Development of Servitization of China’s Manufacturing Industries.On Economic Problems(12),79-84. doi:10.16011/j.cnki.jjwt.2014.12.014.

Wei, H., & Li, C. (2014). The Basic Situation of Rising Labor Costs in China's Manufacturing Industry and Strat-egies for Coping with Them. Intertrade(03), 10-15. doi:10.14114/j.cnki.itrade.2014.03.002.

Wang, X-H., &Guo X. (2020). Analysis on Industrial Chain Shift and Industrial Competitiveness after COVID-19 Pandemic—Take the Integrated Circuit Industry Chain as an Example.intertrade(11),18-27.doi:10.14114/j.cnki.itrade.2020.11.004.

Sun, Z.,& Hou, Y-L.(2019).How Does Industrial Intelligence Reshape the Employment Structure of Chinese Labor Force. China Industrial Economics. (05),61-79. doi:10.19581/j.cnki.ciejournal.2019.05.004.

Zhu, S-J., Tan, X-J., & Li, D. (2022). An Empirical Stu-dy for the Impact of Intelligence on Manufacturing Indus-try Global Value Chain Upgrading from the Perspective of Labor Demand. Journal of International Trade (05), 51-68. doi:10.13510/j.cnki.jit.2022.05.005.

Eaton, J., & Kortum, S. (2002). Technology, Geography, and Trade. Econometrica, 70(5), 1741-1779. https://doi.org/10.1111/1468-0262.00352

Xiao, T. (2018). Can Chinese Manufacturing Get Performance Dividend through Servitization. Finance & Trade Ec-onomics(03),138-153. doi:10.19795/j.cnki.cn11-1166/f.2018.03.011.

Xu, H-L., Cheng, L-H., & Sun, T-Y. (2017).The Effect of the Input Servitization of Manufacturing on Upgrading Export Domestic Value Added of Enterprises—Empirical Evidence from Chinese Micro-enterprise.China Industrial Economics(10),62-80. doi:10.19581/j.cnki.ciejournal.2017.10.005.

Su, H., Zheng, L.,& Mou, Y-F. (2017).Factor Endowmentand Industrial Upgrading of China's Manufacturing Industry—Analysis based on WIOD and China's Industrial Enterprises (IED).Journal of Management World(04),70-79. doi:10.19744/j.cnki.11-1235/f.2017.04.007.

Huang, Q., & Lou, B. (2022). Service-oriented Manufact-uring. In Understanding China’s Manufacturing Industry (pp. 147–166). Springer. https://doi.org/10.1007/978-981-19-2527-6_9

Crozet, M., & Milet, E. (2017). Should everybody be in services? The effect of servitization on manufacturing firm performance. Journal of Economics & Management Strategy, 26(4), 820–841. https://doi.org/10.1111/jems.12211

Breinlich, H., Soderbery, A., & Wright, G. C. (2018). From Selling Goods to Selling Services: Firm Responses to Trade Liberalization. American Economic Journal. Economic Policy, 10(4), 79–108. https://doi.org/10.1257/pol.20150116

Liu, B., & Pan, T. (2020). Research on the Impact of Artificial Intelligence on Manufacturing Value Chain Specialization. Journal of Quantitative & Technological Economics(10),24-44. doi:10.13653/j.cnki.jqte.2020.10.002.

Benedettini, O., Swink, M., & Neely, A. (2017). Examining the influence of service additions on manufacturing firms’ bankruptcy likelihood. Industrial Marketing Management, 60, 112–125. https://doi.org/10.1016/j.indmarman.2016.04.011

Liu, B., Wei, Q., Lu, Y-L., & Zhu, K-F. (2016). Servitization of Manufacturing and Value Chain Upgrading. Economic Research Journal (03) ,151-162.

Wright, G. C. (1976). Linear Models for Evaluating Conditional Relationships. American Journal of Political Science, 20(2), 349–373. https://doi.org/10.2307/2110649

Qian, X-F., Wang, S., & He, J. (2020).Servitization of Manufacturing and China's Exports -- Entering the Service Dividend Era. Research on Financial and Economic Issues(05),111-120. doi:10.19654/j.cnki.cjwtyj.2020.05.013.

Liu, B.,& Wang, N-J. (2016).Input Servitization of Manufacturing and Dual Margins of Firms’ Export ——An Empirical Study Based on the Data of Chinese Micro-enterprise. China Industrial Economics(09),59-74. doi:10.19581/j.cnki.ciejournal.2016.09.004.

Yuan, Y. (2020). the location of firms in embedded global value chains How affects wage levels, China Circulation Economy(30),127-130. doi:10.16834/j.cnki.issn1009-5292.2020.30.041.(2020, p129)

Autor, D., & Acemoglu, D. (2010). Skills, Tasks and Technologies: Implications for Employment and Earnings. NBER Working Paper Series, 16082-. https://doi.org/10.3386/w16082

Acemoglu, D., & Restrepo, P. (2020). Robots and Jobs: Evidence from US Labor Markets. The Journal of Political Economy, 128(6), 2188–2244. https://doi.org/10.1086/705716

Jing, L., & Yuan, P-H. (2019). New Trends in Global Value Chain Changes and China's Countermeasures. Journal of Management World(11),72-79. doi:10.19744/j.cnki.11-1235/f.2019.0148.

Xu, J-H., & Xia, J-C. (2020). The Development of Digital Trade from the Perspective of Global Value Chain： Strategic Positioning and China’s Path. Reform(05),58-67.

Lu, Y., Gu, W., & Bao, Q. (2020). Artificial Intelligence and Chinese Enterprises’ Participate in Global Value Chains. China Industrial Economics(05),80-98. doi:10.19581/j.cnki.ciejournal.2020.05.016.

Cole, M. A., & Elliott, R. J. R. (2003). Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories. World Economy, 26(8), 1163–1186. https://doi.org/10.1111/1467-9701.00567

Liu, Z-B., & Zhang, S-J . (2008).Regional Disparity and Rectification Analysis in China:Based on GVC and NVC’s Perspective. Academic Monthly(05),49-55. doi:10.19862/j.cnki.xsyk.2008.05.008.

Yuan, K-H., Peng, S-J., & Chen, H-W. (2019). The Facts and Explanations of the Domestic Value Chain Driving the Export Value of China's Manufacturing Industry. Economist(09),93-103. doi:10.16158/j.cnki.51-1312/f.2019.09.010.

Gu, F-J., Sha, X-J., & Zhang, W-F. (2022).National Value Chain Connecting Global Value Chains: A Study on the Acquisition Path of China’s Provincial Value Added in Export. China Soft Science. (03),164-172+182.

Liu, P., & Xia, Y. (2021). China's Provinces' Value-added Export and Embedding in Value Chains —From the Perspective of Global Value Chain and National Value Chain. Journal of International Trade(05),109-126. doi:10.13510/j.cnki.jit.2021.05.008.

Brandt, L., Van Biesebroeck, J., & Zhang, Y. (2012). Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing. Journal of Development Economics, 97(2), 339-351. https://doi.org/10.1016/j.jdeveco.2011.02.002

Bai, X., Chatterjee, A., Krishna, K., & Ma, H. (2021). Trade and minimum wages in general equilibrium: Theory and evidence. Journal of International Economics, 133, 103535-. https://doi.org/10.1016/j.jinteco.2021.103535

Pahl, S., & Timmer, M. P. (2020). Do Global Value Chains Enhance Economic Upgrading? A Long View. Journal of Development Studies, 56(9), 1683-1705. https://doi-org-s.elink.xjtlu.edu.cn:443/10.1080/00220388.2019.1702159

Wang, X-H.(2017) The key to reshaping the new competitive advantage of the manufacturing industry lies in improving the capability of independent innovation. Globalization, 2017 ( 11) : 32－38+133－134

Ge, X-T., &Xie, J-G. (2023). Can Talent Introduction Break the “Low－end Locking” of Global Value Chain: Evidence From Export DVAR of China's Manufacturing Enterprises. International Economics and Trade Research (03),19-35. doi:10.13687/j.cnki.gjjmts.2023.03.004.

Zhu, K-P., & Fan, S-D. (2019). A Study on Employment Effects of China’s Manufacturing Shifts: Based on Inter-country Input-output Model. Chinese Journal of Population Science(01),33-46+126-127.

Frey, C. B., & Osborne, M. A. (2017). The future of employment: How susceptible are jobs to computerisation? Technological Forecasting & Social Change, 114(January), 254–280. https://doi.org/10.1016/j.techfore.2016.08.019

Graetz, G. and Michaels, G. (2015) ‘Robots at work: the impact on productivity and jobs’, CentrePiece - The magazine for economic performance [Preprint]. Available at: https://ideas.repec.org//p/cep/cepcnp/447.html

Graetz, G., & Michaels, G. (2018). Robots at Work. The Review of Economics and Statistics, 100(5), 753–768. https://doi.org/10.1162/rest_a_00754

Grossman, Gene M., & Esteban Rossi-Hansberg. 2008. "Trading Tasks: A Simple Theory of Offshoring." American Economic Review 98 (5): 1978-97.DOI: 10.1257/aer.98.5.1978

FORT, T. C. (2017). Technology and Production Fragmentation: Domestic versus Foreign Sourcing. The Review of Economic Studies, 84(2 (299)), 650–687. https://doi.org/10.1093/restud/rdw057

Goos, M., Manning, A., & Salomons, A. (2014). Explaining job polarization: routine-biased technological change and offshoring. The American Economic Review, 104(8), 2509–2526. https://doi.org/10.1257/aer.104.8.2509

Li, G-Q., & Zong, Z-G. (2021). Input Servitization of Manufacturing，Service Trade Openness and Business Cycle Comovement: A Perspective of Global Value Chain. World Economy Studies(10),69-86+135. doi:10.13516/j.cnki.wes.2021.10.006.

Vom Lehn, C. (2020). Labor market polarization, the decline of routine work, and technological change: A quantitative analysis. Journal of Monetary Economics, 110, 62–80. https://doi.org/10.1016/j.jmoneco.2019.01.004.

Kee, H. L., & Tang, H. (2016). Domestic Value Added in Exports: Theory and Firm Evidence from China. The American Economic Review, 106(6), 1402–1436. https://doi.org/10.1257/aer.20131687

Tian, W., & Yu, M-j. (2013). Firms' export intensity and trade liberalization of imported intermediate goods: an empirical study from Chinese firms. Journal of Management World (01),28-44. doi:10.19744/j.cnki.11-1235/f.2013.01.004.

Tang, Y-H ., Yu, F., Lin, F-Q.,& Zhang, M-T. (2019). China’s High-speed railway, Trade Cost and Firm Export. Economic Research Journal (07),158-173.