2012年2月6日 Cluster-Based Industrialization in China Xiaobo Zhang, IFPRI Food Secure Arab World Conference, February 6-7, Beirut, Lebanon
2012年2月6日
Cluster-Based Industrialization in China
Xiaobo Zhang, IFPRI
Food Secure Arab World Conference, February 6-7, Beirut, Lebanon
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• State banks rarely provided credit to private entrepreneurs at the onset of reform.
• The contribution of the domestic private sector to the overall growth is 72% according to the Industrial Census in 1995 and Economic Census in 2004.
• A little over 70% of the private sector growth is attributable to the birth and the growth of new private firms.
How Come Has China Become the “World Factories”
in Just a Few Decades?
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• Assume production technology is not divisible. Thereby, it is important to pool disparate savings to finance large lump-sum investment for factory building and machinery.
• Many argue that a well-developed financial system is a key prerequisite for industrial development.
• However, financial development itself is a great challenge.
Conventional Thinking on Industrial Development
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Agricultural
society
Industrial society Big VI Firms
SMES, Clustering
Financial constraints
Financial constraints
Two Paths of the Industrialization
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Clusters of completely un-integrated firms as “world factories”
• Each small firm is narrowly specialized in one process of production
• A group of coordinated firms complete a product
• Thousands of small firms are concentrated in a ‘specialized’ town
• These towns become ‘world factories’ of socks, neckties, buttons, umbrellas, sweaters, etc. – most challenging
• Datang Town produced 6 billion pairs of socks per year
• Shengzhou Town made 40% of the world's neckties
• Qiaotou town made more than 70% of the buttons for clothes made in China
• Songxia town produced 350 million umbrellas every year
• Puyuan Town made over 500 million cashmere sweaters; 60% of China’s market
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Long and Zhang, JIE(2011)
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The Location of Puyuan
Zhejiang Province
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History of Puyuan Cashmere Sweater Cluster
1976 1988 year 1994 2007
A collectively
owned enterprise
began to produce
cashmere sweaters
Local government
constructed the
first marketplace
The largest
distributing centre
of cashmere
sweaters in China.
Ten million pieces
500 million pieces. 4,000 firms & workshops
6,000 merchants
60,000 workers
More than ten billion yuan sales
local population had
jumped from less
than 30 thousand in
1992 to more than
130 thousand in
2005
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The Putting-out System
Yarn
Purchasing
Weaving Assembling Dyeing &
Finishing
Buttoning
Ironing
Printing
Packing
Selling
Sweater Shops (VPCS) New Style
Designing
Computer
Aided
Designing
Integrated Producing Factories
Yarn
Purchasing
Weaving Assembling
Dyeing &
Finishing
Buttoning
Ironing
Printing
Packing
Selling
New Style
Designing
Computer
Aided
Designing
The Vertically-integrated System
Two business model in Puyuan Cluster
Ruan and Zhang, EDCC(2009)
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Production Organizers
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Sweater Merchants as the Leading Entrepreneur
Coordinating production processes among the workshops
within each group:
• Has shops in the town’s designated sweater marketplaces
• Provide designs and receive orders
• Purchase raw materials and deliver them to the subcontracting weaving workshops; then semi-finished products are sent to the subcontracting dyeing factories; then to printing and ironing workshops; then …
• Finally package in the sweater merchant’s shop, which also serves as quality inspection
• The final products are transported to the Puyuan logistics center
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Less than 2 miles
Sweater market
Raw material
market
Sweater shops
Weaving
Workshops
Yarn
dealer
Buttoning
Workshop
Dyeing &
Finishing
Factory
Printing Workshops
National Road
Ironing Workshops
Logistics
company
Other
Cities
Markets
Overse
as
Markets
The Putting-out System
CAD
Workshops
Assembling
Workshops
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Market
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Family workshops
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Independent Workers/Entrepreneurs
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Does Dispersed Production Mode
Incur Higher Transaction Cost?
• Not necessarily for three reasons.
• When producers stay in a geographically proximate region,
information flow is much easier. Words about bad behavior
spreads fast.
• The opportunity cost of committing dishonest behavior is high
because of the nature of asset specificity in a cluster (the asset,
skills and network are not portable to other places).
• Since they locate nearby to each other, they know each other
well. Repeated transactions help form trust.
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The entrepreneurial firms are closely coordinated but no written
contracts between them
Page 17
Sample receipt
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The Average Investment for Different Step of Production
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Logisticscompany
Dyeingfactories
Integratedfirms
Finishingfactories
Sweatershops
Yarndealers
Printingworkshops
Familyweavingworkshops
Ironingworkshops
Three-wheelerdrivers
Types of division
Ln(initial investment)
Investment required by different types
Integrated Factory in Inner Mongolia
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Role of the Government in the Cluster
Page 19
• Common features of clusters: goods markets, intermediate material
markets, logistic center, quality control and inspection center and
other infrastructure (roads, electricity, security, and so on).
• The presence of these markets and other essential public goods in a
cluster enables individual producers to keep the scale of production
small and specialize in fewer tasks.
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Crises and Provision of Public Goods
Page 20
Local governments facilitate the growth of cluster by providing necessary public goods in response to various crises:
• Roadside sweater stands blocked traffic:
• Built cashmere sweater marketplaces (with roof) through private-public partnership to formalize the informal business
• Fights among different private logistic centers and transport companies: • Set up a unified logistic center by re-organizing dozens of private logistics and transport
companies and auctioning out the rights of transport routes
• Increasing crimes as a result of more merchants and migrant workers: • Increased street security patrol to ensure a safe environment
• A large fraud by a woman trader using fake name: • Established information system to link hotels with police stations to check fake Ids to
chase out cheaters
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Crises and Provision of Public Goods
Page 21
• Reputation crises due to low quality product: • Enacted decrees on the quality requirement of cashmere products;
• Set up quality inspection centers and quality control offices;
• Established an industrial park to attract cashmere firms with brand names to Puyuan from all over the nation by preferable land, tax, and credit policies
• Short of skilled labors and inadequate trainings: • Built technical training centers/schools to train employees at the township
level
• Land shortage: • Replaced the scattered farmers’ residential houses with town houses. Using
the saved land to build factories and industrial park (in which famers hold shares).
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Why Do Local Governments Have the Incentives to
Promote Cluster Development?
Page 22
• Inter-county competition is a key feature of Chinese
economy (Steven Cheung’s lecture in the last meeting).
Local government officials’ performance is based on
GDP growth, fiscal revenue growth and other economic
indicators.
• In contrast, in many other developing countries, local
governments play little role in fostering local economic
development.
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Coordinated Entrepreneurial Clusters
• The basic operating unit in Puyuan: family owned workshops (3,900) and trading shops (6,000)
• Every workshop is specialized in one task: • Designing, weaving, finishing, dyeing, printing, ironing, packaging, etc.
• A virtual firm: a group of specialized workshops closely worked together coordinated by a lead entrepreneur • Sweater merchants as virtue production coordinators
• Design and produce cashmere sweaters from yarns
• A virtual conglomerate: thousands of workshops clustered together sharing infrastructures • The town government provides many important public goods and services,
fostering the clustering development
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Source of Starting Capital
Page 24
Average amount
(10,000 yuan)
Founder
(%)
Relatives or
friends
(%)
Banks
(%)
Others
(%)
Yarn dealers 12.45 83.21 16.79 0.00 0.00
Family weaving
workshops 7.31 81.46 15.64 2.90 0.00
Dyeing factories 340.07 47.50 31.87 20.63 0.00
Finishing factories 177.82 29.91 34.14 25.68 10.27
Printing workshops 10.60 77.36 22.64 0.00 0.00
Ironing workshops 3.83 88.26 11.74 0.00 0.00
Sweater shops (VPCs) 12.74 80.58 12.47 6.95 0.00
Three-wheeler drivers 0.54 63.28 36.72 0.00 0.00
Logistics company 4000.00 50.00 0.00 50.00 0.00
Integrated enterprises 263.84 59.59 19.28 21.13 0.00
2-month salary