The Asian Model of the Industrial Cluster Policy For the Global Value Chain October 10, 2015 Akifumi Kuchiki Nihon University 1.

The Asian Model of the Industrial Cluster Policy

For the Global Value Chain

October 10, 　 2015

Akifumi KuchikiNihon University

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Only 300 hectares in Iran for Industrial agglomeration!

Iran will start its growth from 300 hectares! (3 Km2)

Objective: In Iran, we will create China’s Shenzhen ！！！

Industrial agglomeration in Asia:Kaohsiung in Taiwan in the 1960s.Penang in Malaysia and Eastern Seaboard in Thailand in the 1980s.Shenzen in China in the 1990s Industrial Cluster Policy in Iran!

1. What kinds of the segments of an industrial cluster are built?2. Is it an efficient sequence of forming the segments?3. Who is a leader?

Key words: segment,sequence, leader

Questions:

In other words,

•The segments = The investment environment•Sequence = Prioritization•Leader = Human resource

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Bases1.　Segments　of　industrial　cluster　

Capacity SegmentInfrastructure Roads　 Railways　 Airports　 Ports　 Communication　 Water supply　 Electricity　 Industrial zonesLabor Unskilled labor　 Engineers　 ManagersInstitutions Liberalization　 Land ownership　 Foreign currency exchangeLiving environment Schools　 Hospitals　 Entertainment　 Shopping

Conclusions: The Asian model:Flowchart Approach:

•1. Segments•2. The economies of sequence in forming the segments.

•3. We must find a leader as an initial value of a sequence.

industrial cluster(a bunch of grapes)

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1. Industrial cluster

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A bunch of grapes

Kuchiki’s Definition: industrial cluster of the industry

consists of two stages:

Stage 1 is the stage of Agglomeration,

Stage 2 is the stage of Innovation.

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Sequence　 a 　 b 　 c 　 d 　　

　 Belly 腹 Breast 胸 Heart 心臓 Head 頭 　

　Anchor firms Water

supplyIndustrial zone Port 　

2. The economies of sequence

Today’s topics:Industrial clusters in Asia:

1. Automobile ： Guangzhou, China

2. Electronics: Thang Long Industrial Park (TLIP) in Hanoi, Vietnam

3. Automobile: Eastern Sea Board in Thailand

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Automobile Clusters = Global VC

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Nagoya

Kyushu

Shanghai

Guangzhou

Beijing/Tianjin

Manila

Kuala Lumpur

Jakarta

Bangkok/Rayong

China

ASEAN

India

Delhi

Mumbai[Bombay]

Korea

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１． Guangzhou’s Automobile Industry Cluster

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The Asian model:Flowchart Approach:

(a) industrial zones (b) anchor firms (c) the related firms (suppliers) (d) segment building (e) leader

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16Source: A. Kuchiki and K. Yoshida

Step Ⅰ ： (a)

Agglomeration(b)

(c)

(d)

Step Ⅱ ： (a)

Innovation(b)

(c)

(d)

Industrial zone

Capacity building(Ⅰ )

3.      Human resources

4.      Living conditions

Anchor firm

1.      Infrastructure

2.      Institutions

Related firms

Anchor persons

Cluster

3.      Human resources

4.      Living conditions

1.      Infrastructure

2.      Institutions

Capacity building(Ⅱ )

Universities / Research institutes

The Asian Model: Flowchart Approach

(a) Industrial Zones and Segment Building:

6 Industrial Zones

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Source: The Bureau of Foreign Trade and Economic Cooperation of Guangzhou Municipality, A Foreign Investment Guide to Guangzhou Auto Industry , 2005.

Zone East Auto-Industry Belt South of Guangzhou Northwest of Guangzhou

Capacity Guangzhou Economic & Technological Development District

Xingtang Industrial Processing Zone of Zengcheng City

Huangpu District

Nansha International Automobile Industry Park

Panyu Automobile High-tech Industry Base

Huadu Auto City

Infrastructure: ( )Electriciⅰty Supply

A 110 thousand KVA (kilovolt amperes) transformer substation and completed underground electrical network with two-circuit electricity supply.

A 500 thousand KVA transformer substation and 4 transformer substations of 110 thousand KVA.

Electricity Network with 6 of 110 KVA transformer substations, a 220 KVA transformer substation and Huangpu Power Plant of 1.1 million KW (kilowatt).

Several 110 thousand VA transformer substations. Zhujiang Powerplant, with capacity of 1.2 million KW and many thermal power stations with 50-100 thousand KW.

Supplied by Shilou 110 KV Transformer Substation ,and a new 110 KV transformer substation is under construction.

15 transformer substations with 110 KV and a 220 thousand KV transformer substation. Power supply rate to enterprises reaches 100 % with daily supply of 4,760,000 KW/h.

( )Water ⅱSupply

Xinhe Waterworks with daily capacity of 300,000 tons

Four large waterworks, Dadun, Xizhou, Xinhe and Shapu, providing daily water capacity of 1.2 million tons.

Supplied by Guangzhou Municipal Waterworks

3 main water pipes from Shawan Waterworks are serving the whole Park with daily supply of 250,000 tons.

Supplied by Shawan Waterworks with daily capacity of 560,000 tons.

3 waterworks with daily supply capacity of 200,000 tons and the water quality reaches State’s sanitary standards.

( )Sewagⅲe Treatment

A modern wastewater disposal station enabling separate treatment for underground water and sewage water

First stage of 300,000-ton waste water disposal station is under construction

Water and waste drainage system is under construction , which is available with first stage of Da Shadi Wastewater Disposal Station of daily capacity of 200,000 tons

Guangzhou Nansha City Wastewater Disposal Station, with daily handling capacity of the first stage of 100,000 tons

The project of drainage system which adapt the rain water type drainage, capable of 160,000 ton/day wastewater disposal is under way

150,000-ton/day waste water piping system

Human Resource:

Education

Close to Gunagnzhou Zone of High Learning and Guangzhou University City. Various of middle schools, primary schools, kindergartens and Japanese schools are located within the area

Within 30-minute drive to South China University of Technology, Sun Yet-Tsen University, Guangdong University of Foreign Studies, Guangdong Commercial College

Close to Guangzhou University City where many high educational and research institutes are located, capable of supplying rich human resources to enterprises

Yingdong Middle School and Nansha Central Primary School, etc

Located in the southeast of the University City, only 20-minute drive with rich human resource available

Gungzhou Institute of Automobile of South China University of Technology, Gunagdong Transportation Technology College, Guangdong Peizheng Business School

Living Conditions : ( )Environⅰment

A sound environment of green hills and clean water, with villa gardens, noble residences and tourist resorts

Ecological residential areas, such as Country Garden Phonix City, Jinxiu Heung Kong Xinjiang and Xinshijie Residential Area

Residential areas including Wanke City, Huangpu, Jinbi Millenium are within the area with average estate price at 3,500 yuan / ㎡

The area is composed of river and lake with nice natural environment and well-preserved natural ecological zone

Modern residential areas with nice environment, excellent facilities, and convinient transportation network are available

The Sunshine Residential Area is surrounded by favorable environment

( )Food & ⅱEntertainment

A four-star hotel (Foreign Business Center), and a golf court

Two five-star hotels and three four-star hotels and four golf courts

The District is well-known for Nangang Seafood and Bicum Lichi, a delicious fruit exclusively from Guangdong Province

Tourist attraction with Nansha Puzhou Park, Waterside Street, Nansha Golf Court, Sunflower Park, Wetland Park, Nansha Hotel, Clifford Hotel, etc

Lotus Hill, one of the Eight New Scenes of Guangzhou, and golf club, an ideal place for recreation

8 of starred hotels, 2 golf courts and shopping and entertainment facilities in the Sunshine Residential area, Automobile city

( )Medical ⅲServices

GETDD Hospital (322 beds) and more than 10 medical institutes

General hospitals with advanced technology and equipments , several medical institutes

More than 10 hositals are available including Sun Yet-Tsen Huangpu Affiliated Hospital

Nansha Hospital Two A-class hospitals, one international medical institute and the medical institutes at every town

18 hospitals and the world-level Clifford Hospital is under construction

Source: A Foreign investment Guide to Guanzou Auto Industry, 2005

Equipment installation

Examination and approval ofcompleted project

Business operation

Opening of an account with a bank

Registration of finance andstatistics

Registration at the Customs Recruitment of employees

Handling of labor insurance

Procedure for Setting up Foreign-invested Enterprises

Application for the business license

Engraving the seal of the enterprise

Registration at tax authority

Signing of contract on land use /contract on leasing of factory

building

Application for project construction;Construction; Decoration

Registration of foreignexchange;application for opening a

RMB account

Pre-verification of the name of the enterprise

Verification of the project site and its impact on surrounding environment

Submission of projecct feasibility study report, contact, articles of association

Application for the organization code

Acquirement of the Approval Certificate of the Foreign-invested Enterprise

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Segment: (b) Institutions: One-stop Services

(c) Anchor firms:

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Toyota Honda NissanJoint venture company Guangzhou Toyota Motor

Co., Ltd.Guangzhou Honda Automobile Co., Ltd.

Dongfeng Nissan Motor Company

Establishment 2004 September

2006 May

1998 2004 May

Joint venture partner Guangzhou Automobile

(JVs with First Automotive Works in Tianjin)

Guangzhou Automobile,

Dongfeng Automobile

(Engines)

Dongfeng Automobile

Main products Camry Accord, Fit Sunny, Tiida

Annual production volume

100,000 (2006)

Production capacity is 300,000.

240,000 (2004).

Second plant is under construction. (Scheduled to complete in 2006.

150,000

Location of headquarters

Southern coast of Guangzhou city (Nansha district:797 ㎢ )

Center of Guangzhou city. (Guangzhou Economic Development Zone)

North of Guangzhou city. (Huadu district: 50 ㎢ )

Agglomeration of components makers

Nansha district (12 keiretsu companies),

Shunde district Foshan city (6 Keiretsu companies).

Guangzhou Economic Development Zone

Huadu district

Main components makers

Japanese makers Japanese makers Taiwanese makers,

Japanese makersSource: Based on Tsukada (2005), Kuchiki arranged partly.Notes: Korea Hyundai Motor and Guangzhou Automobile produce commercial vehicles in Huadu. (Total investment: 135 billion yen) Hyundai Motor and Beijing Automobile Investment Co. produce passenger vehicles.

(d) Related Firms: Suppliers ：

Anchor Firms: Honda, Nissan and Toyota => Agglomeration

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NISSAN’s Agglomeration(2003-06)Company name Investor Products Foundation

1 Dongfeng Motor Corporation Nissan Motor Co., Ltd. Dongfeng Motor Corporation Passenger cars, commercial vehicles 2003

2 Unipres Guangzhou Corporation Unipres Corporation Car body components 2003

3 Yorozu Bao Mit Automotive Co., Ltd.Yorozu Corporation, Shanghai Bao Steel Int. Economics

&Trading Co., Ltd., Mitsui &Co., Ltd.Suspensions 2003

4 Guangzhou Mitsuike Autoparts Co., Ltd. Mitsuike Corporation Metalic dies 2003

5 Dongfeng Passenger Vehicle Research & Development CenterDongfeng Nissan Research and development center 2004

6 Guangzhou Hitachi Unisia Automotive Parts Co., Ltd. Hitachi Automotive Systems Power Steering System 2004

7 Fuzhou Fukwang Rubber & Plastic Co., Ltd. Kinugawa Rubber Industrial Co., Ltd. Body sealing products 2004

8 Guangzhou Hua Jing Automotive Steelparts Co., Ltd. Mitsui & Co., Ltd. Steel plates 2004

9 Kiriu-Lioho Co., Ltd. Kiriu Corporation, Lioho Machine Works, Ltd.（Taiwan）Brake parts 2004

10 Guangzhou Nishikawa Sealing Systems Co., Ltd. Nishikawa Rubber Co., Ltd. Sealing parts 2004

11 Alpha (Guangzhou) Automotive Parts Co., Ltd. Alpha Corporation, Marubeni Vehicle Corporation Key sets 2004

12 Xingguang (Guangzhou) Autoparts Co., Ltd. (*) Hoshi Diecast Kogyosho Die-castings 2004

13 Tacle Guangzhou Automotive Seat Co., Ltd. Tachi-S Co., Ltd. Automobiｌe seats 2004

14 Guangzhou Kasai Automotive Interior Trim Parts Co., Ltd. Kasai Kogyo Co., Ltd. Interior parts 2004

15 Calsonic Kansei (Shanghai) Corporation (Huadu Branch) Calsonic Kansei Corporation Module Products 2005

16 MI Steel Processing Guangzhou Co., Ltd. Marubeni Itochu Steel Inc. Steel plates 2005

17 CAST Autoparts Co., Ltd. (*) Daiichi Kinzoku Co., Ltd. Automobile parts 2005

18 Fuji Autotech Guangzhou Co., Ltd.Shanghai Min Fang Auto Parts Co,. Ltd.

Fuji Kiko Co., Ltd., Tachi-S Co., Ltd.Automobiｌe seats 2005

19 Calsonic Kansei (Guangzhou) Components Corp. Calsonic Kansei Corporation Instrument panels, exhaust products 2005

20 Guangzhou Mahle Filter System Co., Ltd. Mahle Filter Systems Japan Corporation Air filters, motor heat insulation boards 2005

21 Tachi-S Trim Guangzhou Co., Ltd. Tachi-S Co., Ltd. Automobiｌe seats 2005

22 Engine factory of Dongfeng Nissan Dongfeng Nissan Engines 2006

23 Toyo Quality One Guangzhou Co., Ltd. (*) Toyo Quality One Corporation,　Nagase & Co., Ltd. Automotive devices 2006

24 Guangzhou Nanjo QuanXing Autoparts Co., Ltd. (*) Taiwan QuanXing, Nanjo Kogyo Automobiｌe seats 2006

25 Guangzhou Kanto Autoparts　Co., Ltd. (*) Kanto Auto Works, Ltd. Auto bodies and parts 2006

Source: Inagaki (2004), Huadu District, Guangzhou (2005)

(* ) = Author's translation.

TOYOTA’s Agglomeration(2002-06)Company name Investor Products Foundation

1 Foshan Melx Leather Co., Ltd.　（*） Melx Co., Ltd. Leather products for automobile seats 20022 Foshan Nichiwa Co., Ltd.　（*） Nichiwa Co., Ltd. Bolts, nuts, pressed parts 20033 Toyota Gosei (Foshan) Rubber Parts Co., Ltd. Toyota Gosei Co., Ltd., Toyota Tsusho Corporation Body-sealing products for automobiles 20044 Aisin Seiki (Foshan) Automotive Parts Co., Ltd. Aisin Seiki Co., Ltd. Engine parts 20045 Aisan (Foshan) Auto Parts Co., Ltd. Aisan Industry Co., Ltd., Toyota Tsusho Corporation Throttle bodies, Engine valves 20046 Foshan Japan Brake Co., Ltd.　（*） Japan Brake Industrial Co., Ltd. Brake assemblies 20047 Foshan Shunde Yinhe Motorcycle Co., Ltd.　（*） Axle Corporation Motorcycles 20048 Foshan Tokairika Automotive Parts Co., Ltd. Tokai Rika Co., Ltd., Toyota Tsusho Corporation Switches, steering locks 2004

9 Koyo Lioho (Foshan) Automotive Parts Co., Ltd.Koyo Seiko Co., Ltd. ,Koyo Metaltec Co., Ltd.Toyota Tsusho Corporation

Bearings 2004

10 Foshan Yutaka Auto Parts Co., Ltd. Yutaka Giken Co., Ltd. Torque converters 200411 Foshan Summit Nikka Mold & Metal Products Co., Ltd. Sumitomo Corporation Mold and metal products 200412 Toyota Gosei (Foshan) Auto Parts Co., Ltd. Toyota Gosei Co., Ltd., Toyota Tsusho Corporation Interior and exterior parts 200413 Toyoda-Koki Automotive (Foshan) Co., Ltd. Toyoda Machine Works, Ltd. Power steering parts 200414 Takagi Auto Parts (Foshan) Co., Ltd. Takagi Seiko Co., Pla-Net Corporation Plastic components, molds 2004

15 Kobe Wire Products (Foshan) Co., Ltd.Kobe Steel., Ltd. , Metal One Corporation , Kyodo Shaft Co., Ltd.

Sugita Wire, Ltd.Steel bars and steel wires 2005

16 Elastomix (Foshan) Co., Ltd. Elastomix Co., Ltd. Carbon master batch 2005

17 Guangzhou Parkerizing Co., Ltd.Nihon Parkerizing Co., Ltd. ,Asahi Chiyoda Kogyo Co., Ltd.Hamamatsu Netsuhori Kogyo Co., Ltd. ,Parker Netsusyori Kogyo K.K.

Surface treatment for automobile parts 2005

18 Toyota Boshoku Foshan Co., Ltd. Toyota Boshoku Corporation Oil filters 200519 Fujikura Kasei (Foshan) Paint Co., Ltd.　（*） Fujikura Kasei Co., Ltd. , Kyokuto Boeki Kaisha, Ltd. Coating for plastics 200520 Foshan Unytite Co., Ltd.　（*） Unytite　Corporation Bolts, nuts 200521 Tokai Spring Mfg. (Foshan) Co., Ltd. Tokai Spring Mfg. Co., Ltd., Nagase & Co., Ltd. Precision leaf springs, press products 2005

22 Yamasei Automotive (Foshan) Co., Ltd.Toyoda Machine Works, Ltd. , Yamasei Kogyo Co.,The Yokohama Rubber Co., Ltd.

Power steering parts 2005

23 Sanyo Seiko (Foshan) Co., Ltd.　（*） San-Esu Mold parts 200624 Foshan Dongrong Xuri Electrics Co., Ltd.　（*） Toei Kagaku Kogyo, Xuri Co. Automobile parts 200625 Foshan Nitigura Co., Ltd. Nihon Glassfiber Industrial Co., Ltd. Exhaust manifold covers 200626 Foshan Shunde Yazaki Auto Parts Co., Ltd. Yazaki Corporation Automotive instruments 200627 Hegu (Foshan) Automotive Fuel System Co., Ltd.（*） Nichiwa Sangyo Co., Ltd. Automobile parts 200628 Daiichi Bussan (Foshan) Co., Ltd.　（*） Daiichi-Bussan Co., Ltd. Insulators 200629 Usui Automotive Parts Co., Ltd.　（*） Usui Kokusai Sangyo Kaisha, Ltd. Brake tubes, power steering tubes 200630 Enkei Aluminum Products (Guangdong) Co., Ltd.　（*） Enkei Corporation Aliminum wheels 200631 Foshan Shunde Lefu Hardware Precise Mold Co., Ltd.　（*） Osamu Fukui, Tsuneo Imai, Yosuke Fukui, Masaru Nakamura Mold parts 200632 Azimit Auto Parts (Foshan) Co., Ltd.　（*） Azimit Mold parts 200633 Sugiyama Kogyo (Foshan) Mold Co., Ltd.　（*） Sugiyama Kogyo Co., Ltd., Toyota Tsusho Corporation Mold parts 2006Source: Inagaki (2004), Nansha Development District (2005)

(* ) = Author's translation.

HONDA’s Agglomeration 1997-2006(Suppliers)Company name Investor Products Foundation

1 Guangzhou Showa Autoparts Co., Ltd. Showa Corporation, Kanematsu Corporation Shock absorbers 19942 Guangzhou Stanley Electric Co., Ltd. Stanley Electric Co., Ltd., Honda Motor (china) Investment Co.,Ltd. Automotive lightning products 1999

3 Guangzhou Mitsuba Electric Co.,Ltd. MITSUBA Corporation., Mitsuba China (Hong Kong) Ltd.Auto electrical systems, Two-wheeledvehicle engine support

1999

4 Guangzhou Sanoh Seikan Co., Ltd. Sanoh Industrial Co., Ltd.Automotive parts (brake tubes, fueltubes, other tubular parts)

1999

5 NIPPON　LEAKLESS　Corporation GZ LEAKLESS Co.,Ltd. Automotive Gaskets 19996 Auto Parts Alliance (China) Ltd. Kikuchi Co.,Ltd., TAKAO KINZOKU KOGYO Co., Ltd. Aluminum structural assemblies 20017 Guangzhou Daiyu Seat Co., Ltd. Daiyu Co.,Ltd. Sewn automotive seat components 20018 Guangzhou Marujun Co.,Ltd. Marujun Co.,Ltd. Automotive stamping parts 20019 NHK-Uni spring(Guangzhou)Co.,Ltd. NHK Spring Co.,Ltd. Coil Springs, Stabilizers 2002

10 Guangzhou NTN-Yulon Drivetrain Co.,Ltd. NTN Corporation, Yulon Group（Taiwan） Constant-Velocity Joints (CVJs) 200211 Guanzhou Vigo Stanley electric company limited Stanley Electric Co., Ltd. Automotive Lightning Products 200212 Guangzhou Nanbu Plastics Co.,Ltd. Nanbu Plastics Co.,Ltd. Plastic products 200213 Guangzhou GKI Car Interior Parts Co.,Ltd. ITOCHU Corporation, Kotobukiya Fronte Co.,Ltd. Automotive upholstery 200314 NHK Spring Precision (Guangzhou) Co.,Ltd. NHK Spring Co.,Ltd. Suspension Springs 200315 Honda Automobile (China) Co., Ltd. Honda Motor Co.,Ltd. Motorcycles, Automobiles 200316 Guangzhou DEMPU Automobile Ｐarts Co., Ltd. N.A.　（*1） Plastic products 200317 Guangzhou Shiroki Corporation Shiroki Corporation Doorframes, Moldings 200318 Guangzhou Ahresty Automobile Parts Co.,Ltd Ahresty Corp. Die Casting　products 2003

19 Guangzhou You-Ri Automotive Parts Co.,LtdSumitomo Pie & Tube Co.,Ltd., Sumitomo CorporationNippon Steel Corporation

Electric-resistance welded pipes 2003

20 Tokai Rubber (Ghuangzhou) Co.,Ltd. Tokai Rubber Industries Ltd.Anti-vibration rubber parts,Automotive hoses

2003

21 Honda Engineering China Co., Ltd. Honda Engineering Co., Ltd., Honda Motor (China) Investment Co.,Ltd.Mold parts 200422 Guangzhou NEIVE Co.,Ltd. NEIVE Co.,Ltd. Automobile Parts 200423 Decker System China (DSC) Decker Corporation, Chinese United Faith Automobile Parts 200424 Guangzhou Tech Interior Trim Manufacturing Co.,Ltd. TS Tech Co.,Ltd. Sewn automotive seat components 200425 TEIKURO Guangzhou Corporation Teikuro Inc. Surface treatment for mold parts 200426 Guangzhou Bridgestone Chemical Products Co., Ltd. Bridgestone Corporation、Guangzhou Automobile Group Co., Ltd. Urethane foam 200427 Guangzhou Fuji Tool Co.,Ltd. Fujiseiko Limited Carbide Tools 200428 Toyo Automotive Parts (Guangzhou) Co., Ltd. Toyo Tire&Rubber Co.,Ltd Anti-vibration rubber parts 200429 Ring Techs Automobile Products Co.,Ltd. Ring Techs Co.,Ltd., Metal One Corooration Steel wheels for passenger cars 200430 Tsuchiya (Guangzhou) Automotive Components Co., Ltd. Tsuchiya Co., Ltd. Plastic Products 200431 Akebono Corporation (Guangzhou) Akebono Brake Industry Co.,Ltd. Brakes 200432 Ohashi Technica (Guangzhou) Co., Ltd. Ohashi Technica, Inc. Automobile Parts 200433 Ghuangzhou Uchiyama Manufacturing Co.,Ltd. Uchiyama Manufacturing Corp. Gaskets, Seals 200434 Tocalo& Han Tai Co., Ltd. TOCALO Co.,Ltd.,　HAN TAI Co.,Ltd. Surface modification 200535 Guangzhou Hori Automobile Glass Co., Ltd. Hori Glass Co.,Ltd Plastic parts for windshields 200536 Guangzhou Linjun Automobile Internal Decoration Co., Ltd.HAYASHI TELEMPU Co.,Ltd.,Guangzhou Automobile Group Co., Ltd.Automotive upholstery 200537 Guangzhou Ninomiya Cold Forging Automotive Parts Ninomiya Co., Ltd. Cold forged products 200638 Tigerpoly Manufacturing Tigaers Polymer Corporation Rubber seats, Plastic hoses 2006

Source: Inagaki (2004), Shunde District, Foshan City (2005)

(e) Leader: Local Government

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Guangzhou AutomobileIndustry Park (GAIP)

Guangzhou municipality

Industrial zones

Guangzhou AutomobileIndustry Group (GAIG)

Guangzhou Automobile Group

Guangzhou State-ownedEnterprise Projects

Honda 　Nissan 　Toyota HyundaiIsuzu

Their related companies

(6 companies)

(6 industrial zones)

(21 companies)

(14 component companies)

(30 companies)

Anchor firms

Source: Author’s

Sequence 1: Honda’s effect

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(e) Leadership of a mayorGuangzhou Economic Development Zone

Foshan Industrial Park

Zengcheng Industrial Park

Capacity buildingⅠ

HONDA

Keiretsu firms ： Tier1, Tier2, Tier3

Capacity building Ⅱ

Related firms

Automobile Industry Agglomeration

R&D, Technology transfer

Automobile Industry Cluster

Source: A. Kuchiki and H. Tsukada

Electricity, railway : actors ＝ Guangzhou city, Guangdong Province

1998

2005

Future

20012002

Future (Yonghe Economic Zone), Foshan

(Innovation), Universities, Research Institutes

(Anchor firm) (Decision Making by the president of Japanese Headquarters)

Zengcheng, Zongshan, Foshan

1. Universities and research institutes: university park?2. Local government incentives: one stop service

Human resource management: Japanese interpreters: actors ＝ JETRO

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Sequence 2:Toyota’s Effect

(e) Leadership of a mayor

Source: A. Kuchiki and H. Tsukada

(Automobile Industry Agglomeration)

Competition between the industrial zones

(Construction of subway: actors=Guangzhou

city ）

(Construction of highway: actors=Guangzhou city)

Capacity building I

TOYOTA

Keiretsu: Tier1

Keiretsu: Tier2, Tier3 Chinese local firms

Related manufacturers and service industries I

Automobile Industry Cluster

Capacity building II

Technology transfer

Finance R &D LogisticsMachinery Equipments

(Innovation)

(actors to invite firms=Guangzhou city, JETRO)

Nansha, Shunde, Foshan(a)

(b)

(c)

Cluster

Step I ：Agglomeration

Step II ：Innovation

Summary:

1 ． Segment building for Anchor Firms:

Honda, Nissan and Toyota

2 ． Local government: Leadership

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2 ． The Electronics Industry Cluster in northern Vietnam:

Segment Building: The effects of ODA:

(a) Highway Route 5, (b) Haiphong Port, (c) Institutional Reform

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Industrial zones and segment buildingContents Items Participation

Development　of　Land

Industrial　zones Site　development　

Central　and　local　　governments

Capacity　　　　　Building

Tax　incentives

Central　and　local　governments

Infrastructure

(a)　Roads,　(b)　ports

ODA

(c)　Institutions

Investment　Climate　

The　government　and　ODA

Human　Resource:　Technological　Transfer

ODA

Living　conditions

Restaurants,　Shops

Foreign　direct　investment　

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Sequence 3: Industrial Clusters in Northern Vietnam

Hanoi (TLIP) Haiphong Haiphong Port

Nomura Haiphong IZHighway No.5

Northern Vietnam

A Model of Forming Industrial Clusters

Thang Long IP (TLPI)

Nomura Haiphong IZ (NHIZ) +Segment building

(a)Highway No.5, (b)Haiphong Port(c)Institutional Reform (One stop service, tax)

Anchor Companies Canon, Honda, Panasonic, Galaxy

Related and Other Companies Japanese companies, other foreign and local companies

Industrial Clusters Development of Northern Vietnam

Canon’s Effect

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Segment: (a) Highway and (b) Port

Type　 Poduction　

Market-　Local　

Market-Export　

Import　 Hai-Phong　Port　

Highway　No.5

Example　

1 Hanoi Hai Phong Hai Phong XX XX Canon

2 Hanoi Local Hai Phong Hai Phong XX XX TOTO

3 Hanoi Local Hai Phong XX X Vietnam Float Glass

4 Hanoi Computer Com Yabashi

5 Hanoi Noi Bai Hai Phong X X Sumitomo Bakelite

6 Hai Phong Hai Phong Hai Phong XX As’ty

7 Hai Phong Local Hai Phong XX X San Miguel Yamamura

8 Hai Phong Local Hai Phong Hai Phong XXX　(inc.local　

distribution　by　ship)　

XX Han-Viet Heavy Industry & Construction

9 Hai Phong Noi Bai Noi Bai XX ESTELL

10 Vinh Phuc Local Hai Phong X X Honda

Note: X shows frequency of use Source: Company survey

35

Segment: (c) Institutional Reforms

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36

Agglomeration : Canon’s effects

Canon(printer)

(Thang Long)

SANTOMAS

(Plastic Products)

(Thang Long)

Inabata Sangyo

(Plastic products)

(Nomura-Haiphong)

Parker Processing

(Surface treatment)

(Thang Long)

ABE Asian Tech

(Users’ manual)

(Thang Long)

Volex

(Power code)

(Thang Long)

Sumi-Hanel

(Writing system)

(Saidon B)

Dragon Logistics

(Transportation)

(Thang Long)

Nippo Mechatronics

(Plastic molds)

(Noi Bai)

Fuji Mold

(Plastic molds)

(Nomura-Haiphong)

Japanese HDQ

Thailand Subsidiary

37

Agglomeration :

Thang Long Industrial Park

LIST　OF　TENANTS　IN　TLIPCompany name Date of I / L Nationali

ty Land Rental

Products

１ Mitsubishi Pencil VN Co., Ltd.

29 November 2001

Japan 3.8 Writing implements

2 Vina KDC Wiring Industries Ltd.

15 January 2001

Japan 0.48 (Rental factory)

Wire harness & power supply cord

C3 Parker Processing VN Co., Ltd

8 August 2001

Japan 2.31 Paint & Surface treatment parts

C4 Volex Cable Assembly(VN) Co.,Ltd

9 August 2001

Singapore

0.47(Rental factory)

Power supply cord, Interconnectors

C5 Canon VN Co., Ltd.

11 April 2001 Japan 20 Ink jet printers

38

Agglomeration (continued)

LIST　OF　TENANTS　IN　TLIP18 Seed VN Co., Ltd 30 August

2002Japan 0.60

(Rental factory)

Manufacturing and sale of stationery products

19 Hanoi Steel Center Co., Ltd

16 September 2002

Japan 1.89 Processing steel sheet

20 Toho VN Co., Ltd 9 October 2002

Japan 1.36 Design and manufacturing mold for plastic product

21 Kayaba VN Co., Ltd 22 October 2002

Japan 0.56 Manufacuture and sales of part and components for automobile and motorcycle

22 HAV VN Co., Ltd 17 December 2002

Japan 1.97 Production and sales of all types of aluminum castings and casting molds

TOTAL 61.19ha Note: C3, C4 and C9-13 provide parts and components to Canon. Source: Sumitomo Corporation, June 2002.

39

Agglomeration : A List of Tenants

and Nomura Haiphong Industrial Zone (as of April 22, 2003)Company District　 Products　 Date　of　Investment　

permit　

Vietphong Garment & Textile Co., Ltd. Hong Kong Capital

Standard Factory B - 2nd.3rd floors

ladies’ knitwears

March　28,　2002　

R&T manufacturing VN Co., Ltd. Hong Kong Capital

Standard Factory A-2nd floor + Na-16 (1ha)

Textile.sewingknitwears

April　16,　2002　

BT Garment Co., Ltd. Hong Kong Capital

Standard Factory A-4th floor

Textile. Sewing knitwears

August　23,　2002　

Office ExpressManufacturing Co., Ltd.Hong Kong Capital

Standard FactoryB- 1st floor

staples (ring file)

January　8,　2002　

Taiwan Fong Tai Paper Co.,Ltd. Taiwan Capital

F-12b (0.5ha)

corrugated cartons, package materials

Febrary　1,　2002　

40

Sequence 3: The electronics industry cluster in northern Vietnam

(Unit: million $: 1$=100\)Year ODA

Highway Route 5 1993, 1995 2.10

Haiphong Port 1995, 1999 1.73

Thanglong Industrial Park 1997 Nomura Haiphong Industrial Zone 1997

Institutional Reform 1999 2.00

Canon 2001 Total amount

5.83 100 suppliers 2008

30 thousand employees

41

1. We found the effects of Canon on the industrial cluster policy in the case of the electronics industry cluster in northern Vietnam. GDP of TLIP = 23%, 80 firms,Labor = 40,000 (2007)

2. We made it clear that ODA played a crucial role in succeeding industrial cluster policy.

41

Conclusion:

43

(1) Detroit in East Asia:

Thailand: Mitsubishi Motors as an Anchor Firm in the cluster of Eastern Sea Board Region:

420 ha and 10 years:the number of the newly employed is about 30 thousands.

44

Sequence 4: Loan contract agreement

Loan completion Loan executed executed

Water/Aqueduct Project 7/1982 4/1987 36.06 36.06

Leamchabang Port 9/1984 6/1993 31.7811/1986 11/1993 48.422/1990 9/1995 58.6810/1985 10/1992 25.769/1987 9/1992 19.89 184.53

Leamchabang Industrial Estate

10/1985 10/1992 25.76

9/1987 9/1992 19.89 45.65

Railway Projects Siracha/Leamchabang 9/1988 7/1996 9.2 Sattahip/Maptaphut 9/1988 1/1997 28.26 Khlong19/Kengkoi 2/1990 12/1999 72.98 110.44

Road Projects Chonburi/Pattaya 11/1988 3/1994 40.74 Bangkok/Chonburi 12/1990 4/1993 134.35 Outer Bangkok Ring 12/1990 4/1993 128.28 303.37

680.05 Mitsubishi Motors (Thailand)

Established in 1990

4545

4. The Asian Model:Flowchart Approach:

Practical

46

1. Segments: roads, port, airport, institutions

2. Flowchart Approach : the economies of sequence

3. Leadership: The government, An anchor

firm

Conclusion:

In other words,

•The segments = The investment environment•Sequence = Prioritization•Leader = Human resource

47

4848

Figure 2-1. Flowchart Approach: Sequence Prioritization: An example

Source: A. Kuchiki and J. Kabir

Industrial ZoneLocal gov. Central gov. Semi-gov. NPOs Private companies Local gov. Central gov. Semi-gov. NPOs Private companies

○ ○ 1 1

(1) Infrastructure: WaterLocal gov. Central gov. Semi-gov. NPOs Private companies

○ 2

Infrastructure: ElectricityLocal gov. Central gov. Semi-gov. NPOs Private companies

○ ○ 2 1

Infrastructure: CommunicationLocal gov. Central gov. Semi-gov. NPOs Private companies

○ 2

Infrastructure: TransportLocal gov. Central gov. Semi-gov. NPOs Private companies

○ 3

(2) InstitutionsLocal gov. Central gov. Semi-gov. NPOs Private companies

○ ○ 4 2

(3) Human resourcesLocal gov. Central gov. Semi-gov. NPOs Private companies

○ 2

(4) Living conditionsLocal gov. Central gov. Semi-gov. NPOs Private companies

○ 1Anchor firms

Find actors

Find actors

Find actors

Find actors

Find actors

Find actors

Find actors

Find actors

Priority of actors to bottlenecks

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

No

No

No

No

No

No

No

No

No

No

No

No

No

Return (after finding actors)

Return

Return

Return

Return

Return

Return

Return

Return

Return

Return

Return

Return Return

No

Return

No

Return

Table 1.Industrialization policies in East Asia

ProtectionManage- Capital policy

ment goods required/ notrequired

J apan 1945- Domestic Domestic Domestic Domestic Domestic Required(LCG) 60 ForeignKorea 1972- Domestic Domestic Domestic Foreign Foreign Required(LCG) 77China 1992- Domestic Domestic Foreign Foreign Foreign Required(Industrial Foreignpolicy)Taiwan 1960- Domestic Domestic Domestic Domestic Domestic Required (SME) 70 (EPZ) 1965- Foreign Foreign Foreign Foreign Foreign Not

70 RequiredChina 1984- Foreign Foreign Foreign Foreign Foreign Not(Economic Requireddepelopment zone)Malaysia 1986- Foreign Foreign Foreign Foreign Foreign Not(FTZ) Required

FTZ:Free trade zoneEPZ:Export processing zoneSME:Small- size and medium-size enterpriseLCG:Large enterpriseSource: Prepared by the author.

PartsPeriod Capital Technology

(3) Anchor firms

1. Firms with high Backward linkage (e.g. Toyota, Nissan) i. Automobile = more than 20,000 parts ii. Electronics (ink-jet printers)= 800 parts

2. Trading corporations (eg. Mitsubishi corporation) bring customers (tenants).

3. Companies in the neighboring counties = lower entry costs: South African firms or other firms

50

A sample:

Flowchart Players (candidates?)

Industrial zone Trading corporations

Infrastructure

Human　Resource

Living condition

JICA

JETRO

Trading corporations

Anchor firms Targeting (candidates?)1. Trading corporation

2. Toyota

3. Nissan

4. Local firms

Capacity

building

Candidates:

Iran: next target:Competitors: India, Indonesia, South Africa:Global competition

52

Conclusion:Conclusion:

The Asian Model:Flowchart approach:

(1)(1)Segment Building =Segment Building = the environment of investmentthe environment of investment

(2) The economies of sequence(2) The economies of sequence

(3) Leadership(3) Leadership

Appendix 1:Worksheets!!!

1. Ask ten professionals as you did and fill out “Worksheet 1”.

2. Compile “Worksheet 2” again as you did in FY2008.

3. Find the candidates of anchor firms.

Just do it!54

Candidates of respondents ：１． Local government２． Central government３． Research institute４． Research institute５． ODA organization: JICA, JETRO, UNDP, 　　　 　 ADB, World Bank６． Researchers of Universities７． Private companies including trading corporations８． NGOs, Others

Let’s apply it to our cases!55

56

Table 1. Questionnaires on industrial cluster policy: Dalat: Agri.

1 2 3 4 5 6 7 8 9 10Results Problems

1. Does industrial zones exist sufficiently?

O O O O O O O O O O 10　

Capacity building: Physical infrastructure

2. Does transport infrastructure exist sufficiently?

X X X X X X X X X X 0X

3. Does electricity infrastructure exist sufficiently?

X X X X X X X O O O 3X

4. Does communication infrastructure exist sufficiently?

O O O O O O O X O X 8　

5. Does port infrastructure exist sufficiently?

X X O O X X X X X X 2X

6. Do institutions exist sufficiently? X X X X X X X X X X 0XHuman resources 　 　 　 　 　 　 　 　 　 　 　 　6. Unskilled labor X X X X X X X X X X 0X7. Skilled labor X X O O O O O O O O 8　Living conditions 　 　 　 　 　 　 　 　 　 　 　 　8. Do hospitals exist sufficiently? O O X X O O X O O X 6　9. Do schools exist sufficiently? O O O O O O O O O O 10　10. Do entertainments exist sufficiently?

O O X X X X X O O O 5X

Source: A. Kuchiki and T. Gokan (interviews in Hanoi on Aug. 28-30, 2008)

57

Figure 1. Nortern Vietnam's FlowchartFlowchart

Prescritions

Roads → ① ． Highway 5 for Automobiles

↓Yes No② ． Highway to link Hanoi and soutern China③ ． Highway to link Noibai Airport and the center of Hanoi

↙Return

Electricity

→ Increase of power supply → Build-Operation-Transfer, Official Development Assistance

↓Yes No↙Return

Ports → Upgrade of Haiphong Port↓Yes No

↙Return

Institutions

→ Customs clearance → ① ． The simplification of paper procedures

↓Yes No② ． The simplification of exchange in container trucks at the border

↙Return

Unskilled labor

→ Employment of labor from rural area → The end of this flowchart

↓Yes NoNo

↙Return

Entertainments

→ Facilitation of entertainments → Private companies

↓Yes No↙Return

Thefts → Ethical education

Worksheet 2: Find players!

Flowchart Players (candidates?)

Industrial zone JICA, Trading corporations

Infrastructure

Human Resource

Living condition

JICA

JETRO, JICATrading corporations

Anchor firms Targeting (candidates?)

1. Mitsubishi corporation

2. Toyota

3. Vietnamese firms

4. Other Asian firms

Capacity

building

Work 3: Find the candidates of anchor firms!

Examples:1. Firms with high Backward linkage (eg. Toyota, Tata)

i. Automobile = more than 200,000 parts

ii. Electronics (ink-jet printers)= 800 parts

2. Trading corporations (eg. Mitsubishi corporation) bring customers (tenants).

3. Companies in the neighboring counties = lower entry costs: Vietnamese firms, Other Asian firms

59

Appendix 2Definition:

Economies of Sequence

The order of A: ｛ s1→s2→s3 ｝

Thank you very much for your attention!

References:Kuchiki, A . & M. Tsuji (2004) Industrial clusters in Asia, Palgrave Macmillan. Kuchiki, A & M. Tsuji (2008) Flowchart approach to industrial cluster policy, Palgrave Macmillan. Kuchiki, A & M. Tsuji (2010) From agglomeration to innovation, Palgrave Macmillan. Kuchiki A. and M. Tsuji eds. (2011) Industrial Clusters, Upgrading and Innovation in East Asia, Cheltenham: Edward Elgar.

62

KUCHIKI AkifumiKUCHIKI AkifumiNihonNihon UniversityUniversity

Production function of a cluster

The production cost: YA ， YB

Total cost of period i to implement sk: Ci （ sk ） （ k=1 ， 2 ， 3 ； i=1 ， 2 ， 3 ）

YB<YA