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Chinese import competition, offshoring and servitization

Author

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  • Grace Gu
  • Samreen Malik
  • Dario Pozzoli
  • Vera Rocha

Abstract

We study how domestic firms adapt to increased import competition from China. Using a Danish employer‐employee matched dataset covering firms over the 1995–2007 period, we find that import competition significantly increases manufacturing firms' expansion of their business activities in the service industry (partial servitization); their probability of offshoring production activities abroad and of exiting the market. Import competition, however, does not induce firms to cease all of their involvement in manufacturing production by completely switching into service sector (complete servitization). These findings are confirmed using various robustness tests as well as an analogous analysis of a Portuguese employer‐employee matched dataset.

Suggested Citation

  • Grace Gu & Samreen Malik & Dario Pozzoli & Vera Rocha, 2022. "Chinese import competition, offshoring and servitization," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 901-928, April.
    • Handle: RePEc:bla:ecinqu:v:60:y:2022:i:2:p:901-928
    DOI: 10.1111/ecin.13055
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    Cited by:

    1. Zhang, Junnan & Sun, Xiaohua & Yuan, Fang & Liu, Xiaoling, 2023. "Which type of servitization promotes firm performance: Embedded or hybrid?," Economic Modelling, Elsevier, vol. 126(C).

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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