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Going mobile in China: shifting value chains and upgrading in the mobile telecom sector

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  • Loren Brandt
  • Eric Thun

Abstract

This paper examines the question of how a shift in the end point of a global value chain alters the prospects for industrial upgrading in a developing economy through an analysis of the mobile telecom sector in China. Over the last decade, China has become the world's largest market for mobile phones, and domestic Chinese firms have been able to take advantage of both increasing modularity (to outsource components that they lacked the technology to produce) and their superior knowledge of low-end market segments to expand sales vis-a-vis foreign firms. But these advantages are temporary: high levels of modularity lead to intense competition and low-profits among domestic firms and foreign firms rapidly improve their market knowledge. The key to long-term success for domestic firms is investment in design capabilities, and a shift away from purely modular relationships, but the rapid rate of technical change in the industry complicates this process.

Suggested Citation

  • Loren Brandt & Eric Thun, 2011. "Going mobile in China: shifting value chains and upgrading in the mobile telecom sector," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 4(1/2/3), pages 148-180.
    • Handle: RePEc:ids:ijtlid:v:4:y:2011:i:1/2/3:p:148-180
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    Citations

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    Cited by:

    1. Brandt, Loren & Thun, Eric, 2016. "Constructing a Ladder for Growth: Policy, Markets, and Industrial Upgrading in China," World Development, Elsevier, vol. 80(C), pages 78-95.
    2. Ding, Ke & Hioki, Shiro, 2018. "The role of a technological platform in facilitating innovation in the global value chain : a case study of China's mobile phone industry," IDE Discussion Papers 692, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Yue Lin, 2018. "Post-crisis China impact on trade integration and manufacturing competitiveness between Argentina and Brazil," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 16(2), pages 147-170, April.
    4. Sun, Yutao & Grimes, Seamus, 2016. "China’s increasing participation in ICT’s global value chain: A firm level analysis," Telecommunications Policy, Elsevier, vol. 40(2), pages 210-224.
    5. Valentina De Marchi & Elisa Giuliani & Roberta Rabellotti, 2018. "Do Global Value Chains Offer Developing Countries Learning and Innovation Opportunities?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 389-407, July.
    6. Joonkoo Lee & Gary Gereffi, 2013. "The co-evolution of concentration in mobile phone global value chains and its impact on social upgrading in developing countries," Global Development Institute Working Paper Series ctg-2013-25, GDI, The University of Manchester.
    7. Lechowski, Grzegorz, 2018. "Beyond "dependent development" in a high-tech industry? The interplay between domestic institutions and transnational sectoral governance in the trajectories of emerging Polish IT firms," Discussion Papers, Research Group Globalization, Work, and Production SP III 2018-302, WZB Berlin Social Science Center.
    8. Chun Yang & David Yuen‐Tung Chan, 2021. "Market Expansion of Domestic Gaming Firms in Shenzhen, China: Dilemma of Globalisation and Regionalisation," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 112(3), pages 256-273, July.
    9. Pan, Wenrong & Xie, Tao & Wang, Zhuwang & Ma, Lisha, 2022. "Digital economy: An innovation driver for total factor productivity," Journal of Business Research, Elsevier, vol. 139(C), pages 303-311.
    10. De Marchi, Valentina & Giuliani, Elisa & Rabellotti, Roberta, 2015. "Local innovation and global value chains in developing countries," MERIT Working Papers 2015-022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Thun,Eric & Taglioni,Daria & Sturgeon,Timothy J. & Dallas,Mark Peter, 2022. "Massive Modularity : Understanding Industry Organization in the Digital Age — TheCase of Mobile Phone Handsets," Policy Research Working Paper Series 10164, The World Bank.
    12. Lechowski, Grzegorz & Krzywdzinski, Martin, 2022. "Emerging positions of German firms in the industrial internet of things: A global technological ecosystem perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 22(4), pages 666-683.
    13. Lechowski, Grzegorz, 2019. "Beyond "dependent development" in a high-tech industry? The interplay between domestic institutions and transnational sectoral governance in the trajectories of emerging Polish IT firms [," Discussion Papers, Research Group Globalization, Work, and Production SP III 2018-302r, WZB Berlin Social Science Center, revised 2019.
    14. Wen Chen, 2023. "The impact of digital economy development on innovation in renewable energy technologies," Economic Change and Restructuring, Springer, vol. 56(6), pages 4285-4308, December.
    15. Prud'homme, Dan & von Zedtwitz, Max, 2019. "Managing “forced” technology transfer in emerging markets: The case of China," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    16. John Humphrey & Ke Ding & Mai Fujita & Shiro Hioki & Koichiro Kimura, 2018. "Platforms, Innovation and Capability Development in the Chinese Domestic Market," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 408-423, July.

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