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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. 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).
    2. De Marchi, Valentina & Giuliani, Elisa & Rabellotti, Roberta, 2015. "Local innovation and global value chains in developing countries," MERIT Working Papers 022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. repec:pal:eurjdr:v:30:y:2018:i:3:d:10.1057_s41287-018-0145-4 is not listed on IDEAS
    4. repec:taf:jocebs:v:16:y:2018:i:2:p:147-170 is not listed on IDEAS
    5. 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.
    6. 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.
    7. repec:pal:eurjdr:v:30:y:2018:i:3:d:10.1057_s41287-017-0126-z is not listed on IDEAS
    8. 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.

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