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Production Networks in Asia : A Case Study from the Hard Disk Drive Industry

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  • Daisuke Hiratsuka

    (Asian Development Bank Institute (ADBI))

Abstract

Production networks have been extensively developed in East Asia. Previous studies on production networks used international trade data or input–output tables, but such aggregate data cannot explain how the networks actually operate. With the aim of understanding the features and characteristics of East Asian production networks, this paper examines the procurement system of a HDD assembler operating in Thailand. This micro-level case study found that this particular production network consists mostly of arm’s-length suppliers, who are independent and on an equal footing with the assembler. These arm’s-length suppliers are mostly located in the assembling country, but some are located in neighboring countries. This proximity is necessary to establish good relationships between customer and suppliers and allows problems to be solved as soon as they occur. The arm’s-length suppliers engaged in each country’s leading industries, such as the electronics industry in Malaysia and Singapore and the automobile industry in Thailand, have extended their business to supply the HDD industry. These suppliers have formed an industrial cluster in each country within a two- or three-hour drive area. Each cluster that spans different countries is linked by a well-developed logistic network that employs the just-in-time production method that prevails in East Asia. On a regional level, these separate clusters tend to form international production networks that connect to each other across neighboring countries within a distance that provides a quick response time for problem solving. This study also found that American HDD assemblers outsourced indigenous suppliers in Malaysia and Singapore because American suppliers did not follow the assemblers’ move to the region. However, since Japanese suppliers did follow the Japanese HDD assemblers to the Philippines and Thailand, indigenous suppliers were not outsourced.

Suggested Citation

  • Daisuke Hiratsuka, 2011. "Production Networks in Asia : A Case Study from the Hard Disk Drive Industry," Microeconomics Working Papers 23235, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:23235
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    References listed on IDEAS

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    1. Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2005. "Vertical Production Networks in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 664-678, November.
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    11. Daisuke Hiratsuka, 2011. "Production Networks in Asia : A Case Study from the Hard Disk Drive Industry," Microeconomics Working Papers 23235, East Asian Bureau of Economic Research.
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    Cited by:

    1. Aekapol Chongvilaivan, 2012. "Thailand's 2011 flooding: Its impact on direct exports and global supply chains," Working Papers 11312, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    2. Richard E. Baldwin, 2011. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocks on the Path to Global Free Trade," Chapters,in: International Handbook on the Economics of Integration, Volume I, chapter 2 Edward Elgar Publishing.
    3. Richard E. Baldwin, 2008. "Managing The Noodle Bowl: The Fragility Of East Asian Regionalism," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(03), pages 449-478.
    4. Ferrantino, Michael J., 2012. "Using supply chain analysis to examine the costs of non-tariff measures (NTMs) and the benefits of trade facilitation," WTO Staff Working Papers ERSD-2012-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    5. Willem THORBECKE, 2016. "Understanding the Flow of Electronic Parts and Components in East Asia," Discussion papers 16072, Research Institute of Economy, Trade and Industry (RIETI).
    6. Michael Ferrantino & Gabriela Schmidt, 2018. "Using Gross Trade Data to Map Archetypal GVCs," Working Papers id:12389, eSocialSciences.
    7. Tosapol Apaitan & Nasha Ananchotikul & Piti Disyatat, 2017. "Structural Transformation in Thailand: A Perspective Through Product Innovation," PIER Discussion Papers 72, Puey Ungphakorn Institute for Economic Research, revised Oct 2017.
    8. Daisuke Hiratsuka, 2011. "Production Networks in Asia : A Case Study from the Hard Disk Drive Industry," Microeconomics Working Papers 23235, East Asian Bureau of Economic Research.
    9. Kornkarun Cheewatrakoolpong & Chayodom Sabhasri & Nath Bunditwattanawong, 2013. "Impact of the ASEAN Economic Community on ASEAN Production Networks," Trade Working Papers 23393, East Asian Bureau of Economic Research.
    10. Richard E. Baldwin, 2006. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade," The World Economy, Wiley Blackwell, vol. 29(11), pages 1451-1518, November.
    11. Thorbecke, Willem, 2017. "How Would a Slowdown in the People’s Republic of China Affect its Trading Partners?," ADBI Working Papers 634, Asian Development Bank Institute.
    12. repec:bla:apacel:v:30:y:2016:i:2:p:57-71 is not listed on IDEAS
    13. Hiratsuka, Daisuke, 2011. "Production networks in the Asia-Pacific region : facts and policy implications," IDE Discussion Papers 315, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    14. Soledad Zignago, 2010. "Determinantes del comercio internacional en tiempos de crisis," Working Papers 1016, BBVA Bank, Economic Research Department.
    15. Thorbecke, Willem & Salike, Nimesh, 2011. "Understanding Foreign Direct Investment in East Asia," ADBI Working Papers 290, Asian Development Bank Institute.
    16. Ching-Ching Liu & Yue-Hwa Yu & Iddo K. Wernick & Ching-Yuan Chang, 2015. "Using the Electronic Industry Code of Conduct to Evaluate Green Supply Chain Management: An Empirical Study of Taiwan’s Computer Industry," Sustainability, MDPI, Open Access Journal, vol. 7(3), pages 1-17, March.
    17. Haddad, Mona, 2007. "Trade integration in East Asia : the Role of China and production networks," Policy Research Working Paper Series 4160, The World Bank.

    More about this item

    Keywords

    Production Networks; Asia; Hard disk drive industry.;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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