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Industrial Upgrading and Downgrading of Export-Oriented Furniture Firms in the Market Reorientation Towards China’s Domestic Market

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Relocation of Economic Activity

Abstract

In the face of shrinking demands from Western advanced markets after the 2008 global financial crisis, export-oriented supplier firms in China have engaged in the transition from exporting products to Western customers to selling in China’s domestic market. However, the effects of the market reorientation, especially the subsequent industrial upgrading trajectories have been understudied. Drawing upon the perspective of global production networks (GPNs), this chapter attempts to explore the industrial upgrading trajectories of export-oriented firms in their market reorientation from exports to domestic sales. Taking the export-oriented furniture industry in the Pearl River Delta (PRD), China as the case, this chapter argues that integration into domestic market-oriented production networks has stimulated industrial upgrading, as well as downgrading of furniture firms. Some competitive furniture firms achieved functional upgrading when they established brands for the strategic coupling with domestic chain retailers, while some showed passive attempts at industrial upgrading or even experienced downgrading. The empirical study demonstrates the mix value capture trajectories combining industrial upgrading and downgrading of export-oriented industries in the process of market reorientation. It could enrich the literature by incorporating market dynamics into the studies of industrial upgrading or downgrading. It aims to explore the implication of the rise of emerging markets (e.g. China) for the industrial upgrading of export-oriented industries in developing countries in the post-crisis global economy.

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Notes

  1. 1.

    The average rate refers to the growth rate of furniture sales outputs of wholesalers and retailers that above designed size. According to the National Bureau of Statistics of China, firms above designed size refer to the firms with the sales outputs of over RMB 20 million.

  2. 2.

    According to the standard of small- and medium-sized enterprises designated by the Ministry of Industry and Information Technology of China, the employment of large-scale enterprises in the industry is more than 1000 and business incomes of these enterprises are more than RMB 400 million; the employment of medium-scale enterprises is more than 300 and business incomes of these enterprises are less than RMB 20 million. The employment of small-scale enterprises is less than 20, and business incomes of these enterprises are more than RMB 3 million.

  3. 3.

    The name of the company is anonymous as requested by the interviewee.

  4. 4.

    The name of the company is anonymous as requested by interviewee.

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Acknowledgements

Financial supports from the National Natural Science Foundation of China (41571119), Hong Kong Baptist University Faculty Research Grant (FRG1/15-16/053, FRG1/16-17/035, FRG 1/17-18/013 and FRG2/14-15/055) are gratefully acknowledged.

Author information

Authors and Affiliations

  1. School of Geography and Planning, Sun Yat-sen University, Guangzhou, China

    Tianlan Fu

  2. Department of Geography, Hong Kong Baptist University, Kowloon Tong, Hong Kong

    Chun Yang

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  1. Tianlan Fu
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  2. Chun Yang
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Correspondence to Chun Yang .

Editor information

Editors and Affiliations

  1. Keele Management School, Keele University, Keele, UK

    Paweł Capik

  2. National Institute for Spatial Policy and Housing, Kraków, Poland

    Magdalena Dej

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Fu, T., Yang, C. (2019). Industrial Upgrading and Downgrading of Export-Oriented Furniture Firms in the Market Reorientation Towards China’s Domestic Market. In: Capik, P., Dej, M. (eds) Relocation of Economic Activity. Springer, Cham. https://doi.org/10.1007/978-3-319-92282-9_4

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  • DOI: https://doi.org/10.1007/978-3-319-92282-9_4

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-92281-2

  • Online ISBN: 978-3-319-92282-9

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