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Chinese competition: intra-industry and intra-firm adaptation

  • Benjamin Gampfer
  • Ingo Geishecker
Original Paper
  • 33 Downloads

Abstract

This paper quantifies how a small and open economy adapts and thereby shapes to what extent it is exposed to competition from China on the world market. Starting from granular firm-commodity-destination-level sales data for the universe of Danish manufacturing firms we construct counterfactual competition exposure, measured as sales weighted Chinese import shares in the home and all export markets while holding the industry composition, the product as well as the destination mix constant. Without adaptation the competition shock after China’s WTO accession would have been more than one and a half times of what has been readily observable. Besides broad industry-level structural change, intra-industry reallocations and intra-firm adjustments through product and destination switching are important adaptation channels. Furthermore, we find some evidence for dynamic quality differentiation as a relevant adaptation margin.

Keywords

Import competition Competition exposure China Structural change Product similarity 

JEL Classification

F1 L1 L6 

Notes

Acknowledgements

The authors acknowledge financial support from the Tuborg Foundation.

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Copyright information

© Kiel Institute 2018

Authors and Affiliations

  1. 1.Faculty of Business Administration and EconomicsEuropean University ViadrinaFrankfurt (Oder)Germany
  2. 2.Tuborg Research Centre for Globalisation and FirmsAarhus UniversityAarhusDenmark

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