Value Chain Creation and Reorganization: The Growth Path of China’s Mobile Phone Handset Industry

Abstract

The rise of the East Asian electronics industry has attracted a great deal of research interest (Borrus et al. 2000; Ernst and Guerrieri 1998; Ernst and Kim 2002; Sturgeon 2002; Sturgeon and Lester 2004; Sturgeon and Lee 2005; Yeung et al. 2006; Vind and Fold 2007). These studies have highlighted the key roles that lead firms from developed countries—global buyers and “flagship” transnational corporations (TNCs)—have played in fostering the export-led growth in developing East Asia. In their efforts to reduce costs and tap new markets, lead firms place orders, establish affiliates, and contract portions of production to East Asian manufacturers. In some cases, lead firms have also outsourced the product design tasks to local firms in East Asia. In the process, extensive cross-border production networks, or global value chains (GVCs) have come into being, with local firms in developing countries generally fulfilling limited, specialized, but gradually expanding roles. One of the central concerns of the existing literature is how these local firms can gain more autonomy and become involved in higher value-added activities in GVCs.