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Li, W.; Li, Q.; Chen, M.; Su, Y.; Zhu, J. Global Value Chains' Upgrading and China’s Manufacturing Industry. Encyclopedia. Available online: https://encyclopedia.pub/entry/44941 (accessed on 21 June 2024).
Li W, Li Q, Chen M, Su Y, Zhu J. Global Value Chains' Upgrading and China’s Manufacturing Industry. Encyclopedia. Available at: https://encyclopedia.pub/entry/44941. Accessed June 21, 2024.
Li, Wenqi, Qi Li, Ming Chen, Yutong Su, Jianhua Zhu. "Global Value Chains' Upgrading and China’s Manufacturing Industry" Encyclopedia, https://encyclopedia.pub/entry/44941 (accessed June 21, 2024).
Li, W., Li, Q., Chen, M., Su, Y., & Zhu, J. (2023, May 29). Global Value Chains' Upgrading and China’s Manufacturing Industry. In Encyclopedia. https://encyclopedia.pub/entry/44941
Li, Wenqi, et al. "Global Value Chains' Upgrading and China’s Manufacturing Industry." Encyclopedia. Web. 29 May, 2023.
Global Value Chains' Upgrading and China’s Manufacturing Industry
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The impact of the epidemic has caused temporary paralysis of the global supply chain, with a large number of enterprises ceasing production and work, resulting in bottlenecks in production and logistics, which has had a significant impact on the manufacturing industry.

global value chain digital economy manufacturing industry upgrading

1. Introduction

The impact of the epidemic has caused temporary paralysis of the global supply chain, with a large number of enterprises ceasing production and work, resulting in bottlenecks in production and logistics, which has had a significant impact on the manufacturing industry [1]. In the reconstruction of the global value chain, competition among countries has become more intense [2]. In order to avoid production capacity shortages caused by similar epidemics, companies have begun to strengthen localized production to reduce their reliance on external supplies. This has also brought new challenges to the reconstruction of the manufacturing industry supply chain. The digital economy has had a significant impact on the reconfiguration of the global value chain of China’s manufacturing industry [3]. With the advent of new digital technologies, China’s manufacturing industry has been able to move up the value chain and increase its competitiveness in the global market. Digital technologies such as robotics, the Internet of Things (IoT), and artificial intelligence (AI) have enabled China to enhance its manufacturing capabilities, reduce costs, and improve product quality. In addition, digital platforms have facilitated the integration of supply chains, allowing Chinese manufacturers to better coordinate with their global partners.
The use of robotics in China’s manufacturing industry has increased dramatically in recent years [4]. As a result, the country has become the world’s largest market for industrial robots, with a 36.6% market share in 2020. The use of robots has allowed Chinese manufacturers to increase efficiency, reduce labor costs, and improve product quality. In addition, the development of AI technologies has enabled Chinese manufacturers to improve their production processes by analyzing vast amounts of data, optimizing production lines, and predicting maintenance needs.
The rise of digital platforms has also facilitated the integration of supply chains and enabled Chinese manufacturers to better coordinate with their global partners [5]. Platforms such as Alibaba, JD.com, and Pinduoduo have become important channels for Chinese manufacturers to sell their products to consumers around the world. These platforms have also enabled Chinese manufacturers to access global markets more easily, thereby expanding their customer base and increasing their competitiveness [6].
Moreover, the digital economy has facilitated the growth of new business models in China’s manufacturing industry [7]. For example, the “smart factory” model has emerged as a key strategy for Chinese manufacturers to increase efficiency and reduce costs. Smart factories leverage advanced digital technologies to optimize production processes, reduce downtime, and improve quality control. In addition, digital technologies have enabled Chinese manufacturers to provide more customized products and services to their customers, thereby increasing customer satisfaction and loyalty.
Overall, the impact of the digital economy on the reconfiguration of the global value chain of China’s manufacturing industry has been significant. Chinese manufacturers have been able to move up the value chain by leveraging digital technologies such as robotics, IoT, and AI. The integration of supply chains through digital platforms has also enabled Chinese manufacturers to expand their global reach and increase their competitiveness. Finally, the emergence of new business models, such as smart factories, has enabled Chinese manufacturers to improve their efficiency, reduce costs, and provide more customized products and services to their customers. As the digital economy continues to evolve, it is likely that China’s manufacturing industry will continue to play an increasingly important role in the global value chain.
The global market size of smart factories is gradually expanding. According to a report released by Market and Markets, the compound annual growth rate of the global smart factory market size from 2021 to 2025 will reach 11% (as shown in Figure 1). The key factors driving the market growth include the financial policy to maintain the normal operation of manufacturing facilities during the COVID-19 epidemic, the optimization of resources, and the reduction of production and operation costs, which have increased the demand for industrial robots in the market growth and the demand for digital technology in the manufacturing environment. Smart factories are the future development trend of the manufacturing industry and an optimized path to achieve industrial upgrading. According to a research report from the China Industrial Research Institute, the market size of China’s smart factories in 2021 was 138.4 billion yuan, and the compound growth rate in the coming years will exceed 10%. It is expected that this data will increase to 207.6 billion US dollars by 2025.
Figure 1. Scale of China’s smart factory market from 2021 to 2025 (100 million US dollars).

2. The Impact of Global Value Chains on Manufacturing Upgrading

Studies on global value chains in manufacturing upgrading have mainly focused on the knowledge spillover effect [8], technological innovation effect [9], and foreign investment spillover effect [10]. The knowledge spillover effect can promote the upgrading of the manufacturing industry. The diffusion of knowledge among enterprises in the industrial chain is beneficial for promoting the upgrading of the manufacturing industry [11]. The technological innovation effect is an important path for the manufacturing industry to achieve industrial upgrading and move toward the high end of the global value chain [12]. The improvement of technological efficiency and total factor productivity can improve the relatively unfavorable position of China’s manufacturing industry in the global value chain. The manufacturing industry of developing countries can obtain technology spillover from developed countries by embedding themselves in the global value chain. Under the global value chain, the technological level of China’s manufacturing industry has been improved, but it still plays a “follower” role in some high-end manufacturing industries. The division of labor in the global value chain has a mechanism that promotes and suppresses the upgrading of the manufacturing industry in developing countries. The foreign investment spillover effect of the global value chain promotes the upgrading of the manufacturing industry [13]. Foreign direct investment promotes the upgrading of the value chain in the host country, and China’s participation in the global value chain promotes the improvement of its independent innovation capability. Embedding itself in the global value chain can promote the transformation and upgrading of China’s manufacturing industry.

3. The Impact of Digital Economy on Industrial Upgrading

Studies on the impact of the digital economy on industrial upgrading have mainly focused on theoretical aspects such as the high-quality development of industries, industrial chains, technological levels, and industrial formats. The digital economy provides new ideas for the high-quality development of industries, and implementing policies to promote digital transformation in industries has strategic significance and will promote industrial upgrading [14]. The industrial chain will be restructured and gradually achieve digital transformation [15]. In order to leverage the driving role of the digital economy in the upgrading of manufacturing, the integration and sharing of data in the industrial chain should be strengthened, and attention should be paid to the construction of intelligent manufacturing ecosystems [16]. The improvement of digital technology is the foundation of industrial development, and the popularization of digital infrastructure will improve the efficiency of resource allocation. The digital economy indirectly promotes industrial upgrading through technological innovation and human capital [17]. The digital economy is reshaping the industrial form and plays an important role in the formation of new industries and formats [18]. By solving the “pain points” of upgrading China’s manufacturing industry, the digital economy helps Chinese manufacturing move toward the high end of the global value chain [19].

4. The Impact of Digital Economy on Industrial Upgrading under Global Value Chain

Scholars’ research on the impact of the digital economy on industrial upgrading in the global value chain is mainly conducted from the perspectives of global value chain division of labor, value chain upgrading, corporate social responsibility, and manufacturing service. The digital economy has significantly changed the spatial layout and governance model of the global value chain, making it exhibit new trends such as digitization, disintermediation, service-orientation, and customization [20]. The digital economy has elevated the status of the global value chain division of labor and has the most significant impact on low- to medium-technology manufacturing and information and communication services [21]. The deep integration of digital technology and manufacturing has become a new engine for the global value chain to climb to the high end, and investment in digitization has improved the global value chain division of labor of enterprises. China’s manufacturing industry is faced with development dilemmas such as being captured by low-end industries and being blocked by multiple barriers to upgrade, and digitization will reconstruct the labor division and value system of the global manufacturing industry [22].
Previous research has laid a solid theoretical foundation for this topic, but there are still some limitations and room for further expansion. Firstly, previous studies have focused on the development of ideas, strategies, technologies, and industrial forms that drive industrial upgrading through the digital economy but lack a more comprehensive measurement of the global value chain. Secondly, previous research has mostly analyzed the impact of the global value chain on manufacturing upgrading or the impact of the digital economy on manufacturing but lacks relevant studies that simultaneously consider the relationships between the global value chain, the digital economy, and manufacturing upgrading.

References

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  17. Ding, C.; Liu, C.; Zheng, C.; Li, F. Digital Economy, Technological Innovation and High-Quality Economic Development: Based on Spatial Effect and Mediation Effect. Sustainability 2021, 14, 216.
  18. Appolloni, A.; Jabbour, C.J.C.; D’Adamo, I.; Gastaldi, M.; Settembre-Blundo, D. Green recovery in the mature manufacturing industry: The role of the green-circular premium and sustainability certification in innovative efforts. Ecol. Econ. 2021, 193, 107311.
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