Sustaining Competitiveness: Moving Towards Upstream Manufacturing in Specialized Market Based Clusters in the Chinese Toy Industry
Western industrial cluster literature pays little attention to specialized markets (SMs) and the geographical agglomeration of distributors or sale agencies (SAs) This paper takes Linyin, Shandong, a famous commodity city in Northeastern China, as an example, to discuss the determinants that make SAs in SMs of the toy industry move towards upstream manufacturing. A structured questionnaire survey and subsequent interviews were carried out during 2011 and 2012 to collect data, and a Binary Logistic Regression Model was used to process the data. This paper looks from the perspective of global production networks theory, establishes an analytical framework that combines individual motivations of intra firm coordination, local inter firm relationships and dynamic cross regional level relationships. The findings indicate that the expansion of SAs towards manufacturing allows them to sustain competitiveness under changing circumstances. The local inter firm relationships within SM based clusters not only makes it easy to obtain material and human resources with lower manufacturing costs, but also facilitates the access to production knowledge and technologies for an expansion of production scale. Cross regional relationships with suppliers provide an informal channel for SAs to obtain skills, which is fundamental for an expansion into manufacturing. In addition, it is a preference for strengthening competitiveness rather than the simple pursuit of economic profit that encourages SAs to invest in manufacturing.