Market Platforms, Industrial Clusters and Small Business Dynamics

Market Platforms, Industrial Clusters and Small Business Dynamics

Specialized Markets in China

Ding Ke

Specialized markets are a unique product of China’s economic transition. They are marketplaces located in industrial clusters, specializing in the wholesale of local commodities and related goods. Ding Ke reveals that, despite their seemingly primitive form, specialized markets appeared in many of the modern industrial sectors and were paradoxically upgraded and expanded as these clusters developed. He argues that specialized markets have also formed solid linkages with marketplaces in various cities in China and in other developing economies. A powerful, emerging market-oriented distribution system has thus appeared. Based on thorough fieldwork covering ten years, and using the novel theory of the platform, this book clarifies the unique development logic of specialized markets.

Chapter 4: Local Government and Platform Governance in Yiwu

Ding Ke

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics, industrial economics, urban and regional studies, clusters


Source: Copyright © 2006, Huang Xiaochun. Figure 4.1 A campaign called “Establishing Credibility as an Exemplary Market” in Yiwu Market 4.1 INTRODUCTION Chapters 4, 5, 6 and 7 investigate the basic structure of the specialized markets by use of a case study of Yiwu China Commodity City (Yiwu Market). Through the interaction between local government, regional groups of merchants and countless small firms, Yiwu Market has grown into the largest specialized market in the world, and has become the most important innovator in the specialized market system. By focusing on this 52 M2920 – DING 9781781006276 PRINT.indd 52 20/06/2012 13:15 Local government and platform governance in Yiwu 53 market, it has been possible to clarify the evolutionary mechanism of the specialized markets in China. Chapter 4 first focuses on the role of local government in the development of Yiwu Market. As has been pointed out in Chapter 2, although existing two-sided market literature assumes an omnipotent platform manager, it is actually faced with various difficulties in the real world. The first difficulties are the barriers to trade, which are caused by various institutional and informational factors. The second difficulty concerns the physicality of a platform, which is caused primarily by realestate-related institutions and transaction costs. Appropriate platform governance is indispensable for overcoming these difficulties. Regarding this issue, previous studies have suggested that the local government is a key actor. The role of local government in deregulating the private sector, guaranteeing credibility and so on has been mentioned briefly (see Chapter 1)...

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