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 9: The Logic of Quantitative Expansion and Qualitative Upgrading in the Market Platform Mode Cluster

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: The author. Figure 9.1 Numerous local brands gathering in Zhaoshang City 9.1 INTRODUCTION Concerning East Asia’s industrial clusters, Sonobe and Otsuka (2004) assert that both the clusters in mainland China, which have specialized markets, and clusters in Japan and Taiwan, which do not have specialized markets, have shown a development process that moves from a “quantity expansion phase” to a “quality improvement phase.” During this process, 151 M2920 – DING 9781781006276 PRINT.indd 151 20/06/2012 13:15 152 Market platforms, industrial clusters and small business dynamics along with the appearance of leading companies, a large number of SMEs are either integrated into their supplier network, or eliminated through competition. The empirical data concerning Chinese clusters, however, did not necessarily support this viewpoint. Within the children’s wear cluster of Zhili, Zhejiang, which Sonobe and Otsuka consider has entered the quality improvement phase, the number of children’s wear firms increased from 5700 to 8000 during the period September 2006 to September 2008.1 The industrial upgrading of this cluster has been clearly accompanied by quantitative expansion. A similar phenomenon can be observed in various specialized-market-based clusters in China. In the author’s opinion, the reason why Sonobe and Otsuka’s study cannot exactly explain China’s experience is that it failed to recognize two fundamental differences between Japan, Taiwan and mainland China. The first difference is that the Japanese and Taiwanese clusters on which their study focused are in merchant mode. China’s specialized-market-based clusters treated in this study, however, are in market platform mode. The second difference...

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