The Disintegration of Production

The Disintegration of Production

Firm Strategy and Industrial Development in China

Edited by Mariko Watanabe

In the past two decades, China has experienced rapid industrial and economic growth. This fascinating book explores the unique Chinese business strategy of vigorous market entry and low prices, which has been the key feature of this accelerated industrial growth.

Introduction: the “vigorous entry and low price” phenomenon – how Chinese industries have developed

Mariko Watanabe

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics, industrial organisation, institutional economics


More than 30 years have passed since China started its economic reform and open door policy, and it is now the factory of the world. Mobile phones made in China are presently in the hands of many African people; electric rickshaws and electric motorcycles with Chinese logos are operating in Bangladesh; in the United States and Japan, food and clothing made in China are purchased daily by consumers. With the world’s largest production capacities in several industries, China delivers inexpensive products throughout the world. This situation is the complete opposite of that 30 years ago when there were shortages of everything in China. What has enabled these drastic changes? Previous literature on the development processes of individual industries has shown that transfers of technology and management methods from abroad spurred the dynamic growth of industry in China. Because of this, some have argued that the experience of Chinese industry has followed a compressed process of industrialization, compared to the lengthier experience in developed economies elsewhere in the world, achieved by merely transferring technology into China. Therefore, the competitiveness and sustainability of Chinese industries are still inferior and are dependent on industries in developed economies. Nevertheless, Chinese firms have overwhelmed foreign brands, at least in terms of shares of the domestic market and in the array of products, such as color TVs, air conditioners, and other electronic goods. Despite this success in the domestic market, some still criticize local firms for their lack of capacity to develop new technology.