Specialized Markets in China
Chapter 6: Overseas Linkages of Specialized Markets
6. Overseas linkages of specialized markets Source: The author. Figure 6.1 A foreign resident office in Yiwu 6.1 INTRODUCTION In recent years, the specialized markets have rapidly begun to establish business linkages with overseas markets. On the one hand, specialized markets have attracted a number of foreigners to China for purchasing. On the other hand, a large number of merchants from Zhejiang and other locations have started up businesses in developing countries. Thus, a new type of globalized distribution system has been emerging in the developing world. 96 M2920 – DING 9781781006276 PRINT.indd 96 20/06/2012 13:15 Overseas linkages of specialized markets 97 The Global Value Chain (GVC) approach is a well-known approach for analyzing international trade. According to Schmitz (2006a, Section 4), the basic structure of the GVC is that “there are lead firms . . . which set and enforce the parameters, under which other firms in the chain operate.” Compared to the GVC, however, the emerging specialized market system has completely different features. First, the commodities in the specialized market system are mainly circulated to the low-end market in developing countries. In contrast, the ultimate destination of commodities in GVCs is the developed country market, in which the middle class forms the majority. Second, the main actors in the specialized market system are numerous SMEs, especially those people who have historically engaged in longdistance trade. Physical marketplaces have played a crucial role in organizing them. In contrast, GVCs are organized by the “lead firms,” which usually have strong organizational capabilities. Third,...
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