Chinese import competition, offshoring and servitization

Grace Gu, Samreen Malik, Dario Pozzoli and Vera Rocha

Economic Inquiry, 2022, vol. 60, issue 2, 901-928

Abstract: We study how domestic firms adapt to increased import competition from China. Using a Danish employer‐employee matched dataset covering firms over the 1995–2007 period, we find that import competition significantly increases manufacturing firms' expansion of their business activities in the service industry (partial servitization); their probability of offshoring production activities abroad and of exiting the market. Import competition, however, does not induce firms to cease all of their involvement in manufacturing production by completely switching into service sector (complete servitization). These findings are confirmed using various robustness tests as well as an analogous analysis of a Portuguese employer‐employee matched dataset.

Date: 2022
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https://doi.org/10.1111/ecin.13055

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Working Paper: Chinese Import Competition, Offshoring and Servitization (2021)
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