Servitization of manufacturing and China's power status upgrading of global value network

Guangcan Huang, Lili Ma, Ziguang Xietian and Xinxin Huang

Structural Change and Economic Dynamics, 2024, vol. 68, issue C, 313-328

Abstract: In the context of the great changes of the global value network pattern, the servitization of manufacturing has become an important strategy for the transformation and upgrading of multinational enterprises. China's manufacturing industry has been in the core area of the global value network, creating a lot of export value, but the quality of development needs to be improved. Especially, the servitization level and structure of China's manufacturing have a great space for development. The servitization level affects the international competitiveness of manufacturing enterprises, and their power status in the global value network depends on their international competitiveness to a large extent. With value-added trade data, inter-country input-output tables and China's industrial economic data, there is a simultaneous equations model in this paper to systematically study the impact of servitization of manufacturing on the upgrading of power status in the global value network. The empirical results show that the servitization level of the manufacturing significantly improves the competitiveness of the export value-added, and then affects its core position in the global network. This is a transmission mechanism with a complete mediating effect. Heterogeneity studies show that both commercial and non-commercial servitization have positive impacts on the status of China's manufacturing in the global value network, but the difference is significant. The distance between service and production, and the development stage of service dominance are the main reasons for the difference. China's manufacturing enterprises should optimize the allocation structure of production factors and strengthen their own service-oriented transformation to improve the core competitiveness, especially in the forms of digital servitization and financial servitization. And the government should innovate public service supply to carry out economic governance.

Keywords: Servitization of manufacturing; Global value network; Power status; International competitiveness; Simultaneous equations model (search for similar items in EconPapers)
JEL-codes: F41 L6 L8 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:68:y:2024:i:c:p:313-328

DOI: 10.1016/j.strueco.2023.11.005

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