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Study of China’s International Specialization Status in Advanced Technology Industry: A Case Study of Zhejiang Pinghu Opto-mechatronics Industry Cluster

Author(s)

Huang Xianhai, Yang Gaoju, Lu Jing


Abstract

Using the opto-mechatronics industry cluster of Pinghu, China, as a case study, this paper analyzes the international specialization status of China’s advanced-technology industry. Our research indicates that Pinghu’s industry cluster follows an exogenous industry cluster development model, which is typical of China’s advanced technology industries. In this model, government-guided foreign investment comes to a region first and generates learning spillovers for local enterprises, enabling the government to create a public platform for technology innovation. Foreign-owned and local private companies then work together to promote the further development of industry clusters. True to this model, the initial driving force behind the opto-mechatronics industry was the Chinese government, with foreign investment as its engine; then followed the public technology platform and supporting industries. Our study, based on interviews with industry personnel, also indicates that the performance of Pinghu’s opto-mechatronics industry exceeds the national average and that Pinghu is becoming more like an endogenous cluster over time—more market-oriented and increasingly reliant on domestic factors. However, its average value-added ratio was relatively low; imported intermediate inputs still constitute a large share of the value of manufactured output. Thus, although Pinghu’s opto-mechatronics industry enjoys a leading position in China, it remains largely concentrated on processing and assembly, which is at the low-skill-intensive end of the production chain.