Chinese import competition, offshoring and servitization

Abstract

This paper examines whether Chinese import competition increases the propensity for firms to offshore production or to cease any involvement in production by switching completely and permanently out of the manufacturing sector (servitization). Using a Danish employer-employee matched dataset covering a large sample of manufacturing firms over the 1995-2012 period, we find that import competition from China significantly increases offshoring but does not induce servitization. These findings are confirmed using various robustness tests as well as an analogous analysis of a Portuguese employer-employee matched dataset.

Configurations for emerging market firms to achieve a high-level servitization strategy: evidence from Chinese manufacturing firms

“…, 2020). Competition arising from homogenous products seems to be the most basic and important driver of servitization (Gu et al ., 2022; Zhao et al ., 2022); for example, Gu et al. (2022) find that highly productive firms have a greater likelihood of servitization in response to import competition.…”

“…As a user-oriented strategy, servitization can help manufacturing firms compete with competitors by meeting the heterogeneous needs of users (Gu et al ., 2022). Zhao et al.…”

“…Specifically, marketization level and corporate equity are the most powerful institutions in the context of China and other emerging markets (Sun et al, 2016;Pan et al, 2020). Competition arising from homogenous products seems to be the most basic and important driver of servitization (Gu et al, 2022;Zhao et al, 2022); for example, Gu et al (2022) find that highly productive firms have a greater likelihood of servitization in response to import competition. In addition, the resources and capabilities related to servitization guarantee the implementation of a high level of servitization (Benedettini et al, 2015;Kanninen et al, 2017;Valtakoski and Witell, 2018).…”

“…2.2.4 Industry competition degree and servitization level. As a user-oriented strategy, servitization can help manufacturing firms compete with competitors by meeting the heterogeneous needs of users (Gu et al, 2022). Zhao et al (2022) and scholars suggested that firms focus on a high level of servitization with high heterogeneity and tacit knowledge .…”