Growth Path of Industrial Clusters Embedded in Global Value Chains From the Perspective of Knowledge Transfer

Introduction

Multinational companies take advantage of the cost of developing countries to transfer industries to meet the needs of international competition in the process of globalization. In the early stage of embedding in the global value chain, local industrial clusters, limited by their technical level and international market environment, are often engaged in the simple product assembly or produced according to the map transferred by multinational companies. After the completion of product manufacturing, the outsourcing mode of unified sales by multinational companies affixed their brand trademarks usually becomes “label production” or “agent production”, which in the OEA or OEM phase of the upgrade path. At this stage, the local industrial clusters are embedded at the lowest end of the global value chain. The embedding process is entirely dominated by multinational companies, with greater embedding flexibility. Multinational companies outsource the processing links at the lowest end of the whole industrial chain to relevant enterprises when they seek to build factories. They value the advantages of industrial clusters in these regions in terms of labor price, relatively low technical requirements, and strong substitutability of outsourcing objects. With the intensification of competition and the growth of local industrial clusters, multinational companies gradually transfer part of their R&D activity in emerging markets, which accelerate the knowledge transfer gradually increases. Therefore, local industrial clusters should actively seek to acquire knowledge transfer from multinational companies and slowly accumulate their relevant leadership for the future, which is the purpose and premise, while embedded in the global value chain. The knowledge and technical strength of the domain lay a foundation, but also can reduce the substitution flexibility, enhance their bargaining ability in the global production chain, and improve their competitive advantage in the global value chain. This provides the best opportunity for local industrial clusters to acquire advanced technology, achieve knowledge accumulation, and promote industrial upgrading based on embedding in the global value chain.