Abstract:China's equipment manufacturing enterprises are facing the double competition of "high-end return" and "low-end diversion", and exploring the path of late-development equipment manufacturing enterprises to participate in the transformation and upgrading of the global value chain will help to overcome the low-end lock-in effect. In the text by "what is it?" "Why?" and "What to do?" the main conclusions are: according to the difference of three indicators: knowledge coding degree, production complexity and low-end node development potential, the global value chain is divided into five types: market type, module type and relationship type; and the latecomer is most likely to be "captured" in the upgrading stage in the various stages of participation in the global value chain ". In view of the above conclusions, this paper puts forward two "escape" paths: the transformation to the value chain with high marginal benefit and high equilibrium relationship and the upgrading outside the chain.

Key words:latecomer equipment manufacturing enterprises, global value chain, transformation and upgrading, "capture" value chain

Abstract: Chinese equipment manufacturers are facing the dual competition of "high-end reflow" and "low-end diversion". Exploring lagging enterprises′ participation in the global value chain transformation and upgrading path will help overcome the low-end locking effect. Through the logic of "What?", "Why?", "How?" to dig deep into the path design opportunity. The results showed that: According to the differences of knowledge coding degree, production complexity and lagging enterprises development potential, global value chains are divided into market type, module type, relationship type and so on; From the knowledge coding index, the development potential index of lagging enterprises and the production complexity index to further judge that the main type of participation in the global value chain of Chinese lagging equipment manufacturing enterprises is capture type; Based on the actual situation of lagging enterprises participating in global value chains, our paper attempts to divide the process of enterprises participating in global value chains into four periods, the pre-association phase, the association phase, the upgrade phase, and the stable phase. The high-risk period when lagging equipment manufacturing enterprises are captured occurs in the upgrade phase because these enterprises at this stage cannot complete the transition to the high-end production node of global value chains are replaced by external homogeneous enterprises or "captured" by advanced enterprises at low-profit production nodes. 

In view of the above conclusions, our paper proposes two "escape" paths to the high marginal benefit, high equilibrium relationship value chain transformation and extra-chain upgrade. When lagging equipment manufacturing enterprises are "captured" by advanced partners at low value-added nodes in the upgrade stage, in addition to "brute force" upgrades, lagging enterprises also learn to be flexible and shift to a value chain with high marginal benefits and high decision-making power, for instance, from capture type to modular type, from capture type to relational type and from capture type to market type. Although the process of transformation and upgrading does not necessarily mean that lagging enterprises can achieve high-end growth and dominate the original production chain, it can help to lag to solve the situation of "sit and wait to die", and can find more development time and opportunities for a subsequent high-end upgrade. Otherwise, the captured enterprises have gone through the value chain upgrade stage but have not completed the high-end upgrade, in addition to continuing to maintain the original production chain, lagging enterprises can rely on their reserve knowledge, technology and human resources to expand other self-led value chains. In this way, the disadvantage of absolutely low value-added production is reversed into a situation where disadvantages and advantages coexist. Each "escape" path is supported by real cases, including Yutong Heavy Industries Co., Ltd., Triangle Group, Hisense Home Appliances and Foxconn. Each "escape" path is supported by real cases, including Yutong Heavy Industries Co., Ltd., Triangle Group, Hisense Appliances and Foxconn. The transformation and upgrading path designed in our paper correspond to these cases one by one, which further demonstrates the effectiveness of the research conclusions. Our study provides management enlightenment for China′s lagging equipment manufacturing enterprises and government.

Key words: lagging equipment manufacturing enterprise, global value chains, transformation and upgrading, "capture type" value chain

Authors: Hu Feng, Xi Xun, Yu Rongjian, Xiang Rong, Xie Jie, Zhang Yueyue

Author: School of Business Administration, Zhejiang Gongshang University

College of Economics, Zhejiang Gongshang University

Global Value Chain Research Center, Zhejiang Gongshang University

The full text has been published in Scientific Research Management, Issue 3, 2021.