Moving up in the global value chain in button manufacturing in China

Abstract

This study traces the transformation of Qiaotou city from a button distribution centre to a composite and advanced button manufacturing cluster accounting for 65% of world button production in 2006. It argues that button sales originated in entrepreneurial initiative that expanded through market-based armslength transactions as hundreds of stalls mushroomed in Qiaotou. The transformation of Qiaotou from the late 1990s into a composite cluster including designing, new material and product development took place when the local government took advantage of the rapid manufacturing growth to stimulate collaborative links between government, the firms and universities to support the appropriation of research synergies.

Keywords:

• buttons
• China
• clusters
• industrialization
• innovation

Notes

1. There are also differences between large Korean and Chinese firms, especially as the pressures on transformation are different and they have come at different times (Rowley and Bae 2004).

2. See Buckley (2004) for a lucid framework of Asian network firms.

3. Variants of these arguments related to transactions costs to explain the existence of firms was advanced by Coase (1937) and Williamson (1985), and the relevance of non-market modes of coordination by Richardson (1960, 1972) and North (1991).

4. The successful accounts of technological catch up in China do not mean that there are no examples a lack of movement up the technology ladder. Dekkers (2009) provided evidence of how the printing industry has lagged technologically with firms confined to imitation.

5. Growth calculated in nominal prices.