Intermediaries’ Imports and Export Product Quality: A Perspective of Supply Chain Network Correlation

ABSTRACT

This article investigates how intermediaries’ imported inputs affect nondirect import firms’ product quality. Based on WIOD input‒output tables and microlevel China customs trade data, the result shows that intermediaries can significantly improve nondirect import firms’ export quality mainly through imported quality rather than imported quantity. In addition, the promotion effect of intermediaries’ import quality is greater for nondirect import firms with a larger scale, higher export intensity and longer export year; the imported quality of ordinary intermediaries has a greater effect than that of professional intermediaries. Furthermore, the imported quality of intermediaries is also conducive to alleviating the negative effect of the quality directly imported by peer firms in the same industry. This study not only explores intermediaries’ supporting role in the supply chain but also puts forward some policy implications of export product quality upgrading for SMEs.

KEYWORDS:

• Intermediaries
• imported inputs
• nondirect import firms
• export product quality

JEL:

• D22
• D83
• F14

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. The website of the WIOD: https://www.rug.nl/ggdc/valuechain/wiod.

2. Source: http://app.soe.xmu.edu.cn/elib/db_detail/2/.

3. For example, Kobayashi (2018) finds that in the middle of 19th century, Chinese intermediaries in Singapore market were not only engaged in cotton textile industry among different countries but also involved in mediating trade disputes among local firms, contacting regional affairs and establishing multilateral ties with firms of different types and countries.

4. Source: http://app.soe.xmu.edu.cn/elib/db_detail/2/.

5. Specifically, the BEC codes of intermediate goods are 111 (primary food and beverage mainly used for industry), 121 (processed food and beverage mainly used for industry), 21 (primary industrial supplies), 22 (processed industrial supplies), 31 (primary fuels and lubricants), 322 (processed fuels and lubricants excluding motor spirit), 42 (parts and accessories of capital goods excluding transport equipment) and 53 (parts and accessories of transportation equipment).

Additional information

Funding

The work is supported by National Social Science Fund of China [No. 22ZDA060].