? ? ? ? Are Vietnam and other Southeast Asian countries capable of replacing China as the new “factory of the world”? This is one of the focus topics of overseas public opinion in the first half of this year. “Hard to replace” has become the consensus of the industry.

? ? ? ? Cross-border industrial chain, as a production relationship formed by economic activities in the upstream and downstream industries and between regions and countries under the international system of large division of labor, has been evolving and changing since the first Industrial Revolution. The spread of COVID-19 and the increasingly complex international situation have accelerated the overall process of a new round of cross-border industrial chain transfer.

? ? ? ? The Research report on the Change and New Comparative Advantage of China’s cross-border Industrial Chain in the Era of Digital Trade released by AliResearch Cross-border E-commerce Research Center at the 2022 China International Trade in Services Fair shows that multi-directional migration, disturbance of non-economic factors and differentiated transfer have become the characteristics of a new round of global cross-border industrial chain change. In this context, although Vietnam’s industrial chain and China’s cross-border industrial chain coexist in competitive and complementary relations, it is still difficult to replace China’s important position in the global value chain. In addition, in the era of digital trade, China’s cross-border industrial chain is ushering in an important period of opportunity for the establishment of new comparative advantages.

? ? ? ? Asean countries: Industrial development presents structural adjustment

? ? ? ? According to the characteristics of the new round of cross-border industrial chain changes, firstly, the direction of cross-border industrial chain transfer changes from unidirectional to multi-directional. On the one hand, labor-intensive industries such as clothing, shoes and hats are turning to Southeast Asian countries; On the other hand, there has been “nearshore migration” and the return of some high-end manufacturing industries to developed countries. Secondly, there is a passive transition component caused by non-economic factors. The value supply chain may weaken or even deviate from the efficiency principle of traditional industrial transfer. The phenomenon of “friend-shore outsourcing” and “nearshore outsourcing” is also emerging. Finally, the industrial chain has undergone a transformation of upstream and downstream differentiation, changing the traditional full-link transition paradigm, and increasing the degree of industry segmentation and production link refinement.

? ? ? ? Since its establishment in 1999, Alibaba International has covered 41 industries and conducted cross-border business for 26 million merchants in more than 200 countries and regions. By analyzing the export situation of upstream and downstream products in key industries such as apparel and consumer electronics on Ali International Station from 2019 to 2022, the report found that the export of upstream and downstream products of apparel and consumer electronics from Ali International Station to Southeast Asian countries had been significantly differentiated in several periods. For example, from the second quarter of 2020 to the first quarter of 2021, intermediate exports of apparel to Southeast Asia outpaced finished products, and a similar situation has already occurred for consumer electronics in 2019.

? ? ? ? Ali, vice President of the institute, ali cross-border electricity, director of the center for OuYangCheng believe that Chinese enterprises in international standing platform for clothing, consumer electronics and downstream products are exported to countries of south-east Asia’s growth differentiation, to a certain extent, reflects the local national industry structural adjustment, the intermediates and raw materials is increasingly become an important product imports from China. Combined with the general trade data of China Customs, China exported $49.12 billion of textiles to the 10 ASEAN countries in 2021, with a year-on-year growth of 24.9%, far exceeding the 4% year-on-year growth rate of the United States. Among them, textile fabrics, yarn as a representative of clothing intermediate goods and raw materials accounted for more than 80%.

? ? ? ? The report also showed that from 2017 to 2021, the average growth rate of international station exports to major countries remained high. Among them, the average growth rate of exports to the United States and South Korea exceeds the overall growth level of the platform. Developed countries and regions such as Europe and the United States are still the main markets for China’s cross-border e-commerce exports. However, a longitudinal comparison of the export growth rate of international stations to countries in recent years shows that ASEAN countries have become the most eye-catching high-growth market of international stations in recent years. In 2021, the export growth rate of international stations to Malaysia, India and the Philippines increased by 42%, 32% and 30% respectively.

? ? ? ? China: Hard to replace in global value chains

? ? ? ? According to the research results released by the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, 53% of Vietnam’s industries compete with China’s domestic industries, such as the transfer of general production places, and 42% form complementary relations with China’s domestic cross-border value chain trade. However, from the perspective of the full caliber of Chinese industries, China still has overwhelming industrial advantages over Vietnam.

? ? ? ? “The survey results show that the current Chinese garment industry has more than 70% of the global raw material origin advantage, has the international leading spinning, weaving, printing and dyeing independent technology and equipment advantage, and based on the complete link system of flexible supply and small order rapid return production capacity.” Mr Ouyang said the combination of “one-hour parts and components” capabilities available in the consumer electronics industry, among other things, made it difficult for South-East Asian countries such as Vietnam to displace China as an important player in global value chains.

? ? ? ? With the help of customs statistics, cross-border e-commerce exports from international stations are compared with the same type of products exported from general trade, revealing more information. From the first quarter of 2019 to the second quarter of 2022, the average growth rate of garment raw material export in general customs trade (42.2%) was higher than that of finished garment export (10.4%), and the average growth rate difference between the two exports was 31.8%, showing a trend of divergence.

? ? ? ? During the same period, the average growth rate of garment raw material export at international station (45.2%) was close to that of general trade export of Customs, but the growth rate of garment finished products export (22.8%) was significantly faster than that of general trade export of customs, and the difference between the two growth rates (22.4%) was smaller than that of general trade export of customs data. The contrast in the consumer electronics industry is even more striking.

? ? ? ? It can be seen that for apparel and consumer electronics industries, the degree of industrial chain differentiation through cross-border e-commerce online exports is weaker than that of general trade where offline exports are the main form of industrial differentiation. In addition, the report found that the cross-border e-commerce model represented by international stations can help merchants to mitigate the impact caused by rising costs and prices of raw materials and labor to a certain extent.

? ? ? ? “From the practice, represented by ali international standing of cross-border electronic commercial platform with more complete new infrastructure business infrastructure, service system, with the whole process of cross-border number precipitated the cross-border trade market insight analysis tools, set up trade market main body credit evaluation system, etc., will help improve China’s foreign trade enterprise digital ability, enhance the sea, To build a new comparative advantage in cross-border trade in the digital age.” According to Ouyang Cheng, the transformation of global trade digitalization provides soil and opportunities for the establishment of new comparative advantages of China’s cross-border industrial chain. The pioneering practices and capacity reserves of China’s cross-border e-commerce platforms will provide important support for more Chinese industries to participate in international competition and cooperation and accelerate globalization, and contribute positive forces to China’s new development pattern and high-quality development.

Article source：China Business News Network