Import competition from and offshoring to China: A curse or blessing for firms?

By Giordiano Mion, Linke Zhu. 2013

251 citations recorded by the source corpus.

We use Belgian manufacturing firm-level data over the period 1996–2007 to analyze the impact of imports from different origins on firm employment growth, exit, and skill upgrading. For this purpose, we use both industry-level and firm-level imports by country of origin and further distinguish between firm-level offshoring of final versus intermediate goods. Results indicate that China is different from both other low-wage and OECD countries. Industry-level import competition from China reduces firm employment growth and induce skill upgrading in low-tech manufacturing industries. On the other hand, import competition has no effect on firm survival, while offshoring of finished goods to China actually increases firms' probability of survival. In terms of skill upgrading, the effect of Chinese imports is large. Import competition from China accounts for 27% (48%) of the total observed increase – within and between firms – in the share of non-production (highly educated) workers in low-tech Belgian manufacturing over our period of analysis. Offshoring to China further accounts for a small but significant increase in the share of non-production workers.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/e0026998d3ea4c227229311926a38fa3e100c96f

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Citations in the corpus

The Impact of Chinese Import Penetration on the South African Manufacturing Sector (2015, methodology): “Capital stock (in 2005 prices) are obtained from Quantec Ltd. (2012). Export orientation is measured as share of exports in sales and import penetration is calculated as imports/(sales–exports + imports). Both trade measures are calculated using sales data from Statistics South Africa and trade data”
The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France (2017, unknown): “This pattern is consistent with the process of skill-upgrading caused by Chinese import competition at the firm-level detected by Mion and Zhu (2013). In contrast, the non-traded sector’s occupational structure is affected more uniformly.”
Offshoring and Labor Markets (2018, background): “…countries with a stable external trade environment, like Denmark, for which changes in tariffs and exchange rates do not provide sufficient variation (see our discussion for Mion and Zhu 2013 in subsection 3.4); and (ii) at the firm level, endogeneity is likely to be a serious concern.”
Productivity growth in Italy: a tale of a slow-motion change (2018, unknown): “…that across sectors the exposure to imports from low wage countries is negatively (positively) correlated with employment growth (probability of plant death); analogous results emerge from studies focusing on European countries (Coucke and Sleuwagen, 2008; Bloom et al., 2016; Mion and Zhu, 2013).”