China improves status on global value chain of manufacturing industry: WIPO report

Chinese enterprises are gradually ranking among the upstream manufacturers of high added value as China improves its status on the global value chain of the manufacturing industry, said a report issued by the World Intellectual Property Organization (WIPO).

The report “World Intellectual Property Report 2017: Intangible Capital in Global Value Chains” carried out in-depth case study on three global industries including coffee, solar panels, and smartphones.

It revealed that nearly one third of the value of manufactured products sold around the world comes from “intangible capital,” such as branding, design, and technology.

East Asia, North America, and Europe are the major study regions of the report because they share the closest in relation in terms of supply chain.

The three regions, as high-income “headquarter economies,” have a similar production mode, that is, export high value-added products and services to middle-income manufacturing economies and then re-export them after assembly.

Japan, the US, and Germany used to be the leading “headquarter economies,” but Chinese enterprises have been gradually approaching the upstream of the value chain in recent years, bringing huge change to the traditional pattern.

For instance, through branding and high investment in research and development, Chinese tech giant Huawei has become one of the major producers of high-end smartphones. In addition, Chinese enterprises, such as Xiaomi, Oppo, and Vivo, are also among the top 10 selling brands in the world.

“Intangible capital will increasingly determine the fate and fortune of firms in today’s global value chains. It is behind the look, feel, functionality, and general appeal of the products we buy and it determines success in the marketplace,” said WIPO Director General Francis Gurry. “Intellectual property, in turn, is the means by which companies secure the competitive advantage flowing from their intangible capital.”

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