Benefits Distribution Mechanism of NB Computer Processing Trade in Mainland China—From the View of Control Power

摘要

The profitability mechanism of processing trade enterprises is mainly based on three kinds of international production organizations, which however is neglected by the existing studies. The notebook computer accounts for the largest share of total export volume of processing trade in all kinds of products classified according to HS code. Focusing on the benefits of processing trade represented by the profits of companies is fundamental for thinking about the update and transformation of processing trade in mainland China. We build a model analyzing the relationship between control power and corporate profits based on the traditional trade theory framework, and carry out an empirical test on it. The result of regression is that NB processing trade enterprises in mainland China have no control power at all, and which thus has do nothing to their profits. R&D investment and expansion of output, however, are positively related to their profit, which gives us the inspiration that the extension to the R&D function is an important way to improve the trade interests of NB processing trade enterprises in mainland China. We further find that, the feasible path of the update and transformation of processing trade companies, whose right to property, purchase and sale are controlled by foreigners, is to encourage foreign-funded companies to improve the function position of their companies in mainland China so as to raise the value chain situation of the local and whole country.