Encourage and support the enterprises who has

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Encourage and support the enterprises who has comparative advantages to invest overseas. Protective policy are given and recommendation to avoid risk is also available. Business Consultancy and Recommendation 2011 Ministry of Commerce & National Development and Reform Commission Investment Guide for Foreign Countries and Key Industries Provide government opinion on the key investment destination and specify the feature industry in each foreign country. Source : compile by authors.
25 4.3. Intra-industry Trade By disaggregating G-L index 3 of different types of products in clothing sector, we found a very low-level intra-industry exchange from 2002 to 2010, with all the observation being less than 0.10 (Table 9). In terms of time-series trend, the intra-industry trade of the whole clothing sector is facing a declining trade as the figure drops from 0.06 in 2002 to 0.04 in 2010. Among all the main products, clothing accessories record the highest intra-industry exchange level, but with the lowest level in the wool knitted garments making. While leather product and accessories saw a moderate growth in the exchange within the sector, the rest products experienced a declining trade with their partner inside the sector. Table 9: G-L index, Clothing Manufacturing, China, 2002-2010 Year Clothing Wool knitted garments woven clothing leather clothing Other clothing clothing accessories Headgear 2002 0.06 0.06 0.05 0.03 0.01 0.03 0.03 2003 0.04 0.05 0.05 0.02 0.02 0.03 0.04 2004 0.048 0.05 0.05 0.03 0.02 0.02 0.03 2005 0.04 0.04 0.04 0.01 0.02 0.1 0.08 2006 0.03 0.03 0.04 0.04 0.03 0.05 0.06 2007 0.03 0.02 0.04 0.04 0.02 0.09 0.07 2008 0.04 0.03 0.04 0.07 0.02 0.08 0.06 2009 0.04 0.02 0.04 0.06 0.02 0.07 0.05 2010 0.04 0.02 0.03 0.07 0.02 0.05 0.04 Source : Cao (2012). The small share of intra-industry in total trade volume shows that endogenous products are mostly traded out, indicating that there is no completed value-chain within the sector or a powerful multinational corporation to organize the whole production process from raw material processing to the final product manufacturing. The current sector players are still characterized as small- medium producer with insufficient capacity to participate in each stage of the whole value chain. A large deficit in the intra-industry trading pattern gives trading partner country higher chance to impose import barriers to tip the trade balance in its favour. In so doing, 3 The Grubel-Lloyd index is measured as total trade in an industry minus the difference between exports and imports, with the assumption that such difference standing for inter-industry trade.
26 Chinese clothing manufacturers fall into a disadvantage position in global market as they face higher uncertainty from counter party, at the same time, limiting themselves in making the profits. Further, China’s clothing industry gained competitive advantages mainly in cheap labour and abundant resources rather than diversified demands and scales of economies. Hence, international trade of Chinese clothing industry is still trapped in a stage which is mainly based on the vertical labour division.

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