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Value captured by China in the smartphone GVC– A tale of three smartphone handsets

2021; Elsevier BV; Volume: 58; Linguagem: Inglês

10.1016/j.strueco.2021.06.002

1873-6017

Yuqing Xing, Shaopeng Huang,

Economic Growth and Productivity

1 Chinese firms have moved into upper ladder of iPhone value chain. They have performed relatively sophisticated tasks beyond simply assembly; 2 Chinese firms collectively captured 25.4% of the value added in the process of manufacturing the iPhone X, much higher than 3.6% obtained from assembling the iPhone 3G, the first generation iPhone; 3 Chinese firms added relatively low value to domestic brand mobile phones. In terms of production costs, the domestic value added of Xiaomi MIX 2 is 15.5% and that of OPPO R11 is 16.7%. No indigenous Chinese firms were capable to supply the core parts embedded in the printed circuit board assembly of the two domestic brand phones; 4 In terms of retails prices, the shares of domestic value-added for Xiaomi MIX 2 and OPPO R11s are 41.7% and 45.3% respectively, suggesting that developing indigenous brands before overcoming technology deficiency is an alternative strategy to move up the value ladder along the value chains. In this paper, we evaluate the distribution of value-added by country and by task for three mobile handsets assembled in China: Apple iPhone X, Xiaomi MIX 2 and OPPO R11s. We adopt two baselines: production costs and retail prices. In terms of the production costs, it is found that the shares of domestic value-added for the three handsets are 25.4%, 15.5% and 16.7% respectively. For the iPhone X, Chinese firms collectively captured more value--added than the first generation iPhone 3G and performed relatively sophisticated tasks beyond simply assembly. For MIX 2 and OPPO R11s, the teardown analyses further reveal that no indigenous Chinese firms are involved in the manufacturing of components mounted on printed circuit board assembly. In terms of retails prices, the shares of domestic value-added for Xiaomi MIX 2 and OPPO R11s are 41.7% and 45.3% respectively, higher than the corresponding figures for production costs, suggesting that developing indigenous brands before overcoming technology deficiency is an alternative strategy to move up the value ladder along the value chains.