The Role of Trading Cities in the Development of Chinese Business Cluster

  •  Zhenming Sun    
  •  Martin Perry    


Purpose-designed trading cities are a unique but under-researched feature of many of China’s business clusters. Trading cities have evolved as an outcome of the larger reform of China’s distribution system. During the reform process economic planners have managed the evolution of market relationships. In this context, trading cities have also become a deliberate strategy for enhancing enterprise clusters. In China, as in other low income countries, attachment to international supply chains is a double-edged process: initial opportunities for business growth are balanced against challenges to upgrade business capacity. Developing trading cities as focal points within enterprise clusters has been viewed as one way of strengthening the position of Chinese producers in value chains controlled by buyers in high income countries.  This paper draws on existing literature to examine trading city linked to a number of different business clusters. We identify four types of trading cities: real-estate, cluster-induced, hub and spoke and incubator. Four case studies highlight the differences and similarities of each type of trading city and provides guidance on the potential future of trading cities.

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