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Download Exceeds 5 Million People - Established Game Duck, a Subsidiary for Game Play Storage and Sharing Service 1 Research on Promoting SMEs’ Participation in Global Value Chains – ICT/Electronic Industry Table of Contents Executive Summary ..................................................................................................................................1 1. Overview.................................................................................................................................................3 1.1. Background and Purpose .................................................................................................. 3 1.2. Scope of Study .................................................................................................................. 4 2. Concept of GVC and SMEs’ Participation in GVC .......................................................................5 2.1. Concept of GVC and SMEs’ Participation ....................................................................... 5 2.1.1. Concept and Significance of GVC ........................................................................ 5 2.1.2. Review of Precedent Studies on GVC ................................................................ 15 2.1.3. Patterns and Types of GVC Structure ................................................................. 17 2.1.4. Significance of SMEs’ Participation in GVC ..................................................... 22 2.2. Changes and Development of GVC Structure ................................................................ 25 2.2.1. Outlook of GVC Structure Changes ................................................................... 25 2.2.2. Implications of Structural Changes of GVC ....................................................... 28 3. GVC Structure and Changes in the ICT Industry ....................................................................... 32 3.1. GVC Structure and Current Status of the ICT Industry- Focus on Korean Companies . 32 3.1.1. GVC Structure by Sector .................................................................................... 32 3.1.2. SMEs’ Participation in GVC by Sector .............................................................. 41 3.1.3. GVC by Product Life Cycle (PLC) ..................................................................... 60 3.2. GVC Types and Status by Value Chain Control Model ................................................. 68 3.2.1. Types of Value Chain Control Model ................................................................. 68 3.2.2. Issues Related to Changes in Value Chain Control Structure ............................. 70 4. Challenges and Strategies for Promoting SME’s Participation in GVC .................................. 71 4.1. Challenges and Strategies by the Person Concerned in the GVC ................................. 711 4.1.1. Basic Directions .................................................................................................. 71 4.1.2. Strategies for SMEs ............................................................................................ 71 4.1.3. Strategies for Large Enterprises and MNCs ........................................................ 72 4.2. Challenges and Strategies for the Government ............................................................... 72 4.2.1. Basic Directions .................................................................................................. 72 4.2.2. Challenges for the Government .......................................................................... 73 4.2.3. Response Strategies for the Government ............................................................ 74 4.3. Strategies for Participation in the GVC by Sector .......................................................... 79 4.3.1. Sectoral Participation Strategy ............................................................................ 79 5. Conclusion ........................................................................................................................................... 84 5.1. Strategies in Different Perspectives ................................................................................ 84 5.2. Further Challenges for Development .............................................................................. 85 References ............................................................................................................................................... 88 2 Table of Figures Figure 1. Outsourcing and Offshoring .................................................................................... 6 Figure 2. Five Global Value Chain Governance Type of GVC .............................................. 7 Figure 3. Conceptual Graph of SME GVC Integration ........................................................... 8 Figure 4. Holistic Approach towards Globalization ............................................................... 8 Figure 5. Typical Value Chain of the ICT Industry Structure .............................................. 13 Figure 6. Importance Portion Outlook of the IOT Industry In 2020 ..................................... 14 Figure 7. Export Trends of Worldwide FDI Goods and Services ......................................... 20 Figure 8. Changes in World FDI Stock ................................................................................. 21 Figure 9. Import Ratio into Export Each Nation ................................................................... 26 Figure 10. Import Intermediate Materials Ratio Utilized in the Export Production .......... 26 Figure 11. World GVC Structure and Outlook of the Change in the Value-Added ............. 27 Figure 12. Facilitating Factor and Condition for Each Development Stage of GVC ........... 29 Figure 13. Division of Labor in the Value Chain of Global Electronics Companies............ 32 Figure 14. Current Status of GVC Base Restructuring Of Korean Electronics Industry ...... 34 Figure 15. Value Chain Structure of Mobile Phone .............................................................. 35 Figure 16. Value-added Distribution of Apple iPhone 600 Dollars each Nations ................ 36 Figure 17. Value Chain Structure of Semiconductor Industry .............................................. 37 Figure 18. Global Semiconductor Industry ........................................................................... 37 Figure 19. Overseas Investment Performance Trends in Semiconductor ............................. 38 Figure 20. Digital Content Industry Value Chain of the EU ................................................. 40 Figure 21. Hyper Cycle for Consumer Devices .................................................................... 60 Figure 22. The Development Stage of Digital Convergence Home Appliance Products ..... 62 Figure 23. Product Life Cycle of Major Regions .................................................................. 63 Figure 24. Major Mobile Phone Exporting Countries (2001~2011) ..................................... 64 Figure 25. Growth Rate of Semiconductor Market ............................................................... 66 Figure 26. The Value of the Content Industry Chain in Integration Platform Environment 68 Figure 27. Activating Trade Method: Cost Savings Potential in Merchandise Trade (%) ... 75 Figure 28. The Smile Curve and the Distribution of Added-Value in the Value Chain ....... 78 Table of Tables Table 1. Types of GVC Participation of Developing Countries ............................................. 9 Table 2. GVC Type of Manufacturing Industries ................................................................. 11 Table 3. Changes in Production Costs Rank among IT Manufacturing Countries ............... 12 Table 4. Economic Value Added Prospect of IoT (Unit: trillion $, %) ................................ 14 Table 5. Value Chain Structure of IOT ................................................................................. 15 Table 6. GVC Types Regarding the Control Structure of Value Chain ................................ 19 Table 7. Four Types of Upgrading ........................................................................................ 23 Table 8. Global Value Chain Approach Challenges ............................................................. 71 3 Executive Summary Electronic industry, including ICT (Information and Communications Technology) industry, is one of the major manufacturing sectors in which constant paradigm shift of market and strategy are occurring not only at corporate level, but also in the entire industrial ecosystem. Especially, inter- industrial convergence based on ICT leads the new waves in IT/Electronics industry and intensify global competition. With the new industrial flows, Global Value Chain (GVC) is under continuous development and expansion. Moreover, because of radical changes in competitive composition and ecosystem, structural aspect of GVC is also undergoing reform and innovation. The purpose of this research is analyzing the current status of Small and Medium Enterprises (SMEs) in GVC and identifying successful cases of SMEs in global market, then review issues related to successful responses to changing market environment and strategies for stakeholders of GVC. Also, various views and ideas will be considered to derive ways to GVC upgrade for SMEs and policy objectives for governments based on outcomes of a series of Public-Private Expert Forums (PPEF) and a GVC workshop. In GVC, production of goods and services occurs in manufacturing network which is divided into many stages, and a firm's value chain
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