External Demand and Upstream Supply Chain Adjustment:Supply Stabilisation or Chain Expansion and Strengthening
The world is experiencing unprecedented transformation,requiring the upstream supply chain to not only be highly specialised and efficient,but also reliable and controllable.Drawing on the upstream and downstream corporate relationships inherent in the global value chain(GVC),this paper investigates the effect of downstream external demand expansion on the upstream supply chain layout of Chinese firms and its formation mechanism.Research reveals that firms integrated into the GVC build more stable upstream supply chains to ensure stable supply in the face of expanding downstream external demand.Meanwhile,firms'incentive to innovate increases as the market expands,and the range of imported intermediate goods is enlarged to alleviate the technical and cost constraints that hinder innovation.Additional study demonstrates that the higher the firm's position in the GVC,the greater the incentive to expand and strengthen the chain,while the lower the firm's position in the GVC,the stronger the incentive to stabilise the chain.Finally,the study offers policy suggestions aimed at enhancing openness,stabilising the upstream supply chain,upgrading the GVC and optimising the domestic value chain(DVC).
external demandupstream supply chainstabilising the chainchain expansion and strengthening