Using the theory of competitive advantage to illustrate what a country can do to improve its competitiveness

I. The Theory of National Competitive Advantage

Porter argues that a country's competitive advantage is determined by a set of determinants and their supporting factors. They are:

1. Production factors. It includes (1) human resources. The quality, quantity, proficiency, and cost of labor of human resources; (2) Natural resources. Fertility of land, quantity, arable land, climate, location and size of geographical scale; (3) knowledge resources. Hardware and software for science and technology, government and private research institutions, libraries, statistical agencies, various scientific associations; (4) Capital resources. Availability and cost of capital, returns on capital, globalization of capital markets, flows of capital between countries; (5) Infrastructure. Postal and telecommunication systems, means of payment, health care, social welfare, cultural institutions. Factors of production are subdivided into two categories: primary and higher factors. Primary factors are the natural resources and geographical location, etc., that a country is innately endowed with. Higher factors, on the other hand, are those created by society and individuals through investment and development. For a country to gain a competitive advantage, advanced factors are far more important than primary factors.

2. Demand factors. The demand situation in the domestic market plays a great role in a country's competitive advantage. Domestic demand on the competitive advantage of the impact is mainly through three aspects: First, the domestic market demand for the products of the relevant industry is greater than the overseas market, there are economies of scale, which is conducive to the establishment of the country's international competitive advantage of the industry. Secondly, if the level of consumer demand in the home market is high, it is favorable for the relevant industry to achieve international competitive advantage. This is because sophisticated and discerning consumers will exert pressure on domestic firms to improve product quality, performance and service. Thirdly, if domestic demand is ahead of its time, then domestic manufacturers serving it are correspondingly ahead of the rest of the world. In this case, the enterprise in the home market developed a set of production processes, marketing strategy becomes the enterprise in the future to develop international markets a major competitive advantage.

3. Supporting and related industries. A country to obtain a lasting competitive advantage, it is necessary to obtain at home in the international competitive suppliers and related industries to support. The Japanese machine tool industry's dominance is dependent on world-class suppliers of CNC machine tools, electric motors and other parts. Sweden's competitiveness in the steel assembly products (e.g., ball bearings, cutting tools) industry stems from its specialty steel industry. In addition to the competitiveness of suppliers, the competitiveness of other related industries is also important, as they often bring in new resources, new technologies, and new ways of competing, which can lead to innovation and upgrading of the industry. Therefore, having frequent and close coordination and cooperative relationships among supporting and related industries constitutes a country's international competitive advantage.

4. Corporate strategy, structure and competition. As far as we can see, there is no single management style that can be adopted and applied in all countries in the world. Because of the different goals of enterprises in different countries, the strategy and structure of enterprises are not the same. American companies focus on short-term goals, while Japanese and German companies emphasize long-term goals. Different countries have distinctive "management ideologies" that help or hinder the development of a country's competitive advantage. In addition, the degree of competition in the domestic market has a significant impact on the attainment of international competitive advantage by the country's industries. A high level of competition in the domestic market forces firms to improve their technology and innovate, which in turn facilitates the establishment of the country's international competitive advantage.

In addition to the above four factors, a country's opportunities and the role of the government, the formation of the country's international competitive position also plays a supporting role. Opportunities include important inventions, technological breakthroughs, major changes in the supply and demand of factors of production (such as the oil crisis) and other unexpected events. Government factors refer to the government's efforts to create competitive advantage through policy regulation. Porter believes that the above factors affecting competition **** together to play a role in promoting or hindering the formation of a country's competitive advantage.

Two, China's competitive advantage status quo analysis

Porter believes that the national economic strength of the comparison is too general and difficult to carry out, a country is not possible to make all of its enterprises and industries have a competitive advantage in the international arena, therefore, the comparison of the country's competitive advantage should be examined from the point of view of the industry (industry) to be meaningful. Since in a modern market economy, the international competitiveness of an industry is ultimately measured and tested by the market share of its products, it is clear that the indicators for determining the international competitiveness of specific industries in different countries in a quantitative form are mainly the international market share of the products of the industry and the labor productivity of the products, as well as the Trade Competition Index (TCI). This paper also follows this principle and uses these three indicators to analyze the current situation of China's competitive advantage.

1, trade competition index analysis. Trade competition index is defined as: (E[,i]-I[,i])/(E[,i]+I[,i] ), where E[,i] is the total export of product i; I[,i] is the total import of product i. According to the relevant data of China Statistical Yearbook (1993, 1998), the author chose 12 categories of major export commodities for calculation, and found that: textiles, shoes, hats and ornaments, leather products, food products are China's traditional export products, with strong competitiveness, but in recent years the trade competition index has declined, which indicates that these commodities are facing various challenges of international competition; the other 8 categories of commodities, such as chemicals, plastics, rubber products, paper products, wood products, and so on. rubber products, paper products, wood products, base metal products, electromechanical and audio-visual equipment, transportation equipment, optical and medical equipment, although the trade competition index is still negative, but the negative value tends to shrink significantly, indicating that China's competitiveness in capital- and technology-intensive industries is increasing; from 1992 to 1997, China's merchandise trade competition index in order of magnitude of the rankings of the almost no change, showing that The pattern of strong and weak competitiveness of China's export commodities remains unchanged.

2, labor productivity comparison. Labor productivity refers to the average hourly work output, which is seen as an important indicator reflecting the strength of a country's competitiveness. From the point of view of labor productivity indicators, China's labor productivity level is very low, not only with the developed countries there is a large gap, compared with some developing countries, the gap is also very large. In 1996, China's total labour productivity was US$1,118 per person, equivalent to only 1.8 per cent of the average level of developed countries (US$59,105 per person), 2.8 per cent of the average level of Asian newly industrialized countries and regions (US$38,781 per person), and 22.1 per cent of the average level of developing countries (US$5,047 per person). The low level of labor productivity in China has become the biggest constraint on China's ability to improve its competitive advantage.

3. International market share analysis. International market share is defined as: A country i products of the international market share = A country i product exports / the world's total exports of i products. According to the "International Statistical Yearbook" relevant data, in 1992 China's exports of international market share in the world's first few, mainly cotton, non-knitted men's coats, non-knitted women's coats, textiles, base metal products, motorcycles, travel goods and handbags, non-knitted underwear, clocks and watches, toys and sporting goods, most of which are relatively low value-added labor-intensive products. The international market share of export commodities with relatively high added value, such as steel sections, internal combustion engines, non-electronic mechanical parts and components, automatic data-processing equipment and office equipment, is still relatively low.

Through the above three aspects of analysis, we can see that since the reform and opening up, China's international competitiveness has improved to a large extent, but the competitive advantage is not strong. So far, China's competitive export commodities are basically some labor-intensive products, while the lack of competitiveness is mainly capital- and technology-intensive products such as basic materials and machinery and equipment. On the one hand, this shows that labor-intensive industries are still the comparative advantage industries for China to participate in international competition, and the competitiveness of Chinese commodities in the international market depends more on the lower labor cost, and at the same time, it also exposes the contradictions of slow optimization of the structure of China's exports, the lack of high-level products with long-term development potential, and lagging behind in the upgrading of industrial structure, and so on. According to the famous Lausanne International Institute for Management Development (IMD) launched the "Global Competitiveness Ranking", China ranked 29th in 1998, although China's competitiveness rankings since 1994 has risen by five places, but this situation is still not quite commensurate with China's status as a major power in the world political and economic arena.

Three, improve China's competitive advantage of countermeasures and ways

1, deepen enterprise reform, adjust the enterprise structure, improve enterprise competitiveness. Enterprises are the foundation of the country's competitive advantage, the lack of vitality of enterprises do not think of innovation, the country will be difficult to establish an overall advantage. Therefore, first of all, we must increase the reform and innovation of China's enterprise system, in strict accordance with the requirements of the modern enterprise system: "clear property rights, clear rights and responsibilities, separation of government and enterprises, scientific management," the implementation of standardized corporate transformation of enterprises, so that it can adapt to market competition, self-management, self-supporting legal entities and competitive entities; secondly, to strengthen the existing enterprises, joint ventures and mergers and acquisitions, to enhance the competitiveness of enterprises. Secondly, we should strengthen the existing enterprises' joint mergers and acquisitions, in accordance with the requirements of specialized division of labor and the development of economies of scale, take the existing backbone enterprises as the core, take the property rights as the link, take the famous brand products as the leader, and cultivate a batch of large-scale enterprise groups across the regions, departments and industries, so as to realize the optimal allocation of resources and improve the efficiency of the scale of business operations; thirdly, we should strengthen the enterprise management comprehensively, and improve the innovation ability of the enterprises. Through the strengthening of management, research and development, improve quality, reduce costs and continuously improve the competitiveness of enterprises.

2, on the basis of maintaining the existing advantages, vigorously develop high-tech industries, to create China's industrial competitive advantage. At present, labor-intensive products are still China's participation in the international division of labor to obtain more comparative advantage of the main means, its important role can not be replaced. However, on the basis of maintaining the existing advantages, we should vigorously develop high-tech industries to create competitive advantages in China's industries. As high technology has the characteristics of wide range of use and strong permeability within traditional and high-tech industries, it can not only contribute to economic growth by its own market development ability, but also greatly improve the efficiency of the whole production and international competitiveness, therefore, we must grasp the historical opportunity of the rapid development of the world's high-tech industry in time, vigorously develop high-tech and its industries, and strengthen the commercialization, industrialization and internationalization process of China's high-tech. Commercialization, industrialization and internationalization process, accelerate the transformation of high-tech achievements into real productivity, so that China's high-tech industry has become a new industry of the national economy on the stage.

3. Give full play to the scale advantage of a large country and strengthen the development of domestic demand. Demand plays an important role in the formation of a country's competitive advantage. We should pay attention to the development of domestic demand. China has a population of 1.3 billion, the total amount of GNP, rapid growth in demand, demand level gap and other advantages. At present, China has entered the buyer's market in general, and the domestic competition in the same industry is very fierce, which has an obvious promotion effect on the improvement of the overall competitiveness level of national industry. Due to the unbalanced socio-economic development in China, there exists a disparity of consumer demand differences between regions and between urban and rural areas, which provides opportunities and development space for enterprises to search for market segments, relatively concentrate on certain priority products and industries, and implement target agglomeration strategy attacks. Through the development of segmented market demand, based on the domestic market, to achieve local competitive advantage in the international market, and gradually transition and upgrade to the national competitive advantage, is the starting point and favorable conditions for China's enterprises to the international arena, to win the international competitive advantage.

4, the implementation of science and education strategy, focusing on the development of human resources, and promote the sustainable development of competitiveness. Actively implement the "science and education" strategy to improve the quality of the people, is to improve China's competitiveness level of long-term strategies and measures. At present, it is necessary to reverse the continuing decline in the proportion of science and technology and education in GDP, substantially increase investment in science and technology and education, put "science and technology is the first productive force" into action, and improve the efficiency of the use of capital investment; accelerate the reform of the education system, and change "education according to the test" into "quality education". To accelerate the reform of the education system, change the "exam-oriented education" to "quality education", change the concept of education, the implementation of lifelong education; to improve the advantages of human resources.