Critical Capability of Original Equipment Manufacturers in the Greater Bay Area

Proposed Outline on

A Study of the Critical Capability of Original Equipment Manufacturers in the Greater Bay Area

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Background

China has ranked as the world’s biggest exporter of goods since 2009. Official estimates put Chinese annual exports in the region of $1.904 trillion, and the country took over from the U.S in 2013 as the largest trading nation in the world. The US is the largest import market of China’s products whereby around 19.2% of total Chinese exports was transported to US in 2018.

An unprecedented trade war between China and US has begun. That would increase the cost of sourcing if the manufacturing process took place in China. Original equipment manufacturing is an industry with low profit margin. The challenges for Guangdong’s industrial economy are its reliance on low-margin product assembly (mainly for re-export) and the labor-intensive method of production. Processed manufacturing goods accounted for nearly 40% of the value of the province’s merchandise exports in 2015-17, compared with a national average of around 26%. Value added is still driven by labor, with remuneration for workers standing at around 48.6% of the Gross Domestic Product (GDP) in 2017 (latest available data), which is above the national level and only 2% down from the level in 2001, when China joined the World Trade Organization. This leaves the province’s competitiveness exposed to labor costs, which have been rising steadily amid tight supply.

The Greater Bay Area (GBA) is a national strategy aimed at transforming the Pearl River Delta (PRD) region into a “world-class city cluster“, with the cities of Guangzhou and Shenzhen in Guangdong province, alongside the special administrative regions of Hong Kong and Macau, slated for major roles. The upgrade of the PRD industrial sector, is one of the core components of the GBA initiative. As China’s manufacturing powerhouse and the source of around 10% of national GDP, Guangdong’s ability to move up the industrial value chain will be critical to the vitality of China’s economy. For businesses, opportunities and challenges associated with the process will shape strategies for engagement in the region and their ability to leverage benefits from the GBA

Motivation of this Study

Original Equipment Manufacturers (OEMs) are facing with lots of external challenge in this highly competitive era. Guangdong’s starting point in this industrial transition is relatively strong. Its manufacturing sector is geared towards production of consumer goods, such as household appliances. I have been working in the manufacturing sector for years, because of which I am motivated to explore the critical capabilities of OEMs in sustaining their business growth in the GBA.

Objective of this Study

Based on the challenges of OEMs in GBA, this study intends to explore the critical capabilities that help them sustaining their business growth. Through this study, I would explore answers to the following questions so that the findings of this study may possibly be expanded and extended to similar research areas and topics of my DBA thesis:

1. What are the characteristics of original equipment manufacturers in the Greater Bay Area?

2. What are potential challenges and opportunities of original equipment manufacturers in the Greater Bay Area?

3. What are the new policies and incentive being offered by the Greater Bay Area to help and assist original equipment manufacturers develop and sustain their businesses?

4. What are the initial constructs in terms of generic and industry-specific (and possibly their corresponding measurement indicators) of capabilities of original equipment manufacturers in the Greater Bay Area?

5. What are the initial constructs in terms of generic and industry-specific (and possibly their corresponding measurement indicators) of organizational performance of original equipment manufacturers in the Greater Bay Area?

Expected Deliverables of This Study

The objective of this study is to conduct extensive literature review of previous and extant studies to generate the initial sets of constructs (and possibly their corresponding measurement indicators) of capabilities and organizational performance measures pertinent to OEMs in GBA. The findings of this study would be the foundation and basis to further my studies of OEMs in GBA.

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