Vol. 6 Num. 1 - GCG: Revista de Globalización, Competitividad y ...

China’s Move up the Value Chain. A Framework for Analysis144is defined by the asymmetrical power existing between local producers and internationalbuyers. Examples of quasi-hierarchy include large global retail chains such as Walmart,who enjoys tremendous power in its value chain, and the global computer industry, whereU.S. companies play the leading role at the top of the value chain with Taiwanese ODMsand OEMs in the middle and mainland Chinese manufacturers at the bottom. A hypotheticalquasi-hierarchy is illustrated in Figure 1. The most important aspect of this figure is seen inthe value chain leader’s ownership of a brand that is recognized by consumers, which allowsit to “own” and cultivate the relationship with the consumers.Figure 1: A Hypothetical Hierarchical Value ChainA network value chain, on the other hand, consists of producers who interact with each otherand work together to co-produce values for a particular industry. They represent differentnodes in the value chain network but each enjoy their own market power and brand equityin the market. Members of the network value chain work in a complementary fashion tomeet the needs of the final consumer. An example of a network value chain is the petroleumindustry, which works to meet consumer demands for gasoline as a final product. A networkvalue chain is shown in Figure 2.Figure 2: The Petroleum Industry as a Network value ChainGCG GEORGETOWN UNIVERSITY - UNIVERSIA ENERO-ABRIL 2012 VOL. 6 NUM. 1 ISSN: 1988-7116pp: 136-155