Chinese Export Competition Affects the Exports of Firms from Finland

Abstract

China’s export competition has decreased the total export value of Finnish firms’ products, primarily through price cuts. Firm-level analysis shows that the export competition with China leads to substantial price cuts to retain market shares, especially for homogeneous products. Price cuts to maintain market shares as competition intensifies do not seem to be as relevant for differentiated (heterogeneous) products.

On the other hand, firms respond to the increased level of Chinese export competition by dropping their marginal product exports.

The study highlights the importance of export competition with China for developed countries, as China’s production climbs higher on the value chain ladder.

It is important that policy measures will focus on supporting the growth of production and export of specified products. The continuing support of R&D investments in both companies and in public sector is one of the most important policy actions that will generate new competitive high-skill export products.

Publication info

Series
ETLA Muistio - ETLA Brief 83
Date
09.01.2020
Keywords
Trade flows, Export competition, Firm-level, Product mix, China
ISSN
2323-2463
JEL
F14, F15, F61, L25
Pages
5
Language
Finnish