L’internationalisation des chaînes de valeur

Summary

This video explains the concept of internationalization in value chains, illustrating how production is fragmented across different countries. It emphasizes the role of multinational firms, such as L'Oréal and Apple, in managing global supply chains through subsidiaries and outsourcing. The video showcases how these companies leverage external partners like Foxconn and control their production and distribution processes. By analyzing case studies, the video highlights the complexity of international value chains, including trade imbalances and value-added discrepancies in regions like China, where assembly occurs, but the value-added production takes place elsewhere.

Takeaways

• 😀 Internationalization refers to the process of breaking up production into different stages across different countries, which contributes to the global value chain.
• 😀 The global value chain involves a fragmentation of activities where each stage is carried out in different countries, with exports measured at each step.
• 😀 The internationalization of value chains leads to faster growth in international trade compared to overall production.
• 😀 Nearly half of global trade now consists of value chain exchanges, reflecting the importance of these chains in the world economy.
• 😀 Countries are positioned differently in global value chains, often based on their factor endowments and technological capabilities.
• 😀 Multinational firms are key players in global value chains, with parent companies controlling subsidiaries that handle production in foreign markets.
• 😀 Multinational firms may engage in 'filialization,' where subsidiaries abroad are managed to create an international dimension for their operations.
• 😀 These firms may also externalize certain stages of the production process by working with independent partners rather than keeping everything in-house.
• 😀 Outsourcing to external companies requires careful management of contracts and production standards, including the negotiation and monitoring of production processes.
• 😀 The example of bicycle production shows that international value chains are not limited to high-tech industries, with components sourced globally to create the final product.
• 😀 Companies like L'Oréal control both the supply chain and distribution via their own subsidiaries in multiple countries, offering a global strategy for product delivery.
• 😀 Apple, on the other hand, relies more on outsourcing, contracting external partners like Foxconn to handle assembly, allowing it to focus on design and component production in the U.S.

Q & A

What is the concept of internationalization in the context of value chains?

Internationalization of value chains refers to the fragmentation of production processes across different countries. Each step of the production process, from raw materials to finished products, may occur in different countries, with exports and imports playing key roles at each stage.

How do international value chains impact global trade?

International value chains contribute to the increase in international trade, which grows faster than the production of goods themselves. These value chains now represent nearly half of global trade exchanges.

What role do multinational corporations play in the internationalization of value chains?

Multinational corporations (MNCs) control value chains through subsidiaries in multiple countries. These subsidiaries are the result of foreign direct investments, and they help these corporations optimize production, access larger markets, and benefit from factor endowments and economies of scale.

What is the difference between internal value chain integration and outsourcing in multinational firms?

Internal integration involves controlling the entire value chain within the corporation, while outsourcing involves partnering with independent companies that are not owned by the parent firm. Outsourcing aims to reduce internal organizational costs and involves finding and negotiating with external partners.

Can the entire value chain be outsourced by multinational firms?

No, not the entire value chain is necessarily outsourced. Some firms, like L'Oréal, maintain control over key parts of the value chain, while others, like Apple, focus on outsourcing certain activities such as assembly while keeping design and component production internal.

What is the role of subsidiaries in multinational firms like L'Oréal?

In multinational firms like L'Oréal, subsidiaries play a crucial role in managing both supply chains and distribution in various countries. This strategy allows the firm to maintain control over its operations and protect its intellectual property while reducing reliance on external partners.

How does Apple approach its international value chain differently from companies like L'Oréal?

Apple relies more on outsourcing than on internal subsidiaries. It contracts with independent companies like Foxconn for manufacturing and assembly, while it controls design, component production, and distribution. This approach allows Apple to focus on specific areas of its business while leveraging external expertise.

What is the significance of Foxconn in Apple's value chain?

Foxconn, a Chinese company, plays a key role in Apple's international value chain by assembling components for Apple's products like the iPhone. Apple imposes strict production standards and quality control on Foxconn but does not own the company.

How does the iPhone exemplify the complexity of international value chains?

The iPhone illustrates the complexity of international value chains through its design and assembly process. While Apple designs the iPhone in the U.S. and manufactures some components domestically, other components are produced in various countries and assembled in China. This results in a significant trade imbalance, with the U.S. importing more value than it exports.

Why is it difficult to measure the true value added by China in the iPhone's production?

Measuring China's value added in iPhone production is challenging because the final assembly in China represents only a small portion of the total value of the product. Most of the value comes from the design and component production in other countries, making it hard to assess the actual contribution of Chinese labor and manufacturing.