Imagine a world where your latest iPhone bears the inscription,”Designed by Apple in California, assembled in California”.
Such a scenario would not only bypass the enormous growth of China as the key assembly hub for billions of iPhones since 2007, but also prevent the emergence of Chinese smartphone giants such as Huawei, Xiaomi, Oppo, Vivo and Honor among others.
What”s more, without China’s involvement, consumers in the United States and across the world would not be able to afford iPhones designed and made in California due to their prohibitive costs.
When I was growing up in Hong Kong during the 1980s, brands such as Motorola, Nokia, and Sony dominated the mobile phone market.
It was the time when Japanese electronic products and cars were conquering world markets, reinforcing the “Flying Geese” model of economic development propounded by Japanese economist Kaname Akamatsu. The model depicting Japan as the leading goose and other East Asian economies as its followers was popular in academic and policy circles.
But this “Flying Geese” model has now evolved into a more complex yet resilient economic landscape, where regional and national economies are steering their industrial transformation and economic development through strategic coupling with global production networks.
In today’s interconnected world, no single national economy can control and dominate an entire value chain because production networks now stretch across many regions and continents.
Taking the iPhone as an example, its emergence as the smartphone that replaced Motorola from the United States, Nokia from Finland, and Sony (Ericsson) from Japan by the early 2010s was not merely because it was “designed in California”, but also due to the incredible production efficiency and strong supply chain ecosystem developed by its main “assembler” Foxconn in Shenzhen and elsewhere in China.
These resilient supplier networks were strategically coupled with Apple to support its phenomenal rise.
In fact, the growth and development of the global smartphone industry, including key components such as advanced semiconductors, is largely due to the strategic coupling of Foxconn and other key suppliers with global leaders such as Apple, Huawei, and Xiaomi.
Their inter-firm networks, driven by economic efficiency and mutual interests, have spurred regional growth in Guangdong, Taiwan and other parts of China.
While Japan and Japanese firms (for example Sony and its sensors and lenses for smartphone cameras) continue to play a significant role in global smartphone production networks, the center of gravity in this industrial segment has clearly shifted from Japan to China and the Republic of Korea.
This supply-side story, however, masks an even more significant shift in the Asia-Pacific region — the rise of East Asia as a major market since the mid-2010s. This trend is evident across smartphones, personal computers, consumer electronics and electrical appliances.
Hong Kong, the place where I grew up, relied heavily on the US and Western Europe as key markets. But today, Northeast and Southeast Asia have become important consumers of global smartphones. It’s not just Japan that has lost its lead goose status in technology. The US is also no longer the world’s largest market.
What lessons can we draw for under standing the resilience of supply chains in an increasingly uncertain world?
First, the Asia-Pacific region will continue to play a pivotal role in building resilient supply chains, particularly in the electronics industry.
Instead of fragmenting and decoupling from global production networks, leading firms and their ecosystems will likely adopt a resilient symbiotic approach, shifting from a US-centric model to one more focused on the Asia-Pacific.
This shift will present more opportunities for East Asian businesses, particularly in China, to establish production networks that are less reliant on the US.
In the Guangdong-Hong Kong-Macao Greater Bay Area, significant opportunities exist in the electronics industry along the technology corridor comprising Shenzhen, Dongguan-Foshan, Hong Kong, and Guangzhou.
Second, as Japan’s technological dominance during the “Flying Geese” era has been eclipsed by China and other East Asian economies, geopolitical rivalries and techno-nationalism will create new opportunities for regions to engage in strategic coupling with Asia-based global production networks.
My earlier book Strategic Coupling highlighted how East Asian Tiger economies developed by aligning domestic firms with global leaders across industries.
In today’s new era of geopolitical uncertainty, I foresee more regional economies in the Asia-Pacific aligning with Asia-based leading firms in their diversification and resilience strategies.
This flexible reorganization of Asia-based global production networks will unlock new development opportunities within the Asia-Pacific region and beyond. But unlike the 1980s, it will not be dominated by one leading goose.
Instead, it will be a new geographical mosaic of multi-nodal networks and development patterns that are more resilient and capable of absorbing risks.
This regional resilience and production network diversification will serve the world economy far better than one that champions “Designed in California, assembled in California”. De-globalization and decoupling are outdated; the world should now engage with re-globalization and recoupling!
The author is a leading economic geographer and the Choh-Ming Li Professor of Geography and Resource Management at the Chinese University of Hong Kong.
The views don’t necessarily reflect those of China Daily.
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