The Dynamic Research On Entry Order Choice Of Exporters In China

In recent years, the heterogeneous firm theory has pushed the research of international trade into a new era, and this theory tries to answer the questions "what kind of firms choose to export (Who)", "How these firms export (How)", "where do the firms choose as the location (Where)" and other issues from a creative perspective, these studies have injected new blood into the study of international trade.But it is regrettable that all these studies have neglected another important issue in firms’international trade, that is "When do the firms export (When)". In this paper, we think the reason is that previous studies are all based on the traditional net present value theory (NPV), which assumes that once the net income (income minus the entry cost) is greater than zero, the firm will decide to export. Under this assumption, the firm has lost the initiative and enthusiasm to choose the time to export. But in reality, the export of firm have four characteristics. First, the entry cost of export cannot be recovered. Second, the export earnings are uncertain. Third, the export can be delayed. Four, the competition exists among the firms. These characteristics invalidates the net present value rule used in previous studies, because this rule ignores the opportunity cost of making a commitment now, and thereby giving up the option of waiting for new information. That is, in case that the export can be delayed, the opportunity to export can be regarded as holding a "call option", and the existence of the "option value" will impel the firms to delay, so as to wait for a better time to execute the option. Besides that, the choice of the firms’timing to export is not only reflected in when to export, but also in the choice between the pioneers and followers which not only determines the success of firms in the international market, but also be an important content which is ignored in the theory of heterogeneous firm trade. What is more important, exporters’delayed behavior in new products and new markets will inhibit the expansion of a country’s extensive margin. And under the background of "changing the method, modifying the structure" in China, studying the timing and entry order of exporters in the extensive margin has an important practical significance.Firstly, using the option game theory and including the first mover advantage and crowding effect of the firms into the model, this paper constructs the theoretical framework of exporters’ market entry order and creatively analyzes the choice of firms in exports of ’new combination’, which cannot only modify the deviation of the net present value, but also help to develop the heterogeneous firm theory from the theoretical view. On the basis of traditional decision-making, this paper expands pervious researches to the "timing decision of export (when and entry order)" level from the perspective of option game theory.Secondly, using the big matched data of China’s Customs Database and Chinese Industrial Enterprise Database, this paper gives detailed description of "new combinations" exporting in China during 2000-2009, we find that:above all, the volume share of "new combinations" is low and has less contribution to the growth of China’s export, testifying the fact that export in China mainly depends on intensive margin rather than extensive margin. Moreover, there are obvious differences between "new combinations" and "old combinations":on the one hand, compared to "old combinations", the growth rate of" new combinations" is much higher in the first few years, but they will suffer a greater negative impact under external shocks; On the other hand, the "new combinations" are mainly composed of manufactured goods and distributed in European countries and higher-income countries; At last, different types of firms in the ownership have different market entry order decision.Thirdly, to test and explain the theoretical model and typical facts:on the one hand, this paper explores the factors that influence the market entry order of firms in exporting "new combinations", and finds that micro-variables like productivity and macro-variables like economic growth rate of host country will impact the market entry order of exporters. Based on this, we estimate on samples with different firm type and product to further analyze the different impacts of variables; On the other hand, the paper tests whether the followers be benefited from pioneers from three aspects, that is:first, the number of followers and spillover of pioneers. We use counting model to test the relationship between the number of followers and the exporting years of pioneers. The result indicates there exists significant positive correlation between the two, testifying that followers are benefited from pioneers. Second, deferrable time of followers and spillover of pioneers. Using survival model, we test whether the deferrable time of followers is associated with the growth rate of the pioneers’ export growth. We discover the higher the growth rate of the pioneers’ exporting growth, the shorter the followers’ deferrable time. Third, the export volume and spillover of pioneers. Using OLS model, we confirm the followers have more total export volume than the pioneers on the first year of export, and the difference mainly stems from quantity rather than price, approving the followers are benefited from pioneers again.Finally, according to the conclusions of theoretical model and empirical test, we propose policy recommendations to guide the exporters to make correctly decisions on market entry order from micro and macro level, and provide suggestions to promote China’s export from the perspective of market entry order.