Value Chain Management

Today more and more countries have developed their capabilities in manufacture, so barriers to entry in production have fallen sharply and the competitive pressures have increasingly heightened.Within nearly all forms of productive activity the importance of intangible activities in value chains have been increasing, and there has been a significant shift in importance away from the tangible aspects of production towards the more intangible, such as design, R&D, branding, marketing, logistics, financial services etc. Simultaneously the intangible activities are increasingly knowledge- and skill-based, and this involves growing barriers to entry, so the rents are rising rapidly with the growing barriers. It is witnessed that the rents accruing from tangible activities are transiting to those arising from intangible activities. The pervasive trend, as we shall see is towards control over disembodied activities in the value chain.Chinese firms still got into competition alone in the global market, and the solitary competition mainly in the field of assembly neither resulted in the solid progress of links, such as R&D ,marketing and others, nor each company at every link of value chain cooperatively marching into the world market. In other words, Chinese company is just blue-collar. Philip Kotler, one of the world's leading authorities, told a real story, the price of "BOSS" shirt sold in 54th avenue New York was $120, the channel dealer grasped 60% of cost, the brand holder took 30%, the Chinese producer only had a poor share of 10%, that is $12 or so, and hence the research of value chain was highly significant for both Chinese corporation and the economy in the increasingly globalisation.In this paper we present basic definitions and context of value chains in Chapter one, and show the importance of value chain research, we would see that the systematic is becoming increasingly important, it would be far from enough if a firm just had efficiency in production, one has to gain competencies in the field of R&D ,marketing and other links of value chain. And in Chapter two we have a talk on barriers to entry and rents, then consider the question of governance , upgrading and also the determinants of income distribution. Chapter three is the main part of this paper, in which we set out a methodology for conducting value chain research, and discussed respectively the following topic, The point of entry for value chainanalysis, Critical Success Factor's in final markets* How producers accessing final markets. Benchmarking production efficiency, Upgrading in value chains, and the knowledge role. In the third chapter, Governance of value chains has been underlined in detail, such as the rules, the monitoring, the sanctions and the legitimacy. In Chapter four we draw together some of the policy threads by way of a conclusion, and point the readers to the key policy issues. In the final section we discuss a series of issues of manufacture in China mainland, analyze the dilemma faced by Chinese manufacturers and show the path from blue-collar to white-collar.