An Analysis Of Foreign Retailing Sector's Knowledge Spillover Effects In China

This paper reviews foreign retailing sector's development in China and the characteristics of each stage of its evolution.The spillover ways and their influencing factors can be made clear through the analysis of foreign retailing sector's knowledge spillover mechanism in China.The adoption of a comparative analysis method has proved the existence of foreign retailing sector's knowledge spillover in china. The DEA-Malmquist model is used to calculate and analyze retailing sector's Total Factor Productivity (TFP) from 31 provinces, cities and autonomous regions in China from 2004 to 2009, revealed the knowledge spillover effects in China.The results show that foreign retailing sector's knowledge spills to domestic retailers through three ways which are market competition, learning and benchmarking, and human resources migration. Through a series of activities (competition—learning/personnel flow—benchmarking—innovation), the domestic retailer's technology level and management efficiency will experience a spriral increase which will drive Chinese retailing sector's technical developing.This shows the positive foreign retailing sector's knowledge spillover effects in China. The results of the comparative analysis had shown that China's retail technology and management levels have greatly progressed after foreign retailing enterprises entered China. This is also an indication that foreign retailing sector's spillovers did occur in China. The TFP demonstrates that China's retailing sector has been improved significantly since it has been mainly opened to foreign retailers in 2004. This proves an obvious effect of foreign retailing sector's knowledge spillover in China.Other empirical results have shown that China retail TFP growth momentum mainly comes from technology progress.In addition; technology level has greatly improved as foreign retailing sector expands to midwest China. It can be said that China's domestic retailing sector lacks innovation and still in the stage of learning. China's retailing technology progress also depends on foreign retailing enterprises" knowledge spillovers.