The government generally seizes to break the total exports that have been in use domestically (for consumption, investment, and production), and the ones that have been in use for export, with China not being an exception. Therefore, the estimation is done of the DVAE of a country with the use of data from three separate sources with each having its own limitation and strengths. There is remarkable consistency with regards to the results. The collective shedding of powerful light on the supply chain strategies’ evolution has been done with the consumption of China, and economic performance of China in the time of the global meltdown.
Certain analysis suggests that on an average the goods imported accounts for 40 to 55 percent of the total export value in the period 2002-2008. In other words, around 50 percent of the exports of China have been representing the value added domestically. Alongside, the export share of DVAE usually has increased over time that suggests that China is registering a decreasing trend of the imported goods’ pure assembler. This has been a policy goal of China which has been stated publicly.
The implication of this is extended to the business models and the supply chains of many countries. In case a company manufactures in China, the primary function of that company is to process the components which are intermediate for re-exporting. An example of it can be an original design manufacturer (ODM) based out of Taiwan. For this company, probably the time has come for considering the assembly works’ alternative location. With the movement of China up the value chain and the commencement of exporting goods and services that are more skill intensive, there are chances that there will soon be fewer costs associated with pure assembly in other parts of Asia.
The application of analysis of DVAE has been carried out in reassessing the export contribution of the growth of GDP in the years where the data overlapping has taken place amongst the three metrics. It has been found out that the contribution of the export sector has been between 19-33 percent of the growth of total GDP in the period 2002 – 2008. This is the export contribution’s half, having an indication of measures of traditional total exports.
Putting differently, the analysis of DVAE is suggestive of the fact that with respect to the growth of China, exports remain an important driver. However, that does not indicate that the exports are dominant driver. Moreover, there is overstatement of common wisdom with regards to the exports’ role while the underestimation of the domestic consumption’s role has been carried out for the growth of China.
Any multinational or a Chinese company that are at present manufacturing goods in China and mainly exporting to the other countries should be asking themselves with regards to the requirement of scaling up the domestic strategy in getting bigger piece of pie. This has the involvement in development of understanding of more granular nature regarding the market of China with the making of products appealing to the consumers of China (Chu 2011). They have also found ways for the marketing and distribution of them effectively. Their contention, all the while, have been with the Chinese competitors who are increasingly formidable.