Porter's Diamond
DPorter’s Diamond Model on Competitiveness
Factor conditions for production are the inputs and infrastructure necessary for competition, which include:
• Human resources: quality and quantity of skilled labor, cost of personnel, and labor skill variety;
• Physical resources: “the abundance, quality, accessibility, and cost of the nation’s land, water, mineral, or timber deposits, hydroelectric power sources, fishing grounds, and other physical traits.” (Porter, 1990, p. 74);
• Knowledge resources: market, scientific, technical knowledge residing in a nation’s research institutions;
• Capital resources: capital availability and cost to finance industries. Capital resources can be affected by the rate of savings and national capital market structure;
• Infrastructure: availability and quality of infrastructure, including communication system, transportation system, payment or funds transfer, health care, and so forth.
A positive estimate of profit in the automobile industry indirectly promotes the development of national infrastructure development. To speed up the progression, the government has attracted FDI in the basic infrastructure sectors.
Although China’s population on average has a low education level, the auto industry attracts many skilled laborers in urban areas due to its geographical concentration in major cities and fast technological advancement introduced by foreign partners. Both labor productivity and wage in the auto section increased significantly between 1994 and 2004, at the rate of 11.4% and 13.5% respectively (China Automotive Yearbook, 2005). China’s labor cost owns comparative advantage as compared with developed nations, but may not be as competitive as other developing nations. Wages (including welfare bonus) is on average $1 to $2 US per hour, which is 1/10 to 1/20 of hourly wages paid in advanced nations.
As technological and managerial skills keep transferring into China, the quality and cost of its labor market will show
Factor conditions for production are the inputs and infrastructure necessary for competition, which include:
• Human resources: quality and quantity of skilled labor, cost of personnel, and labor skill variety;
• Physical resources: “the abundance, quality, accessibility, and cost of the nation’s land, water, mineral, or timber deposits, hydroelectric power sources, fishing grounds, and other physical traits.” (Porter, 1990, p. 74);
• Knowledge resources: market, scientific, technical knowledge residing in a nation’s research institutions;
• Capital resources: capital availability and cost to finance industries. Capital resources can be affected by the rate of savings and national capital market structure;
• Infrastructure: availability and quality of infrastructure, including communication system, transportation system, payment or funds transfer, health care, and so forth.
A positive estimate of profit in the automobile industry indirectly promotes the development of national infrastructure development. To speed up the progression, the government has attracted FDI in the basic infrastructure sectors.
Although China’s population on average has a low education level, the auto industry attracts many skilled laborers in urban areas due to its geographical concentration in major cities and fast technological advancement introduced by foreign partners. Both labor productivity and wage in the auto section increased significantly between 1994 and 2004, at the rate of 11.4% and 13.5% respectively (China Automotive Yearbook, 2005). China’s labor cost owns comparative advantage as compared with developed nations, but may not be as competitive as other developing nations. Wages (including welfare bonus) is on average $1 to $2 US per hour, which is 1/10 to 1/20 of hourly wages paid in advanced nations.
As technological and managerial skills keep transferring into China, the quality and cost of its labor market will show