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Stepping Stone Strategy and Export Growth of Chinese Exporters

【Authors】
LU Xiaodong, YI Min
【WorkUnit】
Sun Yat-sen University, 510275.
【Abstract】

With the deeply changing world economic structure, Chinese enterprises will face greater uncertainties when exporting. Focusing on how Chinese exporters cope with these uncertainties, this paper investigates the influence of the stepping stone strategy on the decision of market entry, export growth and market exit by using trade data of Chinese firms with the 50 principal trading partners between 2000 and 2012. The main conclusions include: (1) Exporters will learn from markets they have entered and use them as the stepping stone to reach distant countries. On a given market, the export growth of new entrants in their third year is greater than incumbent exporters, but the possibility of exiting the market is higher for them. (2) The favorable market conditions, such as high GDP, relatively short distance and low tariff of a market not only attract more enterprises to enter but also stimulate the export growth and reduce the possible exit of established exporters. (3) The external stepping stone effect has a weak positive impact on the market entry of exporters while only the local stepping stone can facilitate the export growth of firms on a specific market.

JEL:F10, D22, F13

【KeyWords】
Uncertainty, Stepping Stone, Export Growth, Export Dynamic