1. Introduction
Among the four main raw materials (namely wood, steel, cement, and plastic) used for production, wood is the only biodegradable, renewable, and recyclable material. Wood processing products can substitute some high carbon emission materials, thus contributing significantly to climate change mitigation. Due to the low labor cost and huge domestic market, China has gradually developed a complete industrial chain, consequently taking an essential position in the global wood products market [
1]. However, China has experienced a decrease in the provision of wooden products to the global market in recent years. According to the United Nations Commodity Trade Statistics Database (UN Comtrade) and the China Forestry and Grassland Statistical Yearbook, China’s economy developed rapidly after entering the World Trade Organization (WTO), and the share of China’s wood-processing industry exports to the global wood-processing industry exports has been rising. According to
Figure 1, only 4.42% of the global market was represented internationally in 2001. China ranked first in the world in terms of its worldwide market share in 2006, which was double that of 2001 at 8.79%. According to a report by the United Nations Food and Agriculture Organization (FAO), the global market for wood processing products was stifled from 2007 to 2008 as a result of the financial crisis, and China’s exports of wood processing products also decreased during this time. However, China’s share of global exports of this sector is still growing. China’s export share increased from 9.93% in 2009 to 11.61% in 2012 because of the industry’s economic recovery following the financial crisis [
2], surpassing the export shares of other nations in the world with a total value of 14.122 billion US dollars. China’s foreign market share increased threefold from 2001 to 2015, reaching 13.47%. However, the slowdown in global economic development after 2015 forced products from Southeast Asian nations to compete in the global market at low prices, which had a significant negative effect on China’s exports of wood processing products. With the decline in China’s foreign market share, the growth rate of the industry’s total exports for wood processing in China shifted from positive to negative. Therefore, it is critical to discover strategies to encourage the expansion of China’s wood-processing industry and export growth.
Spatial agglomeration is an important economic phenomenon [
3,
4], which refers to a phenomenon whereby enterprises of the same type tend to congregate in one area to establish ties by sharing policies, information, regional reputation, and marketing channels [
4] and gain size effects through interaction. This is done to reduce costs and increase benefits. The spatial agglomeration could bring certain convenience to local enterprises. Therefore, spatial agglomeration may be able to break down the barriers and meet the developmental needs of China’s wood-processing industry. Achieving spatial agglomeration may have a positive impact on the development of enterprises [
5], thus promoting export. This paper aims to explore the possibility of boosting the export of China’s wood-processing industry by releasing an agglomeration economy. This paper makes the following contributions. First, we explore the role of spatial agglomeration in promoting export. Since most of the existing literature focuses on the entire manufacturing industry, there is still a lack of targeted analysis of labor-intensive industries, such as the wood-processing industry. In particular, for green materials such as wood, discussing how to improve resource utilization efficiency is very important. Second, previous studies on China’s wood- processing industry have mostly been based on macro-level data, ignoring industrial features and regional heterogeneity. This study conducts a quantitative analysis of spatial agglomeration at the micro-enterprise level, better reflecting the heterogeneous characteristics of wood enterprises. We use standard deviation ellipses to illustrate the agglomeration center of China’s wood-processing industry, which intuitively shows the spatial-temporal evolution of the industry.
2. Literature Review
The spatial agglomeration of the global manufacturing industry exhibits a complex developmental trend. There is continued growth in spatial agglomeration of the industry around the world [
6,
7]. For instance, the concentration of the German wood-based construction and furniture industries primarily occurs in specific regions, such as Eastern Baden-Württemberg and Lower Bavaria [
8]. Meanwhile, influenced by technological progress and global economic changes, the pattern of manufacturing agglomeration is undergoing major alterations [
9]. With the rise of anti-globalization, the agglomeration effect brought by spatial agglomeration has attracted more and more attention.
The spatial agglomeration of enterprises in China has come to the attention of scholars with the gradual implementation of policies such as ‘Bringing in’ and ‘Going out’. The research results of scholars are slightly different over time. Some academics think that China’s manufacturing industry has become more spatially agglomerated overall. The remarkable phenomenon of industrial spatial agglomeration in China occurred between 1985 and 1997 [
10], increased from 1998 to 2009 [
11,
12], and will be further enhanced [
13]. However, some scholars found that the overall spatial agglomeration of China’s manufacturing industry is not monotonically increasing; rather, it decreased from 1985 to 1997 [
14], showed an inverted ‘U’ shape from 1998 to 2008 [
15,
16], decreased from 2008 to 2013, and declined from 2013 to 2017 [
17]. The reasons for the different agglomeration trends may be the difference in data accuracy, the accuracy of measurement methods, and the spatial agglomeration in various industries. Wood is the only renewable raw material that can be recycled out of the four raw materials, e.g., wood, plastic, cement, and steel. Scholars have continuously discovered the agglomeration phenomenon of China’s forestry industry. Cheng found that the timber industry in Zhejiang formed industrial agglomeration with development [
18]. Zhou found that the agglomeration of the furniture industry has been formed and can bring industrial advantages [
19]. Li found that the agglomeration of the sawn wood and chips industry is mainly affected by market size and local timber forest resources [
20]. Zhao analyzed the agglomeration of the forestry industry in China based on the output value [
21]. Huang concluded that the spatial agglomeration does exist in China’s forestry industry through local spatial autocorrelation tests [
22]. Wei reported that China’s forestry industrial agglomeration has obvious spatial dependence and correlation [
23]. Chen found that the spatial agglomeration of China’s forest products industry was relatively low, and the industry was characterized by a very pronounced imbalance in its spatial distribution [
24]. However, there are few studies related to the spatial agglomeration and its evolutionary trend in China’s wood-processing industry.
The conclusions about the connection between spatial agglomeration and exports vary. Some scholars believe that spatial agglomeration promotes exports. It is because spatial agglomeration makes it easier for enterprises to obtain information, technology, and channels from other enterprises [
25,
26], causing knowledge spillover and thus promoting enterprise innovation [
27,
28,
29,
30,
31,
32]. In addition, similar enterprises acquire export experience faster, share information about global markets, and increase marketing externalities [
3,
4,
32,
33]., improving export performance through more attractive product prices and more effective cooperation [
4,
32]. The positive externality of industrial agglomeration does have a significant role in promoting the dual margin of enterprise export, and industrial agglomeration has a positive impact on enterprise export behavior through the flow of innovation factors [
10]. Due to the fact that foreign businesses favor doing business in densely populated locations [
34,
35], areas with high agglomeration levels attract more foreign capital [
36], enhancing the productivity and export dual margin [
15,
37]. In addition, geographical proximity can enable enterprises to save transportation costs [
38], reduce production costs, and offer price advantages. Long & Zhang found that spatial agglomeration also promotes export by improving labor productivity [
39]. Moreover, the weakening of financing constraints leads to the expansion of the export dual marginal of private enterprises, and the improvement of spatial agglomeration indirectly contributes to the export dual marginal expansion. Enterprises in areas with high agglomeration levels are more likely to become exporters in China [
40], with similar research conclusions noted in Italy [
32,
41].
On the other hand, some scholars believe that spatial agglomeration is not absolutely beneficial to the export of enterprises. The agglomeration of export enterprises makes the labor cost rise, which leads to a decrease in demographic dividends and an increase in export pressure [
42]. At the same time, excessive export agglomeration may lead to vicious competition, and export enterprises squeeze each other’s export markets [
43], thus hindering export growth. Enterprise cooperation brought by agglomeration is regarded as promoting export performance, while competition has a negative impact on export performance [
4,
44]. Chile’s export performance is negatively impacted by spatial agglomeration [
45]. Moreover, data from the Netherlands demonstrate that after a certain level of spatial agglomeration, the export performance of enterprises is no longer influenced by the spatial agglomeration’s external economic consequences [
46,
47]. In addition, spatial agglomeration may improve the productivity of enterprises by integrating resources [
48], or it may result in fierce competition as the number of enterprises increases, depending on the industries and geographic areas involved [
28,
49]. In other words, the impact of spatial agglomeration on exports depends on the trade-off between the ‘scale effect’ and ‘crowding effect’, and a significant ‘inverted U-shaped’ relationship exists between them [
50]. Similarly, this level has a curve relationship with the export possibility of high-tech emerging enterprises in the United States [
34].
A limited number of studies have been conducted on the effect of spatial agglomeration on exports within China’s wood-processing industry. Cheng found that spatial agglomeration promotes the regional brand effect, resource utilization and the sharing effect, industrial division and the cooperation effect, and industrial innovation improvements [
51]. Lv performed a case study of four major wood-based panel clusters, which showed that the utility brought by clusters could provide favorable conditions for enterprises to occupy the market [
52]. Li revealed that the improvement of the agglomeration promotes exports of the paper industry [
53]. The existing literature mostly focuses on the discussion of the manufacturing industry, whereas empirical research on the impact of the spatial agglomeration on exports within China’s wood-processing industry is lacking. Moreover, the current assessment of China’s wood-processing industry’s spatial agglomeration is primarily based on macro-level statistics. We conduct a more precise and realistic quantitative analysis of the spatial agglomeration of China’s wood-processing industry starting at the micro-enterprise perspective and investigate the effects of increasing spatial agglomeration on exports.
6. Conclusions and Policy Implications
Based on Industrial Enterprise Database, we analyze the spatial-temporal evolution pattern of China’s wood-processing enterprises and further study the impact of spatial agglomeration on exports to explore the potential of integrating spatial agglomeration to address the diminishing export growth. The following conclusions are drawn.
First, rational utilization of the agglomeration effect can improve the export of China’s wood-processing industry. The results show that spatial agglomeration significantly promotes the export of China’s wood-processing industry, and the promotion effect brought by agglomeration is greater in the western region than in the eastern region. It can maximize the cost advantage brought by spatial agglomeration, improve the competitiveness of enterprises, and promote the export of the wood-processing industry, especially in the western region. Second, the spatial agglomeration of China’s wood-processing industry holds significant potential for improvement. It is found that the spatial agglomeration of China’s wood-processing industry increased rapidly and substantially from 1999 to 2004. After 2004, the spatial agglomeration remained stable within a small range of fluctuations or even declined. Meanwhile, most sub-sectors of the wood-processing industry are at the primary agglomeration level, indicating significant potential for improvement and further development. Third, the area where China’s wood-processing industry agglomerated gradually shifted from the northeast to the eastern coast from 1999 to 2009. A possible reason is that since half of China’s wood raw material supply comes from imports, joining the WTO further amplifies the port advantages of the eastern coastal areas. The north–south distribution of China’s wood-processing industry was more concentrated than the east–west distribution. Fourth, due to transaction costs, the development path, and policy orientation, the export status of China’s wood-processing enterprises is inconsistent with the New-New Trade Theory, exhibiting a “productivity paradox” whereby enterprises with higher productivity are less likely to export.
According to the results, we put forward the following policy implications. First, the spatial agglomeration effect should be strategically leveraged. Although China is still the world’s largest producer of wood-based panels, attention should be paid to the declining export growth within the wood-processing industry. We found that rational utilization of the agglomeration effect can improve the export of China’s wood-processing industry, and the spatial agglomeration of sub-sectors in the wood-processing industry has not reached the optimal level. Hence, China’s wood-processing industry should utilize the production conditions of industrial parks to further expand existing clusters. This involves consolidating the existing industrial clusters and strategically establishing new industrial parks. Second, agglomeration of wood-processing enterprises in the western region should be stimulated. We found that the current wood-processing industry is mainly agglomerated in the eastern region. However, the agglomeration effect is greater in the western region than in the eastern region. Therefore, entrepreneurs preparing to set up new wood-processing plants should seize the opportunity to find a higher agglomeration effect in the west. Third, the competition of enterprises should be guided. The existence of the ‘productivity paradox’ shows that China’s low-tech manufacturing industry has not fully utilized the advantages of productivity and capital intensity to enter the international market, only with the advantage of low prices. However, price competition cannot enhance enterprise competitiveness, which is difficult to achieve the goal of getting bigger and stronger through the international market. The low-tech manufacturing industry should actively solve the problems, change the status, and finally improve the productivity advantage. Under the gradual loss of labor cost advantage, China should further boost the spatial agglomeration and enterprise productivity of low-tech manufacturing industries and increase the export competitiveness of low-tech industries, such as the wood-processing industry.
This paper focuses on the impact of agglomeration on exports within China’s wood-processing industry. However, faced with increasingly severe export competition, considering the role of spatial agglomeration in promoting exports, we have not made an in-depth empirical analysis on the issues, namely, whether mergers and acquisitions, realizing the scale operation and utilizing the scale economy, can improve the product quality of low-tech manufacturing industries and thus enhance their international competitiveness. These problems have a strong significance for the trend and policy orientation of China’s low-tech manufacturing industry, which deserves further study.