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Reconstructing the global value chain -- a vision for the G20 summit

From a contract manufacturer for foreign companies to an independent brand owner eying global expansion, the technology company Ugreen has reaped the fruits of moving up the value chain.

The company, based in southern Chinese booming town of Shenzhen, was founded in 2009 as a manufacturer of OEM data cable products.

Since establishing its own brand in 2011, the company has witnessed rapid development, growing into a provider of various digital accessories for customers around the world.

Company founder Zhang Qingsen said, "In the past, all chips and other materials we used for production were imported under the request of our foreign clients. Now we have many domestic chips at our disposal."

Zhang said Ugreen wants to increase the firm's proportion of Chinese chips from the current 30 to 50 percent in production.

The story of Ugreen is an epitome of the transformation of China's manufacturing industry over the past three decades after the reform and opening-up drive was initiated.

Chinese manufacturers used to focus more on the lower end of the global value chain -- relying on its advantages of cheap labor and abundant raw materials, a shared problem of many emerging economies.

The G20 summit, which will be held on Sept. 4-5 in eastern Chinese city of Hangzhou, is expected to help developing countries carve a way out of the imbalanced industrial structure.

Ge Shunqi, an economics specialist with Nankai University in Tianjin, said re-balancing the global economy does not mean that the current mode of labor division in manufacturing should be changed. It requires countries to make a more healthy industrial structure by moving up the value chain.

In his keynote speech at the 2015 APEC CEO Summit, President Xi Jinping called for Asia-Pacific economies to jointly build and benefit from a coordinated, open and inclusive global value chain.

He also stressed that while developed economies need to be more forthcoming about sharing their best practices and transferring technologies, developing economies should explore more boldly, increase input and try to catch up more quickly.

"In the post-global financial crisis era, the global manufacturing industry is moving toward the high-end sector. Emerging economies should face up to this new challenge and move up the industrial chain to expand their added value," said Zhang Monan, a researcher with China Center for International Economic Exchanges.

In July, financial and central bank officials from G20 members reached an agreement vowing to help developing countries and small and medium-sized enterprises join the global value chain.

Under the theme of "Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy," this year's G20 summit is expected to help enhance cooperation between G20 members and include all countries in globalization.

Zhang suggested that G20 members adopt a set of measures, such as removing trade-protective non-tariff measures, and promotion of the involvement of small and medium-sized companies in more communication and dialogues under the framework of the global value chain.


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