Emerging Adaptation of Local Clusters in China in a Shifting Global Economy: Evidence from the Furniture Cluster in Houjie Town, Dongguan

At the aftermath of the 2008 financial crisis, a dramatic restructuring of global value chains (GVCs) was witnessed along with the transformation of industrial clusters in developing countries such as China. However, little research has been conducted on exploring the interaction between the evolution of GVCs and local clusters in the dynamic global-local interaction. By attempting to forge links between GVC restructuring and the adaptation of local clusters from the perspective of evolutionary economic geography, this paper explores the emerging adaptation of the furniture cluster in Houjie town, Dongguan, China in the crisis and post-crisis recovery. The study is conducted on the basis of on-site field investigations, particularly in-depth firm-level interviews during the period April 2012 to January 2014. Taking the furniture industry as a case, it examines the positive and negative effects of weak and strong lock-ins of the prevailing export-oriented cluster, reflected by the negative impact of export tax rebate policies and the positive effect of the International Famous Furniture Fair on furniture firms' attempt to tap into China's domestic market. The paper urges more empirical analysis to better understand the dynamic interaction between the global shift of production and markets, as well as the adaptation of local clusters in a shifting global economy.