1. Industrial Cluster Policy For the Global Value Chain
The Asian Model of the
Industrial Cluster Policy
For the Global Value Chain
October 10,　2015
Akifumi Kuchiki
Nihon University

2. Only 300 hectares in Iran for Industrial agglomeration!
Iran will start its growth from 300 hectares!
(3 Km2)

3. Objective: In Iran, we will
create　China’s Shenzhen ！！！
Industrial agglomeration in Asia:
Kaohsiung in Taiwan in the 1960s.
Penang in Malaysia and Eastern
Seaboard in Thailand in the 1980s.
Shenzen in China in the 1990s
Industrial Cluster Policy in Iran!　　　

4. Questions:
1. What kinds of the segments of an industrial cluster are built? 2. Is it an efficient sequence of forming the segments? 3. Who is a leader? Key words: segment, sequence, leader

5. The investment environment Sequence = Prioritization
In other words,
The segments =
The investment environment
Sequence = Prioritization
Leader = Human resource

6. Bases
1. Segments of industrial cluster
Capacity
　Segment
Infrastructure
Roads
Railways
Airports
Ports
Communication
Water supply
Electricity
Industrial zones
Labor
Unskilled labor
Engineers
Managers
Institutions
Liberalization
Land ownership
Foreign currency exchange
Living environment
Schools
Hospitals
Entertainment
Shopping

7. Conclusions: The Asian model: Flowchart Approach:
1. Segments
2. The economies of sequence in forming the segments.
3. We must find a leader as an initial value of a sequence.
industrial cluster
(a bunch of grapes)

8. 1. Industrial cluster
A bunch of grapes

9. Kuchiki’s Definition: industrial cluster of the industry consists of two stages: Stage 1 is the stage of Agglomeration, Stage 2 is the stage of Innovation.

10. 2. The economies of sequencea b c d
Belly 腹
Breast 胸
Heart心臓
Head 頭
Anchor firms
Water supply
Industrial zone
Port
2. The economies of sequence

11. Today’s topics: Industrial clusters in Asia:
1. Automobile： Guangzhou, China 2. Electronics: Thang Long Industrial Park (TLIP) in Hanoi, Vietnam 3. Automobile: Eastern Sea Board in Thailand

12. Automobile Clusters = Global VC
Nagoya
Kyushu
Shanghai
Guangzhou
Beijing/Tianjin
Manila
Kuala Lumpur
Jakarta
Bangkok/Rayong
China
ASEAN
India
Delhi
Mumbai
[Bombay]
Korea

14. １．Guangzhou’s Automobile Industry Cluster

15. The Asian model: Flowchart Approach: (a) industrial zones
(b) anchor firms
(c) the related firms (suppliers)
(d) segment building
(e) leader

16. The Asian Model: Flowchart Approach
Source: A. Kuchiki and K. Yoshida

17. (a) Industrial Zones and Segment Building: 6 Industrial Zones

18. East Auto-Industry Belt
Zone
East Auto-Industry Belt
South of Guangzhou
Northwest of Guangzhou
Capacity
Guangzhou Economic & Technological Development District
Xingtang Industrial Processing Zone of Zengcheng City
Huangpu District
Nansha International Automobile Industry Park
Panyu Automobile High-tech Industry Base
Huadu Auto City
Infrastructure: (ⅰ)Electricity Supply
A 110 thousand KVA (kilovolt amperes) transformer substation and completed underground electrical network with two-circuit electricity supply.
A 500 thousand KVA transformer substation and 4 transformer substations of 110 thousand KVA.
Electricity Network with 6 of 110 KVA transformer substations, a 220 KVA transformer substation and Huangpu Power Plant of 1.1 million KW (kilowatt).
Several 110 thousand VA transformer substations. Zhujiang Powerplant, with capacity of 1.2 million KW and many thermal power stations with thousand KW.
Supplied by Shilou 110 KV Transformer Substation ,and a new 110 KV transformer substation is under construction.
15 transformer substations with 110 KV and a 220 thousand KV transformer substation. Power supply rate to enterprises reaches 100 % with daily supply of 4,760,000 KW/h.
(ⅱ)Water Supply
Xinhe Waterworks with daily capacity of 300,000 tons
Four large waterworks, Dadun, Xizhou, Xinhe and Shapu, providing daily water capacity of 1.2 million tons.
Supplied by Guangzhou Municipal Waterworks
3 main water pipes from Shawan Waterworks are serving the whole Park with daily supply of 250,000 tons.
Supplied by Shawan Waterworks with daily capacity of 560,000 tons.
3 waterworks with daily supply capacity of 200,000 tons and the water quality reaches State’s sanitary standards.
(ⅲ)Sewage Treatment
A modern wastewater disposal station enabling separate treatment for underground water and sewage water
First stage of 300,000-ton waste water disposal station is under construction
Water and waste drainage system is under construction , which is available with first stage of Da Shadi Wastewater Disposal Station of daily capacity of 200,000 tons
Guangzhou Nansha City Wastewater Disposal Station, with daily handling capacity of the first stage of 100,000 tons
The project of drainage system which adapt the rain water type drainage, capable of 160,000 ton/day wastewater disposal is under way
150,000-ton/day waste water piping system
Human Resource:
Education
Close to Gunagnzhou Zone of High Learning and Guangzhou University City. Various of middle schools, primary schools, kindergartens and Japanese schools are located within the area
Within 30-minute drive to South China University of Technology, Sun Yet-Tsen University, Guangdong University of Foreign Studies, Guangdong Commercial College
Close to Guangzhou University City where many high educational and research institutes are located, capable of supplying rich human resources to enterprises
Yingdong Middle School and Nansha Central Primary School, etc
Located in the southeast of the University City, only 20-minute drive with rich human resource available
Gungzhou Institute of Automobile of South China University of Technology, Gunagdong Transportation Technology College, Guangdong Peizheng Business School
Living Conditions : (ⅰ)Environment
A sound environment of green hills and clean water, with villa gardens, noble residences and tourist resorts
Ecological residential areas, such as Country Garden Phonix City, Jinxiu Heung Kong Xinjiang and Xinshijie Residential Area
Residential areas including Wanke City, Huangpu, Jinbi Millenium are within the area with average estate price at 3,500 yuan /㎡
The area is composed of river and lake with nice natural environment and well-preserved natural ecological zone
Modern residential areas with nice environment, excellent facilities, and convinient transportation network are available
The Sunshine Residential Area is surrounded by favorable environment
(ⅱ)Food & Entertainment
A four-star hotel (Foreign Business Center), and a golf court
Two five-star hotels and three four-star hotels and four golf courts
The District is well-known for Nangang Seafood and Bicum Lichi, a delicious fruit exclusively from Guangdong Province
Tourist attraction with Nansha Puzhou Park, Waterside Street, Nansha Golf Court, Sunflower Park, Wetland Park, Nansha Hotel, Clifford Hotel, etc
Lotus Hill, one of the Eight New Scenes of Guangzhou, and golf club, an ideal place for recreation
8 of starred hotels, 2 golf courts and shopping and entertainment facilities in the Sunshine Residential area, Automobile city
(ⅲ)Medical Services
GETDD Hospital (322 beds) and more than 10 medical institutes
General hospitals with advanced technology and equipments , several medical institutes
More than 10 hositals are available including Sun Yet-Tsen Huangpu Affiliated Hospital
Nansha Hospital
Two A-class hospitals, one international medical institute and the medical institutes at every town
18 hospitals and the world-level Clifford Hospital is under construction
Source: The Bureau of Foreign Trade and Economic Cooperation of Guangzhou Municipality, A Foreign Investment Guide to Guangzhou Auto Industry, 2005.

19. Segment: (b) Institutions: One-stop Services

20. (c) Anchor firms: Toyota Honda Nissan Joint venture company
Guangzhou Toyota Motor Co., Ltd.
Guangzhou Honda Automobile Co., Ltd.
Dongfeng Nissan Motor Company
Establishment
2004 September
2006 May
1998
2004 May
Joint venture partner
Guangzhou Automobile
(JVs with First Automotive Works in Tianjin)
Guangzhou Automobile,
Dongfeng Automobile
(Engines)
Main products
Camry
Accord, Fit
Sunny, Tiida
Annual production volume
100,000 (2006)
Production capacity is 300,000.
240,000 (2004).
Second plant is under construction. (Scheduled to complete in 2006.
150,000
Location of headquarters
Southern coast of Guangzhou city (Nansha district:797 ㎢)
Center of Guangzhou city. (Guangzhou Economic Development Zone)
North of Guangzhou city. (Huadu district: 50 ㎢)
Agglomeration of components makers
Nansha district (12 keiretsu companies),
Shunde district Foshan city (6 Keiretsu companies).
Guangzhou Economic Development Zone
Huadu district
Main components makers
Japanese makers
Taiwanese makers,
Source: Based on Tsukada (2005), Kuchiki arranged partly.
Notes: Korea Hyundai Motor and Guangzhou Automobile produce commercial vehicles in Huadu. (Total investment: 135 billion yen)
Hyundai Motor and Beijing Automobile Investment Co. produce passenger vehicles.

21. (d) Related Firms: Suppliers：
Anchor Firms:
Honda,
Nissan and
Toyota
=> Agglomeration

22. NISSAN’s Agglomeration(2003-06)
Company name
Investor
Products
Foundation 1
Dongfeng Motor Corporation
Nissan Motor Co., Ltd. Dongfeng Motor Corporation
Passenger cars, commercial vehicles
2003 2
Unipres Guangzhou Corporation
Unipres Corporation
Car body components 3
Yorozu Bao Mit Automotive Co., Ltd.
Yorozu Corporation, Shanghai Bao Steel Int. Economics
&Trading Co., Ltd., Mitsui &Co., Ltd.
Suspensions 4
Guangzhou Mitsuike Autoparts Co., Ltd.
Mitsuike Corporation
Metalic dies 5
Dongfeng Passenger Vehicle Research & Development Center
Dongfeng Nissan
Research and development center
2004 6
Guangzhou Hitachi Unisia Automotive Parts Co., Ltd.
Hitachi Automotive Systems
Power Steering System 7
Fuzhou Fukwang Rubber & Plastic Co., Ltd.
Kinugawa Rubber Industrial Co., Ltd.
Body sealing products 8
Guangzhou Hua Jing Automotive Steelparts Co., Ltd.
Mitsui & Co., Ltd.
Steel plates 9
Kiriu-Lioho Co., Ltd.
Kiriu Corporation, Lioho Machine Works, Ltd. （
Taiwan ）
Brake parts 10
Guangzhou Nishikawa Sealing Systems Co., Ltd.
Nishikawa Rubber Co., Ltd.
Sealing parts 11
Alpha (Guangzhou) Automotive Parts Co., Ltd.
Alpha Corporation, Marubeni Vehicle Corporation
Key sets 12
Xingguang (Guangzhou) Autoparts Co., Ltd. (*)
Hoshi Diecast Kogyosho
Die-castings 13
Tacle Guangzhou Automotive Seat Co., Ltd.
Tachi-S Co., Ltd.
Automobi ｌ
e seats 14
Guangzhou Kasai Automotive Interior Trim Parts Co., Ltd.
Kasai Kogyo Co., Ltd.
Interior parts 15
Calsonic Kansei (Shanghai) Corporation (Huadu Branch)
Calsonic Kansei Corporation
Module Products
2005 16
MI Steel Processing Guangzhou Co., Ltd.
Marubeni Itochu Steel Inc. 17
CAST Autoparts Co., Ltd. (*)
Daiichi Kinzoku Co., Ltd.
Automobile parts 18
Fuji Autotech Guangzhou Co., Ltd.
Shanghai Min Fang Auto Parts Co,. Ltd.
Fuji Kiko Co., Ltd., Tachi-S Co., Ltd. 19
Calsonic Kansei (Guangzhou) Components Corp.
Instrument panels, exhaust products 20
Guangzhou Mahle Filter System Co., Ltd.
Mahle Filter Systems Japan Corporation
Air filters, motor heat insulation boards 21
Tachi-S Trim Guangzhou Co., Ltd. 22
Engine factory of Dongfeng Nissan
Engines
2006 23
Toyo Quality One Guangzhou Co., Ltd. (*)
Toyo Quality One Corporation,
Nagase & Co., Ltd.
Automotive devices 24
Guangzhou Nanjo QuanXing Autoparts Co., Ltd. (*)
Taiwan QuanXing, Nanjo Kogyo 25
Guangzhou Kanto Autoparts
Co., Ltd. (*)
Kanto Auto Works, Ltd.
Auto bodies and parts
Source: Inagaki (2004), Huadu District, Guangzhou (2005)
(* ) = Author's translation.

23. TOYOTA’s Agglomeration(2002-06)
Company name
Investor
Products
Foundation 1
Foshan Melx Leather Co., Ltd. 　（ * ）
Melx Co., Ltd.
Leather products for automobile seats
2002 2
Foshan Nichiwa Co., Ltd.
Nichiwa Co., Ltd.
Bolts, nuts, pressed parts
2003 3
Toyota Gosei (Foshan) Rubber Parts Co., Ltd.
Toyota Gosei Co., Ltd., Toyota Tsusho Corporation
Body-sealing products for automobiles
2004 4
Aisin Seiki (Foshan) Automotive Parts Co., Ltd.
Aisin Seiki Co., Ltd.
Engine parts 5
Aisan (Foshan) Auto Parts Co., Ltd.
Aisan Industry Co., Ltd., Toyota Tsusho Corporation
Throttle bodies, Engine valves 6
Foshan Japan Brake Co., Ltd.
Japan Brake Industrial Co., Ltd.
Brake assemblies 7
Foshan Shunde Yinhe Motorcycle Co., Ltd.
Axle Corporation
Motorcycles 8
Foshan Tokairika Automotive Parts Co., Ltd.
Tokai Rika Co., Ltd., Toyota Tsusho Corporation
Switches, steering locks 9
Koyo Lioho (Foshan) Automotive Parts Co., Ltd.
Koyo Seiko Co., Ltd. ,Koyo Metaltec Co., Ltd.
Toyota Tsusho Corporation
Bearings 10
Foshan Yutaka Auto Parts Co., Ltd.
Yutaka Giken Co., Ltd.
Torque converters 11
Foshan Summit Nikka Mold & Metal Products Co., Ltd.
Sumitomo Corporation
Mold and metal products 12
Toyota Gosei (Foshan) Auto Parts Co., Ltd.
Interior and exterior parts 13
Toyoda-Koki Automotive (Foshan) Co., Ltd.
Toyoda Machine Works, Ltd.
Power steering parts 14
Takagi Auto Parts (Foshan) Co., Ltd.
Takagi Seiko Co., Pla-Net Corporation
Plastic components, molds 15
Kobe Wire Products (Foshan) Co., Ltd.
Kobe Steel., Ltd. , Metal One Corporation , Kyodo Shaft Co., Ltd.
Sugita Wire, Ltd.
Steel bars and steel wires
2005 16
Elastomix (Foshan) Co., Ltd.
Elastomix Co., Ltd.
Carbon master batch 17
Guangzhou Parkerizing Co., Ltd.
Nihon Parkerizing Co., Ltd. ,Asahi Chiyoda Kogyo Co., Ltd.
Hamamatsu Netsuhori Kogyo Co., Ltd. ,Parker Netsusyori Kogyo K.K.
Surface treatment for automobile parts 18
Toyota Boshoku Foshan Co., Ltd.
Toyota Boshoku Corporation
Oil filters 19
Fujikura Kasei (Foshan) Paint Co., Ltd.
Fujikura Kasei Co., Ltd. , Kyokuto Boeki Kaisha, Ltd.
Coating for plastics 20
Foshan Unytite Co., Ltd.
Unytite
Corporation
Bolts, nuts 21
Tokai Spring Mfg. (Foshan) Co., Ltd.
Tokai Spring Mfg. Co., Ltd., Nagase & Co., Ltd.
Precision leaf springs, press products 22
Yamasei Automotive (Foshan) Co., Ltd.
Toyoda Machine Works, Ltd. , Yamasei Kogyo Co.,
The Yokohama Rubber Co., Ltd. 23
Sanyo Seiko (Foshan) Co., Ltd.
San-Esu
Mold parts
2006 24
Foshan Dongrong Xuri Electrics Co., Ltd.
Toei Kagaku Kogyo, Xuri Co.
Automobile parts 25
Foshan Nitigura Co., Ltd.
Nihon Glassfiber Industrial Co., Ltd.
Exhaust manifold covers 26
Foshan Shunde Yazaki Auto Parts Co., Ltd.
Yazaki Corporation
Automotive instruments 27
Hegu (Foshan) Automotive Fuel System Co., Ltd. （
Nichiwa Sangyo Co., Ltd. 28
Daiichi Bussan (Foshan) Co., Ltd.
Daiichi-Bussan Co., Ltd.
Insulators 29
Usui Automotive Parts Co., Ltd.
Usui Kokusai Sangyo Kaisha, Ltd.
Brake tubes, power steering tubes 30
Enkei Aluminum Products (Guangdong) Co., Ltd.
Enkei Corporation
Aliminum wheels 31
Foshan Shunde Lefu Hardware Precise Mold Co., Ltd.
Osamu Fukui, Tsuneo Imai, Yosuke Fukui, Masaru Nakamura 32
Azimit Auto Parts (Foshan) Co., Ltd.
Azimit 33
Sugiyama Kogyo (Foshan) Mold Co., Ltd.
Sugiyama Kogyo Co., Ltd., Toyota Tsusho Corporation
Source: Inagaki (2004), Nansha Development District (2005)
(* ) = Author's translation.

24. HONDA’s Agglomeration 1997-2006(Suppliers)
Company name
Investor
Products
Foundation 1
Guangzhou Showa Autoparts Co., Ltd.
Showa Corporation, Kanematsu Corporation
Shock absorbers
1994 2
Guangzhou Stanley Electric Co., Ltd.
Stanley Electric Co., Ltd., Honda Motor (china) Investment Co.,Ltd.
Automotive lightning products
1999 3
Guangzhou Mitsuba Electric Co.,Ltd.
MITSUBA Corporation., Mitsuba China (Hong Kong) Ltd.
Auto electrical systems, Two-wheeled
vehicle engine support 4
Guangzhou Sanoh Seikan Co., Ltd.
Sanoh Industrial Co., Ltd.
Automotive parts (brake tubes, fuel
tubes, other tubular parts) 5
NIPPON
LEAKLESS
Corporation
GZ LEAKLESS Co.,Ltd.
Automotive Gaskets 6
Auto Parts Alliance (China) Ltd.
Kikuchi Co.,Ltd., TAKAO KINZOKU KOGYO Co., Ltd.
Aluminum structural assemblies
2001 7
Guangzhou Daiyu Seat Co., Ltd.
Daiyu Co.,Ltd.
Sewn automotive seat components 8
Guangzhou Marujun Co.,Ltd.
Marujun Co.,Ltd.
Automotive stamping parts 9
NHK-Uni spring(Guangzhou)Co.,Ltd.
NHK Spring Co.,Ltd.
Coil Springs, Stabilizers
2002 10
Guangzhou NTN-Yulon Drivetrain Co.,Ltd.
NTN Corporation, Yulon Group （
Taiwan ）
Constant-Velocity Joints (CVJs) 11
Guanzhou Vigo Stanley electric company limited
Stanley Electric Co., Ltd.
Automotive Lightning Products 12
Guangzhou Nanbu Plastics Co.,Ltd.
Nanbu Plastics Co.,Ltd.
Plastic products 13
Guangzhou GKI Car Interior Parts Co.,Ltd.
ITOCHU Corporation, Kotobukiya Fronte Co.,Ltd.
Automotive upholstery
2003 14
NHK Spring Precision (Guangzhou) Co.,Ltd.
Suspension Springs 15
Honda Automobile (China) Co., Ltd.
Honda Motor Co.,Ltd.
Motorcycles, Automobiles 16
Guangzhou DEMPU Automobile Ｐ
arts Co., Ltd.
N.A. 　（ *1 17
Guangzhou Shiroki Corporation
Shiroki Corporation
Doorframes, Moldings 18
Guangzhou Ahresty Automobile Parts Co.,Ltd
Ahresty Corp.
Die Casting
products 19
Guangzhou You-Ri Automotive Parts Co.,Ltd
Sumitomo Pie & Tube Co.,Ltd., Sumitomo Corporation
Nippon Steel Corporation
Electric-resistance welded pipes 20
Tokai Rubber (Ghuangzhou) Co.,Ltd.
Tokai Rubber Industries Ltd.
Anti-vibration rubber parts,
Automotive hoses 21
Honda Engineering China Co., Ltd.
Honda Engineering Co., Ltd., Honda Motor (China) Investment Co.,Ltd.
Mold parts
2004 22
Guangzhou NEIVE Co.,Ltd.
NEIVE Co.,Ltd.
Automobile Parts 23
Decker System China (DSC)
Decker Corporation, Chinese United Faith 24
Guangzhou Tech Interior Trim Manufacturing Co.,Ltd.
TS Tech Co.,Ltd. 25
TEIKURO Guangzhou Corporation
Teikuro Inc.
Surface treatment for mold parts 26
Guangzhou Bridgestone Chemical Products Co., Ltd.
Bridgestone Corporation 、
Guangzhou Automobile Group Co., Ltd.
Urethane foam 27
Guangzhou Fuji Tool Co.,Ltd.
Fujiseiko Limited
Carbide Tools 28
Toyo Automotive Parts (Guangzhou) Co., Ltd.
Toyo Tire&Rubber Co.,Ltd
Anti-vibration rubber parts 29
Ring Techs Automobile Products Co.,Ltd.
Ring Techs Co.,Ltd., Metal One Corooration
Steel wheels for passenger cars 30
Tsuchiya (Guangzhou) Automotive Components Co., Ltd.
Tsuchiya Co., Ltd.
Plastic Products 31
Akebono Corporation (Guangzhou)
Akebono Brake Industry Co.,Ltd.
Brakes 32
Ohashi Technica (Guangzhou) Co., Ltd.
Ohashi Technica, Inc. 33
Ghuangzhou Uchiyama Manufacturing Co.,Ltd.
Uchiyama Manufacturing Corp.
Gaskets, Seals 34
Tocalo& Han Tai Co., Ltd.
TOCALO Co.,Ltd.,
HAN TAI Co.,Ltd.
Surface modification
2005 35
Guangzhou Hori Automobile Glass Co., Ltd.
Hori Glass Co.,Ltd
Plastic parts for windshields 36
Guangzhou Linjun Automobile Internal Decoration Co., Ltd.
HAYASHI TELEMPU Co.,Ltd.,Guangzhou Automobile Group Co., Ltd. 37
Guangzhou Ninomiya Cold Forging Automotive Parts
Ninomiya Co., Ltd.
Cold forged products
2006 38
Tigerpoly Manufacturing
Tigaers Polymer Corporation
Rubber seats, Plastic hoses
Source: Inagaki (2004), Shunde District, Foshan City (2005)

25. (e) Leader: Local Government
Guangzhou municipality
Industrial zones
Guangzhou Automobile
Industry Group (GAIG)
Guangzhou Automobile Group
Guangzhou State-owned
Enterprise　Projects
Honda　
Nissan　
Toyota
Hyundai
Isuzu
Their related companies
(6 companies)
(6 industrial zones)
(21 companies)
(14 component companies)
(30 companies)
Anchor firms
Guangzhou Automobile
Industry Park (GAIP)
Source: Author’s

26. Sequence 1: Honda’s effect
(e) Leadership of a mayor
1998
Guangzhou Economic Development Zone
2005
Zengcheng Industrial Park
Future
Foshan Industrial Park
Capacity buildingⅠ
Electricity, railway : actors＝Guangzhou city, Guangdong Province
1. Universities and research institutes: university park? 2. Local government incentives: one stop service
HONDA
(Anchor firm) (Decision Making by the president of Japanese Headquarters)
2001
2002
Keiretsu firms：Tier1, Tier2, Tier3
Zengcheng, Zongshan, Foshan
Capacity building Ⅱ
Human resource management: Japanese interpreters: actors＝JETRO
(Yonghe Economic Zone), Foshan
Future
Related firms
Automobile Industry Agglomeration
R&D, Technology transfer
(Innovation), Universities, Research Institutes
Automobile Industry Cluster
Source: A. Kuchiki and H. Tsukada

27. Sequence 2:Toyota’s Effect
(e) Leadership of a mayor
Step I：
Agglomeration
Nansha, Shunde, Foshan
(a)
Competition between the industrial zones
(b)
Capacity building I
(Construction of subway: actors=Guangzhou city ）
(c)
TOYOTA
Keiretsu: Tier1
(Construction of highway: actors=Guangzhou city)
Capacity building II
Keiretsu: Tier2, Tier3
Chinese local firms
(actors to invite firms=Guangzhou city, JETRO)
Related manufacturers and service industries I
Step II：
Innovation
Finance
R &D
Logistics
Machinery Equipments
(Automobile Industry Agglomeration)
Technology transfer
(Innovation)
Automobile Industry Cluster
Source: A. Kuchiki and H. Tsukada
Cluster

28. 1．Segment building for Anchor Firms: Honda, Nissan and Toyota
Summary:
1．Segment building for Anchor Firms:
Honda, Nissan and Toyota
2．Local government: Leadership

31. Segment Building: The effects of ODA:
2．The Electronics Industry Cluster
in northern Vietnam:
Segment Building: The effects of ODA:
(a) Highway Route 5,
(b) Haiphong Port,
(c) Institutional Reform 31

32. Industrial zones and segment building
Contents
Items
Participation
Development of Land
Industrial zones
Site development
Central and local governments
Capacity Building
Tax incentives
Central and local governments
Infrastructure
(a) Roads, (b) ports
ODA
(c) Institutions
Investment Climate
The government and ODA
Human Resource: Technological Transfer
Living conditions
Restaurants, Shops
Foreign direct investment

33. Sequence 3: Industrial Clusters in Northern Vietnam
Hanoi (TLIP)
Haiphong
Haiphong Port
Highway No.5
Nomura Haiphong IZ
A Model of Forming Industrial Clusters
(a)Highway No.5, (b)Haiphong Port
Thang Long IP (TLPI)
Nomura Haiphong IZ (NHIZ)
Segment building +
(c)Institutional Reform (One stop service, tax)
Anchor Companies
Canon, Honda, Panasonic, Galaxy
Canon’s Effect
Related and Other Companies
Japanese companies, other foreign and local companies
Industrial Clusters
Development of Northern Vietnam

34. XXX (inc.local distribution by ship)
Segment: (a) Highway and (b) Port
Type
Poduction
Market- Local
Market-Export
Import
Hai-Phong Port
Highway No.5
Example 1
Hanoi
Hai Phong XX
Canon 2
Local
TOTO 3 X
Vietnam Float Glass 4
Computer
Com
Yabashi 5
Noi Bai
Sumitomo Bakelite 6
As’ty 7
San Miguel Yamamura 8
XXX (inc.local distribution by ship)
Han-Viet Heavy Industry & Construction 9
ESTELL 10
Vinh Phuc
Honda
Note: X shows frequency of use
Source: Company survey

35. Segment: (c) Institutional Reforms50
100
150
200
250
300
0_ Abolished the approval system
for new business (changed to a
registration system
1_ Abolished sub-licenses
2_ Improved the collateral and
access to banks
3_ Liberalized trade
4_ Expanded funding policies
(Development Assistance Fund,
Export Assistance Fund and other)
5_ Promoted the establishment of
business associations
6_ Improved bidding regulations
7_ Simplified government
procedures and improved
government-related procedures:
8_ Promoted reforms of the state-
owned enterprises
9_ Others
(enterprises) (
Note: Data collected from private companies only
Onestop services

36. Agglomeration : Canon’s effects
ABE Asian Tech
(Users’ manual)
(Thang Long)
Volex
(Power code)
(Thang Long)
SANTOMAS
(Plastic Products)
(Thang Long)
Japanese HDQ
Thailand Subsidiary
Sumi-Hanel
(Writing system)
(Saidon B)
Canon(printer)
(Thang Long)
Inabata Sangyo
(Plastic products)
(Nomura-Haiphong)
Dragon Logistics
(Transportation)
(Thang Long)
Parker Processing
(Surface treatment)
(Thang Long)
Fuji Mold
(Plastic molds)
(Nomura-Haiphong)
Nippo Mechatronics
(Plastic molds)
(Noi Bai)

37. Agglomeration : Thang Long Industrial Park
LIST OF TENANTS IN TLIP
Company name
Date of I / L
Nationality
Land Rental
Products １
Mitsubishi Pencil VN Co., Ltd.
29 November 2001
Japan
3.8
Writing implements 2
Vina KDC Wiring Industries Ltd.
15 January 2001
0.48 (Rental factory)
Wire harness & power supply cord C3
Parker Processing VN Co., Ltd
8 August 2001
2.31
Paint & Surface treatment parts C4
Volex Cable Assembly(VN) Co.,Ltd
9 August 2001
Singapore
0.47(Rental factory)
Power supply cord, Interconnectors C5
Canon VN Co., Ltd.
11 April 2001 20
Ink jet printers

38. Agglomeration (continued)
LIST OF TENANTS IN TLIP 18
Seed VN Co., Ltd
30 August 2002
Japan
0.60 (Rental factory)
Manufacturing and sale of stationery products 19
Hanoi Steel Center Co., Ltd
16 September 2002
1.89
Processing steel sheet 20
Toho VN Co., Ltd
9 October 2002
1.36
Design and manufacturing mold for plastic product 21
Kayaba VN Co., Ltd
22 October 2002
0.56
Manufacuture and sales of part and components for automobile and motorcycle 22
HAV VN Co., Ltd
17 December 2002
1.97
Production and sales of all types of aluminum castings and casting molds
TOTAL
61.19ha
Note: C3, C4 and C9-13 provide parts and components to Canon Source: Sumitomo Corporation, June 2002.

39. Agglomeration : A List of Tenants and Nomura Haiphong Industrial Zone (as of April 22, 2003)
Company
District
Products
Date of Investment permit
Vietphong Garment & Textile Co., Ltd.
Hong Kong Capital
Standard Factory B - 2nd.3rd floors
ladies’ knitwears
March 28, 2002
R&T manufacturing VN Co., Ltd.
Standard Factory A-2nd floor
+ Na-16 (1ha)
Textile.sewing
knitwears
April 16, 2002
BT Garment Co., Ltd.
Standard Factory
A-4th floor
Textile. Sewing
August 23, 2002
Office Express
Manufacturing Co., Ltd.
B- 1st floor
staples (ring file)
January 8, 2002
Taiwan Fong Tai Paper Co.,Ltd.
Taiwan Capital
F-12b
(0.5ha)
corrugated cartons, package materials
Febrary 1, 2002

40. Sequence 3: The electronics industry cluster in northern Vietnam
(Unit:　million $: 1$=100\)
Year
ODA
Highway Route 5
1993,
2.10
Haiphong Port
1995,
1.73
Thanglong Industrial Park
1997
Nomura Haiphong Industrial Zone
Institutional Reform
1999
2.00
Canon
2001
Total amount
5.83
100 suppliers
2008
30 thousand employees

41. Conclusion:
We found the effects of Canon on the industrial cluster policy in the case of the electronics industry cluster in northern Vietnam. GDP of TLIP = 23%, 80 firms, Labor = 40,000 (2007)
2. We made it clear that ODA played a crucial role in succeeding industrial cluster policy. 41

43. (1) Detroit in East Asia:
Thailand: Mitsubishi Motors as an Anchor Firm in the cluster of Eastern Sea Board Region:
420 ha and 10 years:
the number of the newly employed is about 30 thousands.

44. Loan contract agreement
Sequence 4:
Loan contract agreement
Loan completion
Loan executed
executed
Water/Aqueduct Project
7/1982
4/1987
36.06
Leamchabang Port
9/1984
6/1993
31.78
11/1986
11/1993
48.42
2/1990
9/1995
58.68
10/1985
10/1992
25.76
9/1987
9/1992
19.89
184.53
Leamchabang Industrial Estate
45.65
Railway Projects
Siracha/Leamchabang
9/1988
7/1996
9.2
Sattahip/Maptaphut
1/1997
28.26
Khlong19/Kengkoi
12/1999
72.98
110.44
Road Projects
Chonburi/Pattaya
11/1988
3/1994
40.74
Bangkok/Chonburi
12/1990
4/1993
134.35
Outer Bangkok Ring
128.28
303.37
680.05
Mitsubishi Motors (Thailand)
Established in 1990

45. 4. The Asian Model: Flowchart Approach: Practical45 45

46. Segments: roads, port, airport, institutions Flowchart Approach :
Conclusion:
Segments: roads, port, airport, institutions
Flowchart Approach :
the economies of sequence
3. Leadership:
The government, An anchor firm 46

47. The investment environment Sequence = Prioritization
In other words,
The segments =
The investment environment
Sequence = Prioritization
Leader = Human resource

48. Figure 2-1. Flowchart Approach: Sequence Prioritization: An example48 48
Source: A. Kuchiki and J. Kabir

50. (3) Anchor firms
1. Firms with high Backward linkage (e.g. Toyota, Nissan) i. Automobile = more than 20,000 parts ii. Electronics (ink-jet printers)= 800 parts
2. Trading corporations (eg. Mitsubishi corporation) bring customers (tenants).
3. Companies in the neighboring counties = lower entry costs: South African firms or other firms

51. A sample: Flowchart Players (candidates?) Industrial zone
Trading corporations
Infrastructure
JICA
Capacity
building
Human Resource
JETRO
Living condition
Trading corporations
Anchor firms
Targeting (candidates?)
Trading corporation
Toyota
Nissan
Local firms

52. Candidates:
Iran: next target: Competitors: India, Indonesia, South Africa: Global competition

53. Conclusion:
The Asian Model:
Flowchart approach:
Segment Building =
the environment of investment
(2) The economies of sequence
(3) Leadership

54. Appendix 1: Worksheets!!!
Ask ten professionals as you did and fill out “Worksheet 1”.
Compile “Worksheet 2” again as you did in FY2008.
Find the candidates of anchor firms.
Just do it!

55. Let’s apply it to our cases!
Candidates of respondents：
１．Local government
２．Central government
３．Research institute
４．Research institute
５．ODA organization: JICA, JETRO, UNDP, 　　　 　 ADB, World Bank
６．Researchers of Universities
７．Private companies including trading corporations
８．NGOs, Others
Let’s apply it to our cases!

56. 1. Does industrial zones exist sufficiently? O
Table 1. Questionnaires on industrial cluster policy: Dalat: Agri. 1 2 3 4 5 6 7 8 9 10
Results
Problems
1. Does industrial zones exist sufficiently? O
Capacity building: Physical infrastructure
2. Does transport infrastructure exist sufficiently? X
3. Does electricity infrastructure exist sufficiently?
4. Does communication infrastructure exist sufficiently?
5. Does port infrastructure exist sufficiently?
6. Do institutions exist sufficiently?
Human resources
6. Unskilled labor
7. Skilled labor
Living conditions
8. Do hospitals exist sufficiently?
9. Do schools exist sufficiently?
10. Do entertainments exist sufficiently?
Source: A. Kuchiki and T. Gokan (interviews in Hanoi on Aug , 2008)

57. Figure 1. Nortern Vietnam's Flowchart
Prescritions
Roads →
①．Highway 5 for Automobiles
↓Yes No
②．Highway to link Hanoi and soutern China
③．Highway to link Noibai Airport and the center of Hanoi
↙Return
Electricity
Increase of power supply
Build-Operation-Transfer, Official Development Assistance
Ports
Upgrade of Haiphong Port
Institutions
Customs clearance
①．The simplification of paper procedures
②．The simplification of exchange in container trucks at the border
Unskilled labor
Employment of labor from rural area
The end of this flowchart
Entertainments
Facilitation of entertainments
Private companies
Thefts
Ethical education

58. Worksheet 2: Find players!
Flowchart
Players (candidates?)
Industrial zone
JICA, Trading corporations
Infrastructure
JICA
Capacity
building
Human Resource
JETRO, JICA
Living condition
Trading corporations
Anchor firms
Targeting (candidates?)
Mitsubishi corporation
Toyota
Vietnamese firms
Other Asian firms

59. Work 3: Find the candidates of anchor firms. Examples: 1
Work 3: Find the candidates of anchor firms! Examples: 1. Firms with high Backward linkage (eg. Toyota, Tata) i. Automobile = more than 200,000 parts ii. Electronics (ink-jet printers)= 800 parts 2. Trading corporations (eg. Mitsubishi corporation) bring customers (tenants). 3. Companies in the neighboring counties = lower entry costs: Vietnamese firms, Other Asian firms

60. Definition: Economies of Sequence
Appendix 2
Definition:
Economies of Sequence

61. A=｛s1，s2，s3｝ B=｛s1，s3，s2｝ Definition The order of A: ｛s1→s2→s3｝
Economies of sequence
Definition
The order of forming segments；A，B
Period: 1, 2, 3
The order of A: ｛s1→s2→s3｝
A=｛s1，s2，s3｝
B=｛s1，s3，s2｝

62. KUCHIKI Akifumi
Nihon University
Thank you very much for your attention! References: Kuchiki, A . & M. Tsuji (2004) Industrial clusters in Asia, Palgrave Macmillan. Kuchiki, A & M. Tsuji (2008) Flowchart approach to industrial cluster policy, Palgrave Macmillan. Kuchiki, A & M. Tsuji (2010) From agglomeration to innovation, Palgrave Macmillan. Kuchiki A. and M. Tsuji eds. (2011) Industrial Clusters, Upgrading and Innovation in East Asia, Cheltenham: Edward Elgar.

63. YA YB YA=f（A）=f（｛s1，s2，s3｝） YB=f（B）=f（｛s1，s3，s2｝）
Production function of A YA
Production function of B YB
Production function of a cluster
YA=f（A）=f（｛s1，s2，s3｝）
YB=f（B）=f（｛s1，s3，s2｝）

64. r CA=（1+r）2C1（s1）+（1+ｒ）C2（s2）+C3（s3） The production cost: YA，YB
The interest rate (constant) r
The production cost: YA，YB
CA=（1+r）2C1（s1）+（1+ｒ）C2（s2）+C3（s3）
CB=（1+r）2C1（s1）+（1+ｒ）C2（s3）+C3（s2）
Total cost of period i to implement sk:
Ci（sk） （k=1，2，3　；　i=1，2，3）

65. YB/CB＜YA/CA Def. The economies of sequence of the order of s2and s3
YB is smaller than YA
It costs infinite to proceed from s3 to s2→YB is nearly zero
The order of YB is inefficient
YB<YA
The economies of sequence of the order of s2and s3
Def.
YB/CB＜YA/CA