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Tales from the Development Frontier
to help cluster firms learn to use the new equipment. From the advanced technical knowledge embodied in the equipment, cluster firms learned how to use the equipment to increase efficiency. Yet, cluster firms also needed access to innovative ideas on organization and product development. Firms began to send representatives to international trade fairs, on their own initiative sometimes, but, sometimes, only after efforts by ambitious and supportive local officials to alert unsophisticated businessmen to the benefits of expanding horizons. At these worldwide gatherings of related companies, cluster firms gained information about new products, new markets, advanced technical information, and new orders. They also learned about emerging trends in consumer demand in developed countries. For example, the head of an enterprise in the Shenzhen garment cluster that exports to the European Union (EU) and the United States attends annual fashion fairs in New York and Paris, where she learns about current styles in the two countries. Local governments provide information on trade fairs and sometimes offer financial support as a means of encouraging firms to participate. Cluster firms also gained advanced knowledge by hiring technicians from foreign competitors. Retired managers and technicians in developed countries have decades of working experience and can advise cluster firms on technological development and organizational management. Some retired professionals are altruistic about helping firms in developing countries. For example, a retired Japanese manager has worked for more than a decade as a volunteer advisor to a Haining warp knitting firm managed by a Chinese friend. The upgrading strategy. The upgrading process in China has involved enterprises that have progressed from original equipment manufacturers (OEMs) to original design manufacturers to original brand manufacturers. (An OEM is a firm that manufactures products or components purchased by another company and retailed under the purchasing company’s brand name.) Cluster firms in China have also upgraded by strengthening their links with global buyers. Global retailers such as Sears and Walmart and branded marketers such as Nike and Reebok often control the marketing channel in developed countries for light manufactures such as garments, footwear, and toys. Cluster firms