The Exploration of Intra- Industry and Intra- Firm Trade Phenomenon

UNIVERSITY OF PORTSMOUTH

STUDENT ID: UP672824

TEACHER’S NAME: Dr Sami Bensassi

Introduction
With the development of science and technology, intra-firm and intra-industry trade has occurred among many countries. Nowadays become more mature and plays an important role in the trade flows. The purpose of this essay is to prove the importance of intra-industry and intra-firm trade. Firstly, this essay will give the definitions of intra-firm and intra-industry trade. And then it will give a specific example and datum to analyse and explain that Intra-industry trade are characteristic of modern trade flows. This essay will use Japan and Chinese bilateral trade situation as the example.

Definition
Intra-firm trade is a phenomenon that the products, raw materials, Technology and services of a multinational corporation flow among countries, such as the subsidiaries transact with the parent company or other subsidiaries in other countries. Multi-national Corporation mercantile exchange is very important for the development of international trade among its companies in every country. Intra-firm trade can makes a technical exchange, a cultural exchange and an economic regulation. Also the products creating, the capital flow and technical advancing can be promoted by this exchange.

Intra-industry trade is that to import and export the same kinds of industry products simultaneously in a country or a region. For example, Japan exports cars to the United States, at the same time, the American cars are imported to Japan.

There is an example below; it is the circumstances of Japan and China import and export in recent years. There are five charts about the volume of Japan import and export, the circumstances of japan import from China and export to China, and they will be analysed to explain the purpose of this essay.

Analysis
There is an example about the intra-industry trade situation between Japan and China. Firstly, shown in the figure 1 is the number of Japan imports from January in 2009 to December in 2012. There is an upward trend and increasing by about two thousand billion Japanese Yen during four years. And in figure 2, it is about Japanese export from January in 2009 to December 2012. The trend is fluctuant but it totally is an increase.

Japanese total exports and imports were continued rising to about 750 billion Japanese Yen before 2009. Because of the earthquake in Japan, Japanese international trade rapidly dropped to about 350 billion Japanese Yen. Nevertheless, Japanese total imports and exports were continued rising after the disaster. However, the total import volume is still higher than the total export volume, which also makes a rapid recovery for Japan, and its import and export volume ranked fourth in the world in 2010 (WTO, 14.3.2011). It can be seen that the exchange trade is important among countries.

Figure 1

Figure 2

According to the statistics of Japanese customs, China ranked first in volume of Japan imports and exports. The figure 3 is the data of Japan to China Bilateral Trade from January to September in 2011. The total volume of Japan imports and exports was 254,892million dollars, China imports and exports total volume was less than Japan around 1,440million dollars. Shown in the bar chart is that the export and import volume from Japan to China were 121,271million dollars and 133,621million dollars from January to September in 2011. On the contrary, the import and export volume from China to Japan were 145,720million dollars and 107,730million dollars. The Japan export volume less than China import volume and Japan imports volume outweigh China exports. Also the import volumes of two countries were all greater than their export. Therefore, Japan and China all had deficits at 12,350million and 37,990million dollars, separately. And the deficit in China outweighs the deficit in Japan at