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Editor’s Note

Enterprises are the most dynamic actors in cities and one of the driving forces behind the flow of factors such as personnel, technology, and capital in cities. The urban interactions and connections formed by the connections between enterprises are the most important type of network in the urban network. This issue of Explaining Cities will focus on the global inter-city network based on enterprise relationships, analyzing the differences in perspectives and relationship types behind these networks.

1. Forming different city networks based on two perspectives of enterprises

There are generally two paths to building a city network based on corporate relationships. One is based on the perspective of the subject, building corporate connections based on the headquarters-branch relationship of the corporate subject itself, or the relationship between investment and investment, and then projecting it into a city network based on the location of each enterprise (Note: the address here mostly refers to the office address). The Globalization and World Cities Study Group and Network (GaWC) uses this method to rank cities around the world based on the headquarters-branch network of high-level productive service enterprises. The other is based on the perspective of the object, building corporate connections based on the relationship between the products or services produced by the enterprise, thereby forming a city network. The most typical is the "three-chain network" between cities, namely the supply chain network, industrial chain network and value chain network between cities. These networks are generally based on the enterprises involved in the entire life cycle of products or services, and build city connections between different enterprises on these chains.

The city network from the subject perspective can observe the position of the city in the global layout of the enterprise, which is crucial for the global strategy of multinational companies. The city network from the object perspective can observe the link and position of the city in the supply chain, industrial chain and innovation chain, which is indispensable for city managers and planners to reasonably formulate urban industry and innovation strategies.

Although the urban networks from these two perspectives are so important, it is not easy to analyze these two networks in depth in practice. One of the main reasons is that the relevant data disclosure and statistical systems are not perfect. For example, only listed companies are generally obliged to disclose the headquarters-branch relationship or the investment-investment relationship between enterprises. Therefore, the headquarters-branch network is more common in the research of listed companies. The supply chain of corporate products contains sensitive supplier and customer information, so few companies disclose it in full. As for the industrial chain network and value chain network between enterprises, it is even more difficult to clearly count due to the lack of clear industrial maps and value chain maps, but some case studies have revealed some important rules to us.

For example, some scholars have studied Apple's supplier list and found that the R&D part of Apple's value chain network is usually concentrated in science and technology/education center cities, such as San Jose, Boston, Tokyo, Seoul, Hsinchu, etc.; comprehensive R&D also involves cities in the United States (such as San Francisco, New York, etc.), Western Europe (such as Munich, Thuringia, Bern, etc.) and emerging industrialized countries in the Asia-Pacific region (such as Singapore, Bangalore, Gumi, etc.). Apple's global flagship store network based on the subject perspective (which can also be regarded as a headquarters-branch network) is relatively simple, mainly concentrated in global first-tier cities such as New York (11), Shanghai (8), Hong Kong (6) and Seoul (6).

Figure 1 Apple’s global flagship store network (left) and product R&D chain network (right) Source: Based on Apple’s official website and Liu Qing, Yang Yongchun, Jiang Xiaorong, etc., Analysis of global city networks based on the global value chain - Taking Apple mobile phone suppliers as an example [J]. Acta Geographica Sinica, 2021, 76(04): 870-887.

2. Five dynamic mechanisms of corporate connections and interactions among global cities

Generally speaking, there are five types of relationships in urban networks based on corporate relationships, which also constitute the five dynamic mechanisms of corporate connections and interactions among global cities.

First, the locational relationshipCompanies generally prefer to open branches and develop business relationships in the same region. For example, Tokyo's top 500 companies basically have branches in Singapore, in large part because they are both in the Asian region.

Second, cultural relationshipIf two cities have a common language and cultural background, the city network connection under corporate relations will be closer. For example, multinational companies in London like to do business in cities such as Sydney, New York, and Toronto. The mutual communication of languages ​​between these cities makes business switching smoother.

The third is industrial relationship, corporate relations between cities with similar or identical industrial backgrounds are closer. For example, from the perspective of the global manufacturing network, due to their similar industrial backgrounds in the electronic information industry, the three major cities of San Francisco, Shenzhen and Bangalore have close relations.

Fourth, developmental relationshipIf two cities are at different stages of development, a city in a developing country is more likely to form close business ties with a city in a developed country. For example, in the development gradient from New York, USA to Shanghai, China, and then to Ho Chi Minh City, Vietnam, companies tend to make comprehensive layouts at each step of this gradient, thus strengthening the connection between these cities.

The fifth is functional relationshipAccording to the relevant theories of global cities, some cities are comprehensive cities (such as New York and London), while some cities are specialized global cities (such as San Francisco and Munich). Different cities have different divisions of labor and functions in globalization, and companies prefer to establish networks between cities with different functions. For example, multinational companies in comprehensive global cities such as London like to set up branches in specialized cities such as Saskatoon.

In fact, these five dynamic mechanisms are not completely exclusive, and the corporate connections between cities are likely to be the result of the combined effects of two or more mechanisms. From the nearly 40,000 pairs of cross-border city connections between more than 3,000 cities around the world, city connections dominated by a single type account for only 38.8% of all city networks in the world, and about 13.2% of city connections are dominated by other factors that have not been confirmed (such as time zone factors, political factors, etc.).Among the five types of relationships, functional relationships are the most common, followed by regional relationships, while industrial relationships are relatively weak.

From the perspective of specific cities, the paths of corporate overseas expansion in different cities are not exactly the same. London's corporate overseas expansion mechanism is determined by culture, location and function, mainly due to the widespread use of English, the large number of British colonies, and London's strong control as a comprehensive global city. Tokyo's corporate overseas expansion is a mechanism determined by industry and location, mainly due to Tokyo's solid industrial foundation and Japan's industrial influence in the Asian region.

Shanghai's corporate overseas expansion mechanism is determined by both development and function types.On the one hand, as the first city of a developing country, Shanghai is in the upper middle of the global development ladder. It needs to benchmark against top cities such as London and New York, and also needs to decentralize functions and transfer industries to some underdeveloped cities. On the other hand, as a growing comprehensive international metropolis, Shanghai needs to further highlight its control and leadership in the global value chain system, and it needs to carry out in-depth cooperation with professional technology cities, trade cities, and shipping cities.

Enterprises are the driving force of urban economy, and the urban network formed by the connection between enterprises is an important driving force of globalization. Today, with the rising trend of anti-globalization, it is still unknown whether the interruption of connections between enterprises and the readjustment of enterprise layout are also weakening the interaction between cities. However, the global urban network formed by economic globalization is undoubtedly the most important channel for the flow of global factors.

references

[1] Liu Qing, Yang Yongchun, Jiang Xiaorong, et al. Analysis of global city networks based on global value chains: A case study of Apple mobile phone suppliers[J]. Acta Geographica Sinica, 2021, 76(04): 870-887.

[2]Sigler T, Martinus K, Loginova J (2021) Socio-spatial relations observed in the global city network of firms. PLoS ONE 16(8): e0255461.

The "Explaining the City" column is hosted by Dr. Dai Yuehua of the Shanghai Institute of Development Strategy. It focuses on the cutting-edge trends in the development of urban science, explains the general characteristics and laws of urban science and human behavior dynamics in cities, and explores the paths and methods of using cutting-edge urban science theories to optimize urban governance.