International trade and access to markets

what is comparative advantage?

a country specialises in producing only those goods that can be produced efficiently and at the lowest opportunity cost

what does economies of scale mean?

producing a narrower range of goods and services - means a country can produce in higher volumes and at a cheaper cost per item

what does purchasing power mean?

increasing trade results in increased competition → lower prices → consumers can buy more for their money

what is product dumping?

exporting at a price that is lower in the foreign market than the price charged domestically, putting the importing nation’s firms out of business

what % of umbrellas are still made in China?

70%

where is the centre of China’s umbrella production?

Songxia Umbrella Industrial Park

what is a domestic monopoly?

when a single firm controls a large proportion of the domestic market meaning domestic prices stay high because there is less competition

what helps lessen domestic monopolies?

imports from overseas competitors

what is the origin of umbrellas being made in China?

probably the first to invent it and then exported it via the Silk Road e.g. to the Romans

for what two reasons does Songxia remain the leader in umbrella production?

1. specialisation - all kinds of umbrellas

2. access to domestic and international markets

3. Industrial Park status

why does Songxia have good access to domestic and international markets?

good road networks connecting it to Ningbo Port and Shanghai

who established Songxia Umbrella Industrial Park? Why?

local govt support, to strengthen the competitiveness of the many local manufacturers and to raise the brand awareness