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They help businesses grow and prosper. The focus is on keeping cost down and maintaining faithful partners in similar businesses. China businesses are linked together for a common purpose. China is known for low cost labor so utilizing supply clusters works very well.
Michael Porter describes a cluster as a "geographically proximate group of interconnected companies and associated institutions in a particular field, including end-product manufacturers, component suppliers, and supporting firms...
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These supply chains contain many levels of independent suppliers and manufacturers with different suppliers possibly serving the same manufacturer, and different manufactures ordering from the same supplier (Lifang 2006). The large number of supply clusters formed in China in recent years has contributed significantly to the nation's manufacturing competitiveness...
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