Import of digital products and production fragmentation

Empowering traditional manufacturing through the digital economy can not only enhance the competitiveness of Chinese manufacturing enterprises, but also enhance the degree of specialization of enterprises by optimizing the industrial structure, thus enhancing the embeddedness of Chinese enterprises in the global value chain. Based on this background, on the one hand, this paper extracts and integrates digital product information from China Customs data. On the other hand, this paper constructs the number of production processes of enterprises as a proxy variable for production fragmentation. Finally, by matching these two databases, we get the production segmentation data of Chinese enterprises' digital product import from 2000 to 2014. We found that improving the penetration degree of digital technology by importing digital products can effectively promote the production fragmentation. In order to further clarify the mechanism, we divided the digital products into final and intermediate kinds and found that firms importing digital final goods have a larger marginal impact on their production fragmentation.