Heterogeneity in Export Content and the Use of Trade Intermediaries

Chih-Hai Yang and Meng-Wen Tsou


Using a large firm-customs matched panel data set from China, this study investigates how export composition and content (export heterogeneity) relate to indirect exporting share. We first examine the effect of productivity sorting patterns on the choice between pure indirect exporting and non-indirect exporting. The productivity sorting effect of export mode choice, that low productivity exporters adopted trade intermediaries, as predicted in the theoretical literature, is verified. Ownership structure also plays a critical role in the choice of export modes. Then the estimation of the determinants of indirect exporting share is implemented using only non-pure indirect exporters because pure indirect exporters’ detailed export information is unavailable. The estimation reveals that export heterogeneity affects indirect exporting share. Exporters with a larger proportion of process exports and exports to advanced countries exhibit a lower share of indirect exporting. Export diversification, in terms of destinations and products, and unit price of exports are also negatively related to indirect exporting share. A battery of robustness checks overall support these findings, while the negative association between unit price of exports and indirect exporting share seems to be more relevant to pure direct exporters and both-mode, single-product exporters.