© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3.4What are the location factors of the IT factors of the IT industry? industry?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Information technology (IT) industry is a type of __________ industry which produces products involving IT. high-tech Information technology (IT) industry Manufacturing of hardware and equipment Development of software and related services What is the information technology (IT) industry? iPods and laptop computers Online games and e-shopping

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Where is the IT industry in the USA? Silicon Valley Can you name a famous IT industrial cluster in the USA? The IT clusters are mainly found in the suburbs of ______ cities. large Cities (population)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Where is the IT industry in the USA? Where are the two IT firms, Dell and AMD, located? Why is the distribution of IT industry like this? Before answering this question, we should learn about the characteristics of the IT industry.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 1Research and development-intensive Processes Inputs Cash Global markets Outputs Raw materials Power supply Skilled and unskilled labour Technology Capital Design Research and development Manufacturing Assembly Packaging IT equipment products Which two inputs do you think are the most important ones for the IT industry?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 1Research and development-intensive We can see that the IT industry have to invest huge sums of money on ________________________. research and development Total R&D funds on manufacturing industries in the USA Since the IT manufacturing system depends heavily on the inputs of technology and capital. Therefore, the IT industry is a ___________- and _________-intensive industry. technologycapital

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Only in a few years DevelopmentGrowthMaturityDecline Stage of production Much work on R&D Market grows rapidly Market levels off Market drops rapidly How often do you change your IT products such as mobile phones, PCs, etc.? What are the characteristics of the IT industry? 2Short life-cycle of IT products The product life-cycle of IT products is short.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Development Growth Maturity Decline Stage of production Production requirement Location of production A large number of scientists and engineers are engaged in ______ - Skilled labour Location which helps to lower the costs, e.g. location with cheap ________ (like less developed countries) - _________ workers - Standardized production line - Near market, e.g. ___________ R&D Unskilled metropolis labour - Efficient management - Shared basic ____________ helps costs infrastructure - High-wage, more developed regions What are the characteristics of the IT industry? 3Multinational and multi-point production

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 3Multinational and multi-point production This mode of production is known as multinational and multi- point production. The USA Major city Headquarters (Decision-making) R&D centres (Research and developing new products) Suburb Manufacturing plants (Factories producing standardized products) Less developed countries

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 4Concentration in clusters The IT industry in Silicon Valley in the USA shows a cluster pattern, forming industrial agglomeration. What are the advantages of industrial agglomeration? In the development / R&D stage Inducing innovation Facilitating exchange of market and technical information Providing technical, financial and networking services Establishing business contacts Creating a distinct innovative culture and business climate which can further attract other IT firms to agglomerate

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 4Concentration in clusters In the production stage By sharing basic social facilities and infrastructure, the firms can cut costs; increase competitiveness; attract labour; enjoy low rents offered by the local government.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 5Importance of global markets A lot of money for R&D PlayStation Portable Suiting the taste of customers of global markets Making money Covering the huge amounts of money spent on R&D

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 6An IT industrial landscape University Located in __________ area Low, modern, dispersed office-plant- laboratory buildings Near to ___________ or research institutes A large pool of scientific and technically skilled labour Venture capital is available suburban universities City centre This new kind of industrial landscape is called a ___________ site. green field

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the characteristics of the IT industry? 6 An IT industrial landscape A green field site does not have massive mills, assembly plants, dense transport networks and storage areas. IT industrial landscape (green field site) Traditional industrial landscape (brown field site) Silicon Valley, the USA By comparing the two photos, what are the characteristics of a green field site? (Credit: Ed Kashi/Corbis) (Credit: Andre Maslennikov/Still Pictures)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the location factors affecting the location of the IT industry? In the development stage Researchers, scientists and technicians Labour ‧ ( LDCs / MDCs ) ‧ ( City centre / suburb ) with good amenities ‧ Near universities or research institutes Site Large amount of __________ capital ‧ Providing financial support ‧ Maintaining a favourable business climate and an innovative culture within the community Market _______ markets ‧ Near to suppliers Others venture Global Regions with good innovative climate and good access to high levels of technology Technology Capital Government policy ‧ Good social and cultural quality ‧ Good transport networks

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the location factors affecting the location of the IT industry? In the maturity stage Abundant of _______ and semi-skilled labour Labour ‧ ( LDCs / MDCs ) ‧ ( Cheap / Expensive ) land site ‧ Good infrastructure Site Large amount of capital for setting up factories overseas ‧ Providing a good infrastructure ‧ Providing good communal services Market Global markets ‧ Near to suppliers Others Regions which are ready to receive transferred technology from high-technology regions Technology Capital Government policy ‧ Good social and cultural quality ‧ Good transport networks cheap

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Are the factors affecting the locations of the iron and steel industry in China and the IT industry in the USA the same? Iron and steel industry in ChinaIT industry in the USA Characteristics Industrial landscape Market Pollution problems Heavy industry High-technology industry Consumes a large amount of _____________ and _______ _________ and development-intensive Mostly _______-point production Most are multinational companies and adopt ______-point production power Research multi Traditional industrial landscape Green field site Mainly _____ markets local ________ markets Global Very serious air pollution Less serious air pollution raw materials single

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the location factors affecting the locations of these two industries? Government and technologyThe development stage: ___________, labour quality and the site, which is near universities and large cities The maturity stage: Cheap ________ supply Technology labour Are the factors affecting the locations of the iron and steel industry in China and the IT industry in the USA the same?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What is globalization? Globalization refers to the process which leads to a faster and increasingly free flow of capital, goods, technology, ideas and people among countries. There is an integration of markets of manufactured products. There is a rise and expansion of multinational firms. In industrial geography, globalization has two major implications: The development of the IT industry is very much in line with the development of globalization. What impact has globalization had on the location of the IT industry?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Foreign market Many IT firms expand their market to overseas countries through one or more of the following ways: 1 Export Foreign market Export products directly 2 License Grant a license overseas Home country Produce and sell overseas Set up a plant overseas Produce locally Home country 3 Foreign direct investment (FDI) Sell overseas Produce and sell overseas 1Globalization in marketing What impact has globalization had on the location of the IT industry?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Home country Overseas Headquarters and R&D in … Standardized production bases in … (Regions with lower production costs) _____________ production Multi-point 2Globalization in production What impact has globalization had on the location of the IT industry?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? If an IT firm can obtain cheaper and better quality components elsewhere The firm can cut costs and earn more What is the spatial distribution of the HP product materials and component suppliers? Adopt a worldwide supplier network for parts and components. 3Globalization in sourcing inputs What impact has globalization had on the location of the IT industry?