This study examines how the product mixes of Japanese manufacturing plants have been impacted by the rise of China imports over the period 1997–2014. It focuses on the way plants are embedded in their local environment mitigates this causal relationship. We find evidence that China import competition induced both product downsizing and product exit within Japanese manufacturing plants. Moreover, we find that those negative effects differ across plants according to various plant characteristics including the spatial organization of their parent firm, and the degree of their exposure to external agglomeration economies.
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