Online Discussion of ISSS paper 2002-082, "Performance of Measurement of Chinese Textile Industry in 1998", WANG Xinyu, ZHOU Min, ZHANG Jin, FENG Wenlong

Below is an archive of the comments contributed by members of the International Society for the Systems Sciences (ISSS), prior to discussion within the Special Integration Group (SIG) on Systems Applications in Business and Industry (SABI). For more information on the discussion which occurred in person during the meeting, please contact someone who attended the session!

(7/7/02 2:27:50 pm)
WANG, ZHOU & ZHANG 2002-019 Performance of Measurement o



In this thesis, a data envelopment analysis model with preferences information about input and output targets is set up to evaluate the economic operational efficiency of the textile industry of Chinese 31 regions. Then the stochastic production frontier function of Chinese textile industry is obtained with the data set of all DMUs' projection points on the production frontier face by regressive analysis model. An econometric regressive model is set up to explain the difference among efficiency of different regions. A system analysis and assessment about the macroeconomic operational efficiency of China textile industry is carried through, and some conclusions are valuable for decision-making.

(7/28/02 8:57:44 am)
Re: WANG, ZHOU & ZHANG 2002-019 Performance of Measureme

Key insights I got from the paper:
Chinese is a leading manufacturer and exporter of textiles, but productivity continues to fall, at an uneven rate across various provinces.

How might I apply these concepts:
One way to approach a measurement of efficiency is analytical, comparing across subset (parts) of the whole.

Additional ideas I might suggest to the author.
The paper is heavily focused on economies of scale. Are economies of scope (e.g. selling more to the same customers) or economies of speed (e.g. responding more rapidly with customization, through shorter production runs) also worth investigating? There's a trade-off between economies of scale, economies of scope and economies of speed. See Alfred D. Chandler, Jr., Scale and Scope: The Dynamics of Industrial Capitalism, Belknap Press, 1990, supplemented by William Lazonick, Business Organization and the Myth of the Market Economy, Cambridge University Press, 1991.

wang xinyu
(7/31/02 2:35:23 am)
WANG, ZHOU & ZHANG 2002-019 Performance of Measureme

Mr. Daviding:
Firstly Thank you for your valuable comments about my paper. The economies of scale, economies of scope and economies of speed are indeed three important ways for a nation or industry to promote economic development in market economy. Three ways are all different approaches to utilize the resources effectively and get the maximum outputs. In this paper we consider the production system of Chinese textile industry as an input-output black box. We do not know what inner mechanism input-output black box exactly is, for examples, inner mechanism should include a trade-off between economies of scale, economies of scope and economies of speed and so on. In this paper in Chinese different provinces we assume that the textile industries face different conditions, therefore they may use all available ways to enhance the efficiency. But all ways are just tools to enhance efficiency .
Above all, in this paper we firstly use the data envelopment analysis model with weight restrictions to evaluate the efficiency. This model considers the production system as an input-output black box. In this view the efficiency is a comprehensive index which can embrace all information and ways a regional industry can use to enhance the efficiency in market economy.
In other sections we set up a regressive model to get the stochastic production frontier. We also analyze why the efficiencies of various provinces are so different by an econometric model. In this econometric model we do heavily emphasize the economy of scale. The main reason are that the quantitative targets which reveal the economy of scope and economy of speed are not available, and that economy of scale plays a more fundamental role that the latter in Chinese textile industry now. Of course the latter are also very important factors. If we can get new statistic data about economy of scope and economy of speed, we can append some corresponding independent variables in the econometric model to explain the efficiency more properly, or we can set up other models to identify the affects of economy of scope and economy of speed on efficiency respectively.
It maybe the future works for this paper. Although we ignore some factors, the main conclusions obtained are still valuable for decision-making.

Wang xinyu


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