They, rather than the final assemblers, often control both the pace of technical advance and the availability of critical system elements. As a consequence, product rents accrue to them rather than to assemblers. The creative use of intellectual property rights and associated licensing strategies define defensible market position more than manufacturing scale as the basis of competitive advantage. These networks evolve to take advantage of a more intricate division of labor. They are not principally about lower wages or access to markets and natural resources.
Manufacturing continues to matter, but the strategic problem of production is changed for companies.
We distinguish between four types of network forms that emerged sequentially in Asia. The new production model is increasingly pervasive in electronics. Its scale and pace of development is suggested by the rapid growth of the most visible manufacturing network service companies. The move to CPNs and contract production services permits system firms to concentrate on Wintelist product definition and market strategies while conserving capital and gaining production flexibility. The implications are that while Wintelism creates a whole range of market opportunities in sectors that were previously dominated by giant assemblers playing in controlled oligopolistic markets, the new CPN possibilities provide small producers with a cost-effective production strategy to exploit the new market opportunities.