A Comparative Study on the International Competitiveness of Digital Trade between China and Malaysia: A Diamond Model Approach

Abstract

This study examines the international competitiveness of digital trade between China and Malaysia using Michael Porter's Diamond Model. The Diamond Model, which focuses on four key determinants—factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry—serves as the analytical framework for this comparative analysis. In assessing factor conditions, the study evaluates the digital infrastructure, human capital, and technological innovation capabilities in both countries. Demand conditions are analyzed through consumer behaviors, market size, and the growth rate of the digital economy. The presence and strength of related and supporting industries, such as e-commerce platforms, fintech, and ICT services, are considered to understand their role in enhancing digital trade competitiveness. The study also examines firm strategies, government policies, and the competitive environment that shape the digital trade landscape in China and Malaysia. Findings suggest that China demonstrates a higher level of competitiveness in digital trade, driven by its advanced digital infrastructure, robust innovation ecosystem, and large, tech-savvy consumer base. Malaysia, while showing significant progress, particularly in regulatory frameworks and digital adoption, faces challenges related to scale and innovation intensity. The study highlights the need for Malaysia to invest in digital skills development and innovation to enhance its competitiveness. The comparative insights derived from this study aim to inform policymakers and business leaders on strategic initiatives to bolster digital trade capabilities and foster sustainable economic growth in the digital era.