Creative Industries Development and Efficiency in China

China is becoming a leading player in the world market of creative goods and service. In this paper we first seek to explore the development and structure of urban creative industries in China. It indicates that China’s city creative industries is fast increasing during the period of 2004-2008. Secondly, a Data Envelopment Analysis (DEA) model, based on the data of China’s 36 capital and/or sub-provincial cities, is used to estimate the Technical Efficiency (TE) of urban creative industries, where the efficiency scores are decomposed into the Pure Technical Efficiency (PTE) and Scale Efficiency (SE). Due to poor input utilization and scale inefficiency, it shows most of cities in China are falling into the situation with low efficiency development on creative sectors. Finally, the paper provides some implications for policy makers on how to increase creative industries efficiency.


Introduction
As our society moves into the so-called information age when the economic growth is greatly driven by innovation and creativity, the creative industries as one of most dynamic emerging sectors are growing rapidly and becoming a new It is suggested creative industries is on the huge growth in the contemporary economy. Yusuf & Nabeshima (2005) highlight the economic center of gravity of the leading cities is changing from manufacturing to creative industries. To lead growth and own comparative advantage, cities need to evolve or remain as the centers of creative industries or service-providing hubs. The existing studies show the development of creative industries or the creative class plays an increasing role in driving and facilitating regional wealth and employment growth ( and scale efficiency score of 89.3%. In general, due to poor input utilization and scale inefficiency, it shows most of cities in China are falling into the situation with low efficiency development on creative groups. This study not only can be helpful to understand problems hiding in China's creative industries despite of its fast growing but also provides a representative case for the world creative industries development from the biggest developing country in China. The development structure of creative industries in China is depicted in the following section (Section 2). China's CIA at the city level is discussed in Section 3. China's city creative industries efficiency is estimated and analyzed in Section 4. The last section is the conclusions.

The development of creative industries in china
The participation in global markets for producing creative goods and services is extremely strong in the advanced  In 2008 there are 683 781 creative firms registered in China, accounting for 13.79% in all registered firms, while the employment of creative industries is 13.94 million yuan, accounting for 6.37% of all employment in China. The revenue generated by creative firms is 4648.64 billion yuan, but accounting for 4.46% only of all industries revenue. It shows the proportion of business income of the creative industries in all industries revenue (i.e. 4.46%) is slightly less than the share of creative employment in total employment (i.e. 6.37%), but considerably less than the ratio of creative firm in all firms (i.e. 13.79%). It indicates that the average size of creative firms is slightly smaller than other firms, and the development of business incomes in creative industries is lagged behind general industries probably due to productivity shortfalls.
Data for the share of creative industries in general industries illustrated in Table 1 indicates that 13.79 per cent creative firms produce 6.37 per cent creative employments but only generate 4.46 per cent revenue incomes in all industries in 2008. Table 1 also shows a negative score (-3.53%) of the AAGR on operating revenue of creative industries during the period of 2004-2008, while the creative firms and employments are both highly increased by 4.55% and 3.19% respectively per year over the same period. In other words, it inputs the same creative firms and employments but outputs less incomes, implying there is serious inequality between the inputs and outputs of China's creative industries.
It is inferred that China's creative industries may fall into low efficiency by the observation that the share of creative industries revenue in total revenue is much less than the proportion of creative employment in total employment as revealed in Table 1. However, this argument may suffer from a suspicion because there is not sufficient empirical evidence to calculate how inefficient is the creative industries in China. To deal with this suspicion, empirically, the efficiency of creative industries by different sectors and regions will be estimated in Section 3.

China's city creative industries efficiency
Data envelopment analysis (DEA) is a mathematical programming approach to provide a relative efficiency assessment for a group of decision making units (DMU) by the ratio of inputs and outputs. Determining whether a DMU is efficient from the observed data is equivalent to testing whether the DMU is on the "frontier" of the production possibility set (Wei, 2000). In this paper, the variable returns to scale (VRS) model of DEA is used to calculate city efficiency of creative industries in China, where the VRS model allows breaking technical efficiency (TE) into two components: pure technical efficiency (PTE) and scale efficiency (SE). The PTE measures how a DMU utilizes the resources under exogenous environments, while the SE is the potential productivity gain from achieving optimal size of a firm (Wei, 2000).  GCMM matecconf/201 3016 been lost. There are 15 cities (accounting for 42% of the sample) whose efficiency scores of creative industries have exceeded 60% (see Table 3). Nanchang and Urumchi being with TE scores of 100% are on the "frontier" of the production, suggesting these two cities have achieved the point of best relative efficiency in creative sectors, while Xining is found to be the least efficient relatively with TE scores of 27%. The TE score of top 10 cities are turned out to be more than 70%, in which 8 out of 10 cities, i.e. Urumchi, Nanchang, Beijing, Xi-an, Guangzhou, Shanghai, Chengdu and Lhasa are fully efficient on PTE score. exhibit decreasing returns to scale on the production frontier of creative industries, implying the size of creative firm in those cities are engaged in production on a non-optimal scale. Alternatively, it may be a good way to increase their efficiency of creative industries by optimizing the size of creative firm appropriately.
If the cities aim to increase their technology efficiency of creative industries, both the PTE and SE should be paid attention to. Table 3 shows that some cities such as Lanzhou and Tianjin are calculated as low TE scores due to extremely PTE scores although they possess relatively high SE scores. In contrast, Zhengzhou is on the best efficient of scale, but its PTE score is only 48.2 per cent, leading to a relatively low technical efficiency.  In summary, China's creative industries is experiencing tremendous growth over the world, but its productive efficiency and the ability to create business profit still have a big increasing room.

Conclusion
This