Abstract:The globalization of the division of labor makes it possible for enterprises to use the intermediate input from inside or outside China. In the case that the technological progress in China is faster than that in foreign countries, there is a positive feedback mechanism between the improvement of embedded technology in the domestic industrial chain and the increase of enterprises' export domestic value-added rate: the improvement of the embedded technological level of domestic intermediate products increases the total factor productivity and cost markup rate of export enterprises through technical spillover effect and quality promotion effect, thereby driving export enterprises to use more domestic intermediate products to enhance their international competitiveness and market profitability, and at the same time increasing the domestic value-added rate of enterprises’ exports. This paper uses the enterprise's total factor productivity to represent the embedded technology level of intermediate products, designs a calculation method of the industrial chain embedded technology level based on the idea of input-output, and conducts an empirical test by using Chinese industrial enterprise database, China Customs database, and world input-output table. The results show that during the sample period (2000-2014), the improvement of domestic technology level embedded in the industrial chain of export companies has an effect on the increase of the domestic value-added rate of enterprises’ exports, and it shows obvious heterogeneity of enterprises. This promotion effect decreases successively for enterprises in the middle-technology industry, low-technology industry and high-tech industry, and plays a bigger role in mixed trading enterprises, coastal area enterprises and foreign-funded enterprises. Total factor productivity and cost mark-up rate have a significant intermediary effect, that is, the improvement of embedded technology in domestic intermediate products can increase the total factor productivity and cost mark-up rate of export enterprises, and thus increase the domestic value-added rate of enterprises’ exports. Not only does the improvement of embedded technology in the domestic industrial chain inside the industry increase the domestic value-added rate of enterprises’ exports, but the improvement of embedded technology in the domestic industrial chain from different industries will also increase the enterprises' export domestic value-added rate. Therefore, it is necessary to further encourage and support the technological innovation of all types of enterprises, to improve the quality of the domestic cycle by taking the upgrading of the embedded technology in the industrial chain as a breakthrough, to promote the overall technological upgrading of the whole industrial chain with integrated innovation among enterprises as the link, and to improve the speed of technological progress with independent innovation as the focus. Thus, the status and profitability of Chinese enterprises in the global division of labor system and value chain will be enhanced, and the mutual promotion of domestic circulation and international circulation will be achieved.