Processing export plays a significant role in international trade. In this paper,
focusing on firm level dynamics, we show that firms learn from their processing export
experience to improve their subsequent ordinary export outcomes. Using transaction-level
trade data and firm-level production data, we show that firms' ordinary export performance,
at both extensive and intensive margins, is enhanced by their own processing experience.
Firms also export products with improved quality after engaging in processing exports
of similar products. Furthermore, we investigate potential channels through which
firms learn from processing experience. We find that firms potentially learn from
processing experience to enhance production efficiency, to better understand how to
improve product appeal to cater to specific markets, and to gain better and easier
access to inputs. Moreover, we find that exporters benefit more from processing experience
for larger markets with fiercer competition. Similarly, stronger learning effects
are also observed when processing experience is associated with products that embody
less diffused knowledge and are more differentiated. Also, firms learn more from processing
experience when they are more actively engaged in processing imports. Lastly, we verify
the economic significance and quantify the importance of these potential channels.