Competitiveness Of China’s Wine Industry

China’s wine industry performs outstandingly in domestic market while the export ininternational market is not ideal. The impact of imported wine on domestic market isincreasing continuously. There is obvious contrast between trade status and production andconsumption status of China’s wine industry. In order to explore the paradox this paper makesa comparative analysis between China’s wine industry and world wine industry with China’swine industry as study object and10main production area as basic study unit, sets up a studyframework for competitiveness of China’s wine industry and evaluation index system fromthe perspective of influence factors of industrial competitiveness with the theoretical methodsof diamond model, SCP framework and DEA and the empirical methods of statisticaldescriptive analysis, comparative analysis and econometric analysis. The paper also makesempirical analysis for the current situation and problems of China’s wine industry both fromessence and resource condition factors and provides policy recommendations for improvingproductivity, promoting technical progress and optimizing industrial structure of China’s wineindustry.Foreign country’s research on wine industry is abundant but it isn’t suitable for thesituation in China because of differences in the economic development level andenvironmental factors. Our country makes great progress in the research area of wine industryrecently but it still can not answer the theoretical and practical questions of dynamicdevelopment trend of industry’s competitiveness and influence factors to improving industry’scompetitiveness. Based on the above understanding, this paper is to design a competitivenessevaluation index system of wine industry and make a comprehensive analysis of thecompetitiveness of China’s wine industry which can be used to determine the variousinfluence determinants of industrial competitiveness. The paper also discusses the root causesand inner dynamic mechanism to form the competitiveness and finds basic measures andapproaches to enhance industrial competitiveness.According to the research ideas, this paper studies the competitiveness of China’s wineindustry in the logical sequence: competitive theoretical analysis, industrial competitivenessanalysis framework, index system, competitiveness evaluation, empirical analysis, comprehensive analysis and conclusion.Firstly, the theoretical analysis of competitiveness of wine industry has been made withChina’s wine industry as the study object. This part studies the definition, features,classification and influence factors of industrial competitiveness through combination of thelaw of development of China and world wine industry and the theory of competitiveness.Then the definition, features, economic connotation, classification of wine industry and itscompetitiveness has been discussed and an analysis framework and evaluation index systemhas been set up. The paper derives a theoretical analysis result through a standardized analysisthat bases on the theories of international trade, technical difference, economic growth，efficiency-structure and SCP paradigm: The real source of wine industry’s competitiveness isproductivity, technical progress and industrial organization and other factors functionsthrough these real sources. In the short term, China’s wine industry is lack of internationalcompetitiveness while in the long run, the competitiveness of China’s wine industry will beimproved rapidly thanks to the market demand. The theoretical assumption of developmenttrend of China’s wine industry has been verified by statistical descriptive and comparativeanalysis with the macro information of China wine industry as well as its10main productiondistricts.Secondly, the empirical analysis of real source of competitiveness has been made.Production efficiency and technical progress is the essence of industrial competitiveness.According to data envelopment analysis theory, the function of production efficiency onindustrial competitiveness can be further decomposed into technological progress andtechnical efficiency, and technical efficiency can also be decomposed into pure technicalefficiency and scale efficiency. The deeper decision mechanism of production efficiency oncompetitiveness can be found by decomposing. Industrial competitiveness is a reflection ofmarket performance, and is closely related to market structure and market behavior. Anempirical analysis has been conducted on market structure, behavior and performance ofChina’s wine industry by using SCP paradigm and the relationship among these three factorshas been clarified. The environmental factors of competitiveness of China’s wine industry hasbeen analyzed by using diamond model and the impact of production factors, demand factorsand resource environmental factors on competitiveness of China’s wine industry has beendiscussed.Thirdly, comprehensive empirical analysis has been made and policy recommendation toimprove the competitiveness of China’s wine industry has been put forward. The mechanismof improving industrial competitiveness is decided by the resource condition and real sourceof competitiveness which is the core factors to form industrial competitiveness. Other factors also have influence on competitiveness such as production factors, demand factors, import,government regulation under the background of factors constrain and international free trade.A comprehensive empirical analysis has been conducted to determine the influence factors ofcompetitiveness of China’s wine industry with macro information of China’s wine industryand its10main product districts by using multiple regression model and it verifies theassumption of real source of competitiveness of wine industry and measures the relativeinfluence index. Finally a comprehensive conclusion of dynamic development trend ofChina’s wine industry has been drawn and policy recommendations to improvecompetitiveness of China’s wine industry have been put forward.There is mainly four study conclusion:1. Study found that international market share and other indicators of competitivenessare all in the tendency of downward fluctuations that means the competitiveness of China’swine industry is very weak. China’s wine industry has significant advantages from the view ofdomestic market share and industrial profit rate. The competitiveness of China’s wine industryis still sufficient and sustained growth in domestic market. Domestic market is the main targetfor China’s wine industry and the increase of industry mainly come from domestic marketnow.2. The main reason for constant growing industrial competitiveness is high productivity.Total factor productivity maintains a high level of development. Improvement of technicalefficiency and technical progress are the main driving force for industrial growth while theexterior scale expansion has relatively little effect and it illustrates that China wine industry istechnologically and efficiently sustainable.3. The market structure plays a positive role for industry’s development. China’s winemarket structure is monopoly as well as competitive and market concentration is relativelyhigh. At same time there also have a large number of new enterprises to enter. So there is themonopoly power as well as the competition power in the market. The market structurepromotes the industry embarked on a virtuous circle of development. The scale benefit is notsignificant and industrial competitiveness is inversely to production scale.4. There exist distortions in pricing mechanism for China’s wine. Wholesale price andretail price do not match. The gap between wholesale price and marginal cost is very smalland it shows the allocation of resources is properly. That means pricing mechanism isperfectly. But there is bubble in retail prices due to the impact of imported wine, consumer’smaturity and market regulation, etc.