China Market Entry Barrier Problem

The essence of market entry is that it can make the essential factors such as land, capital, labor and technology that enterprise owns freely move in different markets, different regions and different industries under profit induces. Theory tells us that entry into an industry can facilitate adjustment to change in demand and input prices, increase competition, and put pressure on existing firms to operate as efficiently as possible. In considering the determinants of entry, it is necessary to think about factors that make entry difficult and factors that increase the incentives for entry. The role of entry shows that it promotes the effect of resource allocation through realistic and potential entry and makes the incumbent firms feel pressure that comes from new entrant.China is in the course of history transforming from planning economy to market economy. It is also a process of market deepening and market mechanism is becoming to play more and more important role in resource allocation, and the degree of dependent on market mechanism in economy field is deepening and strengthening. Due to the restriction of market, China has shaped many different market structure in different product and essential factor markets that were decided by many factors not only coming from market but also from government. Government's administrative control is still an important entry barrier. It blocks the entry of firm or makes firms entry on higher cost. Even more in some markets government regulation gives rise to hard entry barriers.This has been a particularly active of research on entry barriers in recent years. Why do we frequently observe that firms do not entry an industry despite the fact that existing firms in the industry make above normal profits?-- Because of the industry existing entry barriers. Barriers to entry are considered an important structure characteristic of an industry. The competitiveness and the performance of an industry is generally assumed to be strongly influenced by its entry condition. Barriers to entry are essential to the existence of non-competitive behavior.Generally, economic entry barriers ( such as economies of scale, product differentiation, ) are spontaneous, and administrative entry barriers are external factors and impose it on many firms. If a potential firm entries an industry it will be decided by government regulation even if the industry is competitive industry.This paper distinguishes and analyses many barriers to entry during China's transforming period and researches economic and non-economic entry barriers incompetitive industry and non-competitive industry and recent development after entry into WTO. Through the research of ten industries we may think many competition industries and some competitive segment of non-competitive industries exist non-necessary entry regulation. Now these government regulations are important entry barriers and produce many negative influences.Market can rapidly influence entry of factors and make it be utilized effectively. Economic entry barriers can't be simply thought as destructive factors. Then the elimination of artificial entry barriers will release much economy energy. So reducing artificial entry barriers is a very important task towards market economy.