Industrial Economics Analysis Of Chinese Chicken Industry

The last few decades since 1978 have witnessed great achievements of Chinese chicken industry. The market of chicken products has shifted from shortage of supplies and seasonal shortage in the past to the current all-year round supply and surplus of supplies, which increases the income of millions of farmers, and provides abundant raw materials for industry. Chinese chicken industry is playing a more important role in national economy and still has great potential for development. After entry into WTO and especially under the influence of Avian Influenza A1 in recent years, the entire market performance of chicken industry has decreased dramatically, due to the fact that the traditional way of production is unable to withstand the double pressures form both home and abroad. Therefore, it is of great practical significance to conduct industrial economics analysis of Chinese chicken industry.Adopting the theory of industrial organization, this dissertation mainly studies the market structure, market behavior and the market performance of the current Chinese chicken industry in the context of integration with world market and market economy, exploring the existing problems related to the market structure and the enterprise behavior, proposing the industrial organization policy and management measures and suggestions, which suit the development of Chinese chicken industry, and which will lead to a promising market performance.The dissertation consists of seven chapters:(1) Chapter One introduces the basis for selecting, literature review, research questions and methodology. Based on a comprehensive analysis of the role of chicken industry in the development of domestic economy, improvement of people's living standard, social progress in agricultural economy and increase in farmers'income, this chapter defines the necessity and practicality of the study on organizational issues in the Chinese chicken industry. Meanwhile, this chapter briefly reviews the past research on industrial organization both at home and abroad, and summarizes the contents, frame structure, research methodology, contributions and questions needed to be further studied.(2) Chapter Two discusses the theoretical basis for research on organizational issues in the Chinese chicken industry. Firstly, based on defining the fundamental concepts in chicken industry, this chapter compares the attribute of being agricultural products with that of industrial products, pointing out that this study is only limited to the former. Secondly, this chapter analyzes the features of the chicken industry, with its emphasis on its risk in management. Thirdly, the typical paradigm of the theory of the industrial organization, i.e. SCP and its four elements, are introduced and analyzed.(3) Chapter Three discusses the practical foundation for research on organizational issues in the Chinese chicken industry. Reviewing the historical developments and its current situation in the Chinese chicken industry, this chapter points out the problems existing in the development of the Chinese chicken industry.(4) Chapter Four, Five and Six are concerned with research on organizational issues in the Chinese chicken industry. Chapter Four analyzes the market structure, especially the breeding, processing and marketing structure of the current Chinese chicken industry, pointing out that the basic situation of the Chinese chicken industry lies in dispersed production, low concentration, small scale and lack of effective organization and effective communicational structure.Chapter Five analyzes the market behavior in the Chinese chicken industry, especially the market behavior of breeding households, processing and marketing companies, revealing the improper behaviors of market agency in Chinese chicken industry and its possible reasons, which lays basis for the corresponding measures.Chapter Six analyzes the market performance of Chinese chicken industry. Through investigation of the market performance of the current breeding, processing and marketing companies, this chapter points out that the overall low profits in Chinese chicken industry lie in the family-based breeding models and the corresponding market behaviors. Moreover, this inappropriate structure is further aggravated by the lower market performance.(5) Chapter Seven consists of organization and management of the Chinese chicken industry. Firstly, based on evaluation of the industrial organizational policy and the problems mentioned in the previous chapters, this chapter puts forward the suggestions for perfecting the industrial organizational policy of the Chinese chicken industry. Secondly, based on the analysis of the current management situation of the Chinese chicken industry, countermeasures to reinforce and improve the industrial organization are proposed.Through a comprehensive analysis and research on Chinese chicken industry, the major conclusions are drawn as follows: 1. This study displays the basic situation of the organization of Chinese chicken industry, namely, the overall scale is large, but the scale of companies is relatively small. The fundamental reasons for the low market performance of Chinese chicken industry lies in the inappropriate market organization, such as small scale of companies and low concentration of markets, which results in a market structure with a almost complete competition, leading further to excessive competition and waste of resources. Meanwhile, this excessive competition is not propitious for the market agency to take actions beneficial to their long-term development, bringing out the irrationality of decision making and bias in avoiding risks. The lower performance in Chinese chicken industry is harmful to capital accumulation and hinders the expansion of companies, which further intensifies the inappropriate market organization and improper market behavior of Chinese chicken industry. Therefore, in order to accelerate the development of Chinese chicken industry, it is crucial to change the inappropriate market structure, and correct the improper market behaviors. To this end, this dissertation proposes the industrial policies and management countermeasures to quicken the development of the Chinese chicken industry.2. This study also indicates that the chicken industry is characterized by concentrated production and dispersed consumption. It is firstly manifested in the conflict between the concentration of production time and dispersion of consumption time, leading to imbalance between supply and demand, fluctuation of price, price and market risk, thus increasing the non-determinacy of profits and risks in management. Meanwhile, insufficiency and asymmetry of market information are bound to cause moral risks and reverse choices, thus decreasing market efficiency. Another manifestation is the conflict between the concentration of production area and the dispersion of consumption area, which causes price variation in different areas and divided markets. Furthermore, chicken products are fresh and easy to be rotten or breakable, thus loss ratio rises as time prolongs and distance extends. In addition, circulation costs and operating risk increases accordingly. Too much risk in management will decrease operators'expectation for the future, which will cause the operators to take short-term opportunist behaviors, leading to deviation of behaviors of the market agency and lower market performance.3. This study notes that the market-entering barrier of Chinese chicken industry is becoming higher and higher. Recently, surplus of supply, Avian Influenza A1 and the pressure from market protectionism abroad increases the capital investment needed for the organizational integration of chicken industry, standardization and concentration of breeding and processing. Thus further raising the market-entering barrier, this leads to the increase in withdrawal barrier. On the one hand, this is harmful to the improvement of the companies'operation profits and decreases the utilization ratio of resources; on the other hand, it causes excessive and malignant competition, and harms the continuity and steady development of the industry.4. Suggestions are offered to the government to make policies to accelerate large-scale production and better the industrial management, which will promote the development of Chinese chicken industry. As an industry producing agricultural products, chicken industry is vulnerable. However, it plays a very important role in increasing farmers'income and maintaining social stability. Therefore, government support, protection and help are needed. The government had better provide more financial and taxation support for chicken industry in order to strengthen its ability to withstand diseases and disasters, to further encourage the chicken industry to expand the scale, better the structure and thus constantly improving the efficiency in both scale and structure; to further enhance the suport in technical innovation to the chicken industry to improve the technological developing efficiency of it. Scientific and comprehensive norms and criteria for production techniques should also be laid down to ensure the safety of products and benefits of consumers, to elevate the technical level and lower the influence of moral risk and reverse choices, which will ultimately increase profit of the industry and utilization ratio of resources. Meanwhile, measures should also be taken to improve management, reinforce the establishment of the industrial associations, to define its legitimate status, provide a favorable external environment for its development, and publicize the association to bring its potential into full play.