The Study On The Entry And Exit Barriers Of Security Industry

The research on the entry and exit barriers is an important part of industrial economics. Since the publication of written by Bain in 1959, the worldwide scholars on industrial economics have made in-depth research on the entry and exit barriers from the perspective of theoretical and experimental analysis, and accumulated large amount of documents. However, these researches mostly focus on the tangible economy in secondary industry and tertiary industry. Recently, as the fast growth of virtual economies, such as security, which have different industrial characteristics and rules from tangible economies, how to extend the research of industrial economics to virtual economies has been one of the hot spots of academic discussion.This article starts with the entry and exit barrier of security industry. Based on the review and summary of classic documents on entry and exit barrier, according to the industrial characteristics of the security industry, this article discusses the characteristics and development trend of the entry and exit barrier of security industry, then discusses the detailed developmental phases of security industry in China. Through the comparison with relevant industry in developed countries and regressive analysis based on time series, this article researches the rationality of entry and exit barrier of security industry in China, and proposes some relevant optimization suggestions.Divided into 7 chapters, this article adopts theoretical analysis scheme at first and then adopts experimental analysis scheme:Chapter First: Introduction. At first, this article briefly discusses the research theme and its significance, then systematically reviews and summarizes the relevant research documents on entry and exit barrier, establishing theoretical base for further discussion.Chapter Second: The entry barrier of security industry. At first, according to different sources, this article separates the entry barriers into economic barrier and administrative barrier. Considering the characteristics of security industry, this article discusses the differences between various economic barriers and those in tangible economy, and indicates that subjective product differences such as goodwill make up of major differentiation barrier, and human resource is the main source of economic scale barrier. Then, this article makes further discussion about development trend of various economic entry barriers, and the causes, basic features of administrative barriers in security industry, indicating that the entry regulation is the main source of administrative barrier, with further discussion of its trend.Chapter Third: The exit barrier of security industry. The exit barriers are composed by economic barrier and social barrier. Similar to entry barrier, the economic exit barrier of security industry also has particularities as virtual economy. For example, the sunk costs, mainly composed by the loss of intangible asset and transition cost of human resource, occupy bigger proportion in the exit barrier. However, as the enormous negative externality of the instability of security industry, the social barrier becomes the main exit barrier, and exit regulation becomes the principal approach to reduce the social barrier. As the gradual accumulation of experience in regulation in each country, the content and system of exit regulation gradually matures.Chapter Fourth: The analysis of entry and exit barrier of security industry in China. Compared with developed countries, the entry barrier in China is not perfect. The administrative entry barrier is too high, not compatible with market development. As the high administrative barrier, the security industry pays little attention to the economic barrier, thus economic barrier is not perfect. The deficiency of corporate governance structure further impairs the function of economic barrier. As the China's entry into WTO and the more and more evident tendency of financial mix operation, the administrative entry barrier in China faces new challenges. As for the exit barrier, the social exit barrier is huge in security industry in China, because of the single exit way and the lack of pre-warning exit mechanism.Chapter Fifth: The impact of entry and exit barrier of security industry in China on industrial structure and industrial performance. This chapter is an extension of the fourth chapter, adopting comparison analysis method and regressive analysis method. Firstly, through the comparison with developed countries, the irrationality of the China's entry and exit barrier in security industry is revealed, which leads to the irrationality of industrial structure and poor performance. Secondly, through regressive analysis method based on time series, this article discusses the relationship between the relative change of industrial intensity and the change of the number of existing enterprises and the change of the industry scale; and the relationship between ROE (return on equity) (industrial performance) and the industrial intensity and the industrial expansion speed. The results indicate that: the industrial intensity has positive relationship with the number of existing enterprises; the industrial ROE has no evident relationship with industrial intensity. These two regressive results are both against the classic theory of industrial economics, and thus to some extent prove that the irrationality of the entry and exit barrier has led to the abnormal development of security industry.Chapter Sixth: The optimization of entry and exit barrier of security industry in China. Based on the former chapters, considering the current state of entry and exit barrier of security industry in China and causes of the irrationality, this article firstly proposes four principles of the optimization of entry and exit barrier. Then according to these principles, the following policy suggestions are proposed: promote the transition of security industry from approval system to registration system; lower the administrative exit barrier and transit to market-oriented exit barrier; enhance the net asset proportion of security companies, increase the asset liquidity, and optimize the assignment of resources; establish the risk pre-warning system which focuses on net asset; perfect the corporate governance in security companies and strengthen the internal risk control system, etc.Chapter Seventh: Some unsolved problems. This chapter summarizes those problems which need further research and clarification during the process of writing.In a word, this article analyzes the problems of entry and exit barrier of security industry in China, integrating theory with practice and adopting relevant theories of industrial economics. We hope it can help the future development of security industry in China.