Research On Market Power Of Equipment Manufacturing Industry In China

Equipment manufacturing industry as our country’s industrial heart and the coreelement of manufacturing industry, it has been the basic force of social materialproduction. Both in the scale of production and industrial production of the equipmentmanufacturing industry in China have been the first in the world in2011. Although Chinahas become a great nation in the equipment manufacturing industry, the marketcompetitive advantage compared to developed countries is still weak.75%of the importproportion in primary and intermediate products and98%of the export proportion inintermediate inputs and the final product show that the main way of participating inglobal division of labor system in our country is assembling products. In the globalmarket competition, Chinese equipment manufacturing industry still relying on lowerlabor cost, technology has not been formed a competitive advantage, and then the hugeprofits of the value chain is carved up by the developed countries, those with the coretechnology, product brands and sales channels. Thus, the equipment manufacturingindustry of China in the process of profit distribution is weak in market competition. Inaddition, because of the continued expansion of the scale growth and profitability offoreign companies, the living space for local enterprises in our country is decliningcausing by them in the development of China’s domestic market. So, the equipmentmanufacturing industry development in our country is faced with lack of market power.At the beginning of2014, Prime Minister Li Keqiang in the NPC and CPPCC mentionedthat “to upgrade China’s economy, the exports products also need to upgrade, we can’talways sell footwear, clothes, toys, and Chinese equipment should upgrade quality to goout and accepted in the world market inspection.” So, in this background of political andeconomic environment, to analyze the market power level and explore how to improveChina’s equipment manufacturing industry market competition advantage are importantpropositions that keeping up with the development of China’s economy. Therefore, thispaper will research on the market power of the equipment manufacturing industry ofChina from the four aspects of measuring market power, market power factors, the liftingmechanism of market power and the measures of market power. First of all, this paper analysis the equipment manufacturing industry in our countrymarket power level based on the concentration index. It found that China’s equipmentmanufacturing industry market concentration is less than30%. Both in the equipmentmanufacturing industry and sectors are all belonging to the competitive market, themarket is relatively competitive and the product homogeneity phenomenon is still serious.According to discriminate standard of related research with Bain and Uekusa, eventhough the four digits industry existed the high market power in the equipmentmanufacturing industry in our country, however, the overall level of the equipmentmanufacturing industry is not high, even very weak. It found that uneven strength ofprovincial equipment manufacturing industry in China market forces through locationentropy index. Strong scientific and technological level of developed areas and coastaleconomic strong province tend to have strong market power. Regional development isnot balanced. It also found that the equipment manufacturing industry in our country atpresent the level of market power is used to show the tendency of weakening throughspace Gini coefficient.Secondly, this paper based on the top factor of the equipment manufacturingindustry analysis the market power factors. It discussed and analyzed the maininfluencing factors affecting and changing the market power of the equipmentmanufacturing industry. And then, it built the ISM model for equipment manufacturingindustry market power factors system on the basis of these factors, and from thetheoretical model, it identified the technological innovation is the important factor. Andthen, it found that the top factor of the equipment manufacturing industry in our countrywith the influence of market forces has a long-term positive effect through the test.Thirdly, this article conducted how the innovation to improve the equipmentmanufacturing industry market power. Based on the modular theory, the model ofproduction and industrial organization of equipment manufacturing industry is no longerclassified by product chain, but increased the technique of modular in the base of valuechain classification to form the equipment manufacturing industry value network. Theequipment manufacturing industry value network has three elements, which aresupporting parts modular, system integration modular, and standard setting modular.Standard setting modular of the equipment manufacturing industry through the standard innovation get the first-mover advantage in the field of research and development, tooccupy the market dominance of technical standards quickly by the way of standardcompetition. The technical barriers can weak or curb the incumbent or potential entrantsin the market competition behavior to realize standard setting modular own market power.Depending on integrated innovation, the system integration modular achieves economiesof scale and speed of economy, to form the scale and cost barriers to increase its marketpower. Through the accessories innovation, the supporting parts modular improveproduct performance, which conforming to the interface rules of the system integrationmodular in a higher degree to meet the demand of market diversification, and to formproduct differentiation competition barriers to raise their market power. Therefore,through the type of the triple innovation to promote the market power of the equipmentmanufacturing industry in our country, and interpreted with the case in the auto industry.Finally, on the basis of study, this paper summed up the suggestions andcountermeasures, such as “integration of global resources of science and technology,access to enhance the ability of technology; the introduction of technology tore-innovation, access to format the local characteristics innovation; building strategicalliance, access to play the innovation synergistic effect; the massive economy as thecarrier, access to promote the innovation diffusion and sharing of resources; theimplementation of non price competition strategy, access to increase the marketcompetitive advantage ".