Research On Market Structure And Performance Of China's Automobile Manufacturing Industry

The automobile manufacturing industry, which is capital and technology intensive, has played an important role in the process of industrialization in various countries. And it's an important pillar industry in many countries. After the international financial crisis, every country has paid more attention to improve industrial competitive forces in the international market and to create new competitive advantages, so competition in the automobile manufacturing industry has evolved into the competition of technology. The shortage of resources and environmental pollution have become increasingly serious, therefore, being low-cost, energy-saving, environment friendly, intelligent has become the mainstream of the development in the automobile manufacturing industry.China's economic development has entered a "new normal" phase with the economic change from high growth to Medium-high growth. As a new power, Chinese economic growth has changed from factor-driven, investment-driven to innovation-driven. Chinese automobile manufacturing industry has also entered a new period of development - innovation and upgrade. How to transform from an automobile strong nation to a powerful nation in a short period to achieve the upgrade and improve the international competitiveness has become an urgent problem for China to be faced with.Research on the market structure and market performance is an important part of the theory of industrial organization. Hypothesis of market power and hypothesis of efficiency structure are to explain the relationship between market structure and market performance from the perspective of market power and efficiency. Hypothesis of market power proposes that a higher market share of the enterprise has the power to manipulate the market to obtain monopoly profits by company and hypothesis of efficiency structure holds that high concentration and high excess profits derive from high efficiency of the enterprise, which means low cost and high profits. The research of the relationship between market structure and market performance has been mainly concentrated on the banking, manufacturing, industry and automobile industry, while the research taking automobile manufacturing industry as the object is rare. Therefore, the study of the relationship between market structure and market performance of Chinese automobile manufacturing industry has important theoretical and practical significance.The relevant theoretical analysis is made on the basis of the literature on the induction of the relationship between market structure and market performance and hypothesis testing. The gap is identified by comparative analysis on China and automobile powerful nations. An analysis of changes in Chinese automobile manufacturing industry market structure and market performance is done on the measure of market structure and market performance. An empirical analysis on market structure and market performance of Chinese automobile manufacturing industry is also made to test the applicability of hypothesis of market power and hypothesis of efficiency structure in Chinese automobile manufacturing industry by using panel data and econometric regression model. Finally, with the analysis of changes of market structure and market performance conditions in Chinese automobile manufacturing industry, some conclusions and recommendations are given as follows:First, Chinese automobile manufacturing industry concentration shows a "U" changes from planned economy period to the present. And the market structure of Chinese automobile manufacturing industry has evolved from competition as a result of the combined effect of the national policies, corporate behavior, FDI, and the market size to monopoly during market economy period. The level of concentration increases slowly. Compared with the automobile powerful nations, Chinese automobile manufacturing industry concentration rate is too low. Large, medium and small enterprises co-exist in Chinese automobile manufacturing industry. It is characterized by high concentration in production by several large groups and dispersion in production by many enterprises.Second, the automobile enterprises with different size and ownership structure are different in profitability, R&D investment and production efficiency. The scale of Chinese automobile enterprises is obvious and large enterprises accounts for proportion. There are big gaps between large enterprises and medium and small enterprises while the gap between large enterprises is not obvious. The gap is striking between Chinese large automobile enterprises and multinational automobile enterprises in size, R&D investment, market share, and other aspects.Third, Chinese automobile manufacturing industry is highly foreign participated and Chinese large automobile groups are major participants in the joint ventures and major providers of automobile brands. This market structure results in low production of own-brand automobile, gradual decline of the market share and weak development of own-brand automobile.Fourth, the profitability, technological progress and the overall level of productivity of Chinese automobile manufacturing industry have increased. In recent years, the profit of Chinese automobile manufacturing industry has declined recently and the economic performance of the listed auto companies is not optimistic, especially the passenger car business in which the decline in economic performance is more obvious.The proportion of the public number of automobile patents has declined, especially the patents of the automobile core parts which declined obviously.Fifth, Chinese automobile manufacturing industry is accorded with the hypothesis of X-efficiency structure. The empirical results show that R&D investment, asset-liability ratio, X efficiency, scale efficiency, ownership structure and regulated variables of scale efficiency impact on performance significantly; R&D investment, firm size, market size and asset-liability ratio affect industry concentration greatly; and R&D investment, asset-liability ratio and the proportion of state-owned shares affect the market share obviously.Sixth, It is found that market structure of Chinese automobile manufacturing industry has a decisive influence on market behavior and market performance based on the relations between market structure and market performance and the analysis of the influencing factors of market structure and performance.Compared with previous studies, the innovation of this thesis is mainly reflected in the following three aspects:First, the applicability of hypothesis of market power and the hypothesis of efficiency structure of the applicability in Chinese automobile manufacturing industry is tested empirically. The previous studies take the automobile industry, industry, manufacturing as the research objects which ignores the differences in the integrated research.Even the automobile industry may be broken down into automobile manufacturing, recreational vehicle manufacturing industry, components manufacturing industry, and there are also differences of these industries. Thus, the integrated research which neglects the difference can not accurately determine the relationship between the market structure and market performance from an overall instead of individual perspective. This thesis takes automobile manufacturing as research object, avoiding differences of the industries, adding control variables and the regulated variables in the empirical model to test the applicability of the six hypotheses in Chinese automobile manufacturing industry.Second, the Chinese automobile enterprises in different scale and ownership structure are significantly different in market performance. The efficiency of size variables in this empirical analysis has a significant positive impact on firm performance. Adding the proportion of state-owned shares to the regulated variables of scale efficiency, the variables of scale efficiency have a significant negative impact on business performance. The necessity of optimization of property right structure in automobile enterprises is explained theoretically.Third, through the study on the relations between market structure and market performance in Chinese automobile manufacturing industry, it is found that market performance of automobile manufacturing industry is the result of joint action of market structure and market behavior. Market structure, market behavior and market performance are interrelated. But market structure is a decisive factor. Market structure of automobile manufacturing industry causes scale efficiency having no significant effect on performance and market power not playing a role. Optimization of market structure is good to improve the performance of the enterprises and industry. It is the inevitable choice to optimize market structure in order to improve the performance of enterprises and industry.Hypothesis of Market power and Hypothesis of efficiency structure reflect the "Marshall conflict" and "Sraffa conflict", namely, the relationship between scale economy and free competition.It is the common focus for theorists and policy makers to construct moderately competitive market structure facing the dilemma of choice between scale economy and free competition. Automobile manufacturing industry belongs to scale economy, this makes automobile enterprises bigger and bigger. Automobile market home and abroad becomes gradually a unified global market as process of economic globalization is accelerating. Automobile manufacturing industry becomes more international and more competitive. And it has entered a competition of technological innovation competition. Automotive technology changes day to day.In the current market environment, Chinese automobile manufacturing industry can achieve scale economy by increasing industry concentration and expanding the scale of enterprises. And this does not bring about monopoly. The measures to optimize industry market structure of Chinese automobile manufacturing industry means to accelerate the concentration of the industry by promoting the mergers and acquisitions and to improve its to exit mechanism, to broaden the financing channels for enterprises, to deepen cooperation among automobile enterprises. Production scale and capital strength of large automobile enterprises is unmatched with small and medium-sized automobile enterprises. They are the backbone of Chinese automobile manufacturing industry. Therefore, it is necessary to deepen the reform of state-owned automobile enterprises, encouraging them to play the leading role in the automobile manufacturing industry.