Excessive Competition In Chinese Motorcycle Industry And Countermeasure

Excessive competition, to which much attention was paid by Japan, has been an omnipresent notion in mainstream economics overseas. In China, with the transition from seller-dominant market to buyer-dominant market of many industries, excessive competition has been the description of some industries, such as appliances and motorcycle. However, in academe, excessive ordinate competition is mixed up with general competition and due to structural overstock and systematic factor. Furthermore, "competition will evaluate consumer's surplus" has been a credendum accepted widely, so a lot of people insisted that excessive competition should not be refrained.Firstly in this paper, the author tries to analysis excessive competition in motorcycle industry and make some theoretical innovation. Based on the indexes about competitive degree from Japanese Official Fair Trade Committee, criterion of measuring competitive degree quantitatively is established. After demonstration by using the indexes mentioned above, over-competition in Chinese motorcycle industry was conformed. Then on the basis of analyzing the harm over-competition brings about, the author draws an important conclusion that consumer's surplus may be increase as the monopoly ratio becomes higher by using dynamic model on product upgrading with creativity.Secondly, with economics analysis method, the reasons of over-competition in Chinese motorcycle industry are concluded, i.e. demand-lack and supply over-abundance. In one hand, motorcycle- prohibition and income difference between urban and rural areas are the cause of demand-lack. In another hand, low industry entry barrier caused by our less advanced technology and easy reach of foreign advanced technology are the reason of supply over-abundance.　The paper has clearly reflected that the excess competition in Chinese motorcycle's industry is resulted by the factor of state-owned property right, which is supported by an empirical analysis on the theory that state-owned enterprise inclines to quantity growth with its ability to share profit but not to response for debt and a model that local-government subsidy causes quantity growth and it is essentially useless as the equilibrium of game theory shows.Finally, having studied macroscopic industry policy and enterprise strategy respectively, the author gives some strategies and tactics on how to achieve the transform from over-competition to effective competition. Government should reduce state-owned shares of stock company and establish bankruptcy Act and merge and acquisition Act in order that those companies with lower efficiency can exit from the industry easily. To a company, with the uselessness of low-cost strategy in excessive competition, it should focus on technological innovation and take the differentiation strategy and expand the methods of cross-nation management.