On The Industry Choosing By China's Private Firms

Private economy has developed quickly since the reform and open, thus private firm is helping push the society forward, because it has not only made great contribution to GDP but also provided plenty of commodities and many jobs. Market economy has brought us private corporation, whose aim is profit only. So it is market mechanism that determines private enterprise's efficiency, which is supported theoretically by the speech delivered at the sixteenth national convention of CCP.Almost all merchandise is in short till the first years of 1990's. We call this kind of market sellers' market, which determines that product choosing is vital to private company because a marketable product is easy to find. While with the economy development since middle of 1990's, sellers' market has been replaced by buyers' market, which means that in most goods market supply exceeds demand. Generally speaking, private company is small and middle-sized and confined in a narrow operation area. It is no longer easy to find a marketable product. Therefore, to find a marketable industry, called industry choosing, is much more important. First, analyzing lengthwise and breadthwise that which kind of industry private enterprise has chosen, we can draw the following conclusions: (1) China's private company has a low industry value, because from the angle of industry structure,?the majority is tradition or labor intensive industry, while rising industry and capital, technology or knowledge intensive industry is only minority. (2) Competition is not very efficient, because from the angle of industry organization, a low concentration ratio means a single firm has small power to control a certain market and scale economy effect can seldom be found. If the problems above cannot be solved properly, many other problems will be followed. Private enterprise can't expand to improve its ability to compete with others and tackle the market problems. Industry structure optimization and upgrade and industry organization rationalization will meet extra difficulties.Based on the issues above, this paper focuses on the industry choosing by private?This word is a concept between macro-economy and micro-economy, which means the proportion between and within industries. Here we refer the proportion between and within certain industries chosen by private enterprise.enterprise in China from the angle of industry structure and industry organization. First, many theories are applied in this paper, such as industry structure theory, industry organization theory, small and middle-sized industry theory, life cycle theory, comparative advantage theory and firm theory. Judging from both firm performance and industry performance level, such conclusion can be made that it's urgent for private enterprise to adjust industry-choosing conduct in order to improve industry value and allocate resource efficiently. Subsequently, we probe what affects industry-choosing conduct of China's private firm. At the end of this paper, some countermeasures are suggested.The structure is as follows:Chapter one is introduction, which focuses on what private firm is and what characters it has. In this part we can also get something about the significance of such study and the structure and method in the paper.Chapter two carries theory applied. Industry structure theory and industry organization theory help analyze the industry structure and organization of private company, and they are basis of the two-level standard that is firm performance level and industry performance level. And small and middle-sized industry theory, life cycle theory, comparative advantage theory and firm theory are also indispensable because we apply them to explore what affects industry choosing conduct and how to improve the performance.In Chapter three, which is positive analysis part, we analyze the industry choosing conduct of China's private firm in the past 25 years lengthwise and single out Zhejiang province and Guangdong province for transverse study. Measured by the two-level standard, China's...