Chinese Auto Industry Organization Policy Research

Theory of industry organization is study the large-scale production,the competition between enterprises and monopoly inside a specificindustry. It seeks the Effective competition between large-scaleproduction and market competition vigor. J .S .Bein , the founder of thetheory of industry organization, set up a studying frame of marketstructure-market conduct-market performance. With the developmentof the theory, other economists revised the studying frame and formed anew one. The new studying frame is also based on the market structure-market conduct-market performance. But it emphasized a relationshipas dynamic, long-term and inter-influencing. The policy of industrial organization is the key content in the wholeindustrial policy system. The policy of industrial organization deals withthe relation between large-scale production and market competition vigorand gets high economic efficiency. The direct goal of the policy ofindustrial organization the government made is to promote therationalization of industrial organization. In this article, I study the theory of industry organization of autoindustry like this: The first part of this article I introduct the origin and development ofthe theory of industry organization. The second part of this article is about the State Department hasestablished the Industrial policy of auto industry in 1994. Theimplementation of the policy of industrial organization is unsuccessfulbasically. As a whole, the structure of the auto industry organization isvery scattered. We have too many automobile factories. With theimplementation of the police, the number of our automobile factoriesdoesn't decrease. The policy of industrial organization has not achievedits goals. The reasons that we fail in implementing the policy is: (1)Administrative repeated constructions can't be suppressed. The localgovernment develops the auto industry actively. So the phenomenon ofrepeated investment is serious. The government protects the auto industryexcessively. So it has hindered the ability of innovation of the autofactories. The international competitiveness of our auto products is veryweak. (3) The policy of automobile consumption lags behind. So it cannot support the implementation of the policy of industry organization. The third part of this article I introduce the experiences whenJapanese and Korea implement their policy of industry organization. The fourth part of this article I use the SCP frame to study the autoindustry of China, and find out many problems: From the market structure: (1)The CR3 of the three biggest autoenterprises Shanghai automobile factory, the NO.1 automobile factoryand the Dong feng automobile factory is 50.2%. It has showed thatconcentration degree of whole market of auto industry of our country isvery low. (2)In 2003, there are 115 automobile factories in China, butonly tow enterprises' output has exceeded 500,000. So the scale of theChinese automobile industrial enterprise is still small. (3) 27 provincesand cities have their own automobile enterprises. The economic enteringbarriers of the automobile industry are very low. From the market conduct: (1)The price competition of theautomobile products is very fierce. The price of the automobile productshas decreased much comparing the end of the 1990s last century. (2)Thedifferential of the products and advertising tactics can enhance theentering barriers of the potential entrants, but this kind of influence isfading gradually. The behaviors of annexation and recombination happenoften. But the behaviors are promoted by the government, not by themarket mechanism. From the market performance: (1)The profits of the auto industry ofour country is quite high. The profits are far more than the internationalautomobile manufacturers. (2) The Chinese auto industry has alreadypromoted quickly on the engineering level. But we are still in the stage ofimporting technology and the input of research and development is verylow. (3) The labor productivity of Chinese automobile enterprises is verylow, and the capacity of th...