Study On The Correlation Between Industrial Concentration And Market Performance In China’s Gold Industry

Since China’s gold market opening, China’s gold industry has been developed rapidlytoo. Especially in2002the Shanghai gold exchange was found in our country, many goldenterprises are also developed. They developed on the basis of the previous evolution.Some of the gold enterprises were listed, Such as Zijin mining group company limited,Zhongjin gold corporation limited and Shandong gold group corporation limited, they werelisted in2003.Gold industry is playing an important role in a country`s economy andpolitics. First of all, Gold industry helps to assure the national economic security andpolitical stability; Secondly, the gold industry can provide important raw materials forindustry; Thirdly, gold industry affects the development of financial markets. Now for thegold industry in China is facing a turning point, many gold enterprises have increased insize and profitability, and these enterprises also provide great guarantee for the localfinance and employment. In the year of2013China is for the first time to become thebiggest consumer of gold in the world, and China also is the biggest producer of gold in theworld for several years. With making great achievements, China`s gold industry is alsofacing a series of problems, such as mining developers of the gold industry in our countryhas a low rate of mineral resources exploitation, the quality of the gold production is nothigh, the resources are dispersed, and the gold enterprises scatter overall arrangement. Soabove it all the most seriously problem of the gold industry is the lower industrialconcentration.According to the theory of industrial organization, the market structure has a greatinfluence on market performance. And the industrial concentration is an importantindicator used to measure the market structure. Based on the careful studying andsummarizing the former researches, this paper makes a special effort to study on goldmarket industrial concentration at this stage in China. This paper introduction is range fromthe gold market to the gold industry, and at the same time, analyzes the problems existingin the gold industry in China. And then the study uses the index of the concentration ratioto measure the industrial concentration of the gold industry in China. Then through thegold industrial concentration in China is compared with the developed countries, with thereason of the analysis it is concluded that the concentration ratio of gold industry in Chinais low. At the same time the study finds out the factors that affect the low concentrationratio of the gold industry in China. The factors include the economies of scale, barriers toentry, technical level and the policy environment. After the statistical analysis, the papercan draw a conclusion that there is a positively correlation between the concentration ratioof the gold industry and the market performance in China, But it shows that there is nocausal relationship between them. And it improves that increasing the concentration ratioof the gold industry is an important way to raising the performance of the gold industry inChina. On the basis of the former study this research shows that the main problem in thegold industry in our country now is the rationalization of industry structure. And the largeenterprises in this industry should take the responsibilities to leading industry concentration moderately. Finally, the research makes suggestions to improve theconcentration ratio of the gold industry in China. Firstly it should integrate the goldresources, standardize the order of mining, solve the resource configuration optimizationproblems. Secondly it should speed up to adjust the industrial structure, operate capital andmining rights positively. And at last, the firms should expand overseas markets actively,make scientific development in order to improve the concentration ratio of the goldindustry in China.