The Study Of Excessive Competition To Recession Impacts In SME Clusters

As a special form of industrial organization, SME clusters show strong economic vitality in recent years and play an important role in regional economic development. However, the establishment of enterprise cluster doesn’t mean to live forever, such as vacuum cup cluster of Yongkang was "a flash in the pan".According to the characteristics of SME clusters, this paper brings forward that excessive competition is one of the important factors to lead to SME clusters’ decline, combines industrial cluster theory and excessive competition theory, and analyzes the connection point of the two theories, and brings forward this textual thought, by using game theory models and cases to analyze excessive competition in SME clusters.This paper analyzes the forming principle of excessive competition firstly. There are low entry barriers, high exit barriers, and product homogeneity leading to excessive competition. It constructs game model to conclude that whether a company comes into a cluster is related to the entry barriers and capital levels of the existing firms; product homogeneity leads to price down and profit loss because of over imitation. Then, this thesis analyzes the excessive competition performance in declining phase and current governance in the case of ceramic cluster of Jingdezhen to verify the above theory. In Jingdezhen ceramic clusters, potential ceramic companies get into clusters easily because of low entry barriers; firms have difficulties to exit clusters because of specialized assets and personnel; sink cost leads to surplus production; product homogeneity is serious because of knowledge spillage leading to easy imitation. All of those will result in excessive competition easily in Jingdezhen ceramic clusters. At last, it discusses the harm of excessive competition brought to consumers, enterprises, clusters and regional economic development and puts forward related recommendations from enterprises, government and industry association three aspects to make excessive competition become effective competition.