A Research On The Economy Of Scale For Chinese Large Retailing Enterprises

Recent years, encountering the huge shock from the e-commerce, the tide of retailing stores closed down emerges. The giant international retailing enterprises also showed the trend of retreating from China. Do the economies of scale exist in the large domestic retailing market? Or has it developed to the bottlenecks to the emergence of diseconomies of scale? Using the data of Chinese retailing companies listed on the Shanghai and Shenzhen stock market during the years from 2002 to 2013, this research adopts the seemingly unrelated regression to estimate the trans-logarithm cost function model, and calculates the economies of scale in different areas based on the estimation results.Research results show that: the law of increasing marginal returns has been showed by the domestic retailing enterprises. It turned to get a certain level of economies of scale in the large domestic retailing enterprises as a whole from 2006, and the effect enhances with the development over time. However, in 2008 after the large-scale retailing enterprises have a certain degree of over-expansion of the scale, the economies of scale slowed down. Therefore, the slump of domestic large retailing enterprises is not entirely due to the exogenous shocks from e-commerce. In developed areas, the dramatic increase of retailing stores caused by the great fiscal expansion and the rapid economy growth is also one of the main difficulties to the retailing industry currently. We can also conclude that the recession of Chinese retailing industry is an inevitable part of China’s economic cycle.At the same time, economies of scale within the industry appear significant regional alienation. Retailing enterprises from eastern areas expanded faster, but never appeared economies of scale(ie, diseconomies of scale), while the middle and west areas relatively acquired more significant economies of scale. This conclusion indicates, retailing industry in the eastern area should focus more on the innovation of business model and the efficiency of input-output. The western areas need to provide enough policy support for the acquisition of technology and attraction of human resource.