The Effect Of Advertising Intensity On Mark-up Percentage In The Chinese Manufacturing Enterprises

In the special period of economic recession, it is pretty essential to promote the competitiveness of the manufacturing industry. Although advertisements always play an important role in the communication process between enterprises and consumers, there are a multitude of differences about the impacts of advertising among different types of enterprises. And the higher cost of advertising does not means effective. In this context, this study is intended to analyze the effect of the advertising in the manufacturing industry based on the theory of mark-up percentage, and expects to explore the relationship between the two.First, the paper summarizes the literatures about the economic functions of advertising and the impact of the cost of trade on the mark-up percentage among enterprises.Then, through analyzing the enterprises mark-up percentage theory, we can summarize the theory from its contents, influencing factors and measurement methods.Next, this part is the combination of descriptive statistics and regression analysis with the data of ?Chinese industrial enterprises database)).The descriptive statistic part classifies the advertising intensity according to the elements of industry, region and other factors. After that, this paper calculates other related variables, for instance, the mark-up percentage, total factor productivity and quartile Herfindahl-Hirschman index. As for the regression part, it uses enterprises' advertising intensity as the independent variable, and mark-up percentage as the dependent variable respectively, while other important factors are regarded as control variables. All these panel data models are established and analyzed by STATA.The conclusions are:1.In general, most manufacturing enterprises which invest advertising can make themselves stand out in the market and profit a lot, but this is not always the case.2. In the middle and western region, the advertisement delivery of manufacturing enterprises acquires few effects, while in the eastern region, it brings opportunities and more profits.3.The efficiency of advertising in the private enterprises is relatively lower compared with other enterprises.4.1n labor-intensive industry, advertisement delivery causes larger effects to market power and gains from trade than that in capital-intensive industry.5.Delivering advertisements in small enterprises is more likely to help enterprises occupy the dominant position.Finally, this paper discusses the defects of this research and provides the idea for further study as well.