Study On Competitive Strategy And Market Structure Of Chinese Internet Platform Enterprise

Based on the argument on competition and and monopoly arising continuously inthe internet sector, this thesis identifies Internet platform enterprises as researchsubject, creating the crystal system analysis framework in interpreting internetindustry organization with the support of industry organization theory. Thus it hasbeen pointed out that relying on the awareness of a new market demand or create anew product is not enough. Instead, more attention should be attached to such sixdimensions as business originality, product viscosity, resource integration, productexperience, user base and profitability mode.Based on comparison with the development mode of Internet in the U.S., thisthesis has analysed the factors accounting for the failure of international Internettycoon in China and has discovered that the Internet market of China has bothinternationally applicable Internet industry characteristics, such as the networkingeffects based on social connections, identifying low material switching cost,free basicfunction, bilateral market and heterogeneous consumers, and certain industry natureswith Chinese characteristics like great price elasticity of demand and platform producthomogeneity. Analysis has been further made with Bertrand competition in China,diversified business mode, one-side charging mode, factors leading to discriminatorypricing model and outlooks for combination between industry and finance andindustry chain integration mode.While fully taking into account the six factors of crystal system: the lowtechnology barrier and imitation of Internet platform business model, low productdifferentiation (more can be shown as product experience difference and productviscosity), high networking effects, difference of user base size and venture capital,this thesis, through expanded hotelling, has created the competition scenario amonge-commerce market, Internet games market and instant messaging. In describing threecouples of competition cases, TaoBao and PaiPai, Tecent and Ourgame, QQ and MSN,normal propositions and conclusions have been drawn. In-depth study has been madeto the formation of China’s Internet industry differentiation pricing and promotion mechanism and the fundamental reason for the overflowing of imitation strategy.In identifying the prerequisites of relevant markets, this thesis has pointed outthat China’s Internet platform market is oligopoly market structure, which has beenproved with the monthly market monitor statistics from July2006to November2012.We can see that the oligopoly position is temporary or unstable, which may changewith the passage of time and the progress of technology. The emergence of newtechnology or new new business model may readjust market structure and acceleratesuch a change with networking effects. The new judgment criteria of Internet industryshould focus on consumer wellbeing, space of market growth, market entry and exitbarrier, startup and innovation and their influence on traditional industries.