Research On Quantitative Evaluation Of Value Creation Ability Of Industries In China

Value creation is one of the most basic economic behaviors, so having well ability ofvalue creation is the base of sustainable development for a company, an industry, even awhole country. After Professor Michael Porter put forward the concept of value chain in1985, theory of value chain has been applied in research fields such as profits increase ofa company, concrete value activities in a value system or a value chain. Moreover, it hasbeen developed into an industrial value chain which can be used to analyze the value(?)reation status of a whole industry. However, the method of industrial value chaina(?)ysis is only suitable for analyzing value creation ability of an industry qualitatively,but the quantitative researches on value creation of an industry are very few.Based on concepts of economic value and value creation, this paper developed the theory of economic value added which is widely used in evaluating the value of a company into using it evaluating ability of value creation of an industry. Not only did this paper evaluate the economic value added created by an industry, but also it evaluated the relative efficiency of value creation of an industry using method of data envelopment analysis.This paper is composed of five parts. Chapter 1 is introduction. The content of Chapter 2 is the establishment of EVA model for evaluating ability of value creation of industries. The content of Chapter 3 is the establishment of DEA model for evaluating efficiency of value creation of industries. Chapter 4 is a study on practice evaluating value creation ability and efficiency of industries in China. And the last chapter is conclusion.After researches mentioned above, this paper draw four conclusions:Firstly, from the results of Industrial Economic Value Added (IEVA) and Return Rate of IEVA, we can know that now the values of IEVA of most industries in China are negative. It means the industries haven't created value for investors in deed.Secondly, by comparing of return rates of different industries, we can know that the value creation abilities of high-tech industries are higher than the traditional industries.Thirdly, because the tax is high in China, the Industrial Social Economic Value Added (ISEVA) is higher than IEVA. Most industries have positive ISEVA, so it means these industries, especially high-tech industries, have created value for society.At last, using DEA model, we can know that nearly 50% industries is low efficient in value creation. And the result is redundancy of input and insufficiency of output.