Research On Competition Strategy In Electronic Payment Industry Of China Based On Network Externality

Electronic payment is an important chain link payment and settlement in the e-commerce industry. With the development of electronic payment industry, the role of electronic payment is also changing from involvement to the guider role of e-commerce development. The market prospects of electronic payment are broad, However, with the existence of Network Externalities,some enterprises who have a huge installed user base or a highly competitive standards of corporate, on the demand side economies of scale and effect of positive feedback effect, winner strong and weak out in the end. Electronic payment market in China has formed a pattern of monopoly by one or two companies. Newcomers face enormous barriers to entry.Electronic payment market has distinct characteristics of network externalities. This is the current form of the internal market monopoly and it is also a breakthrough in breaking the monopoly. Only through careful analysis on the electronic payment market size of network externality factors, the electronic payment enterprises can really create an effective competitive, and have a place in the highly competitive electronic payments market.This paper is written from a perspective of network externalities theory. First, a brief analysis of China's electronic payment industry, network externality features and patterns of industrial competition. Pointed out that as a network externality market, competition of standards and the installed base of users also is the focus of competition in China's current electronic payment industry. Second, expounded the competition strategy of electronic payment market through the two levels of competition. And the carried out an empirical analysis through the two case studies of Alipay Company and Tenpay Company. At last the paper concluded with a summary and outlook.In China nowdays, few studies are related to electronic payment industry. And mostly concentrated in the specific payment type dispute, or in the legal regulatory aspects of electronic payment. With the competition theory of network externality market and the empirical analysis, this paper explained the understanding of electronic payment enterprises competition, and put forward the views on the future development of industry. However, due to the limited time and personal ability, there's no further theoretical analysis and model derivation in this paper. Therefore, the research on competition strategy in electronic payment industry of china needed to be more in-depth in the future.