Advertising The Degree Of Concentration Of China's Car Industry Market Analysis

Chinese saloon car industry is growing quickly at present. Chinese saloon car industry dropped behind the saloon car industry of developed country because it developed rather later. Competition in Chinese saloon car is becoming stronger with open to other country after enter WTO. There are many researches on the relationship of market structure and profitability in other country. Majority of the foreign researches are in industry level, the rest are in enterprise level. But the similar searchers are so few in domestic. This article investigates the relationship between advertising, concentration and profitability on enterprise level in the Chinese saloon car industry. The empirical results offer suggestions on how saloon car enterprises choosing strategy of competitive advantage.This paper has been divided into three parts: 1) Summarization of former theories, based on which following studies will develop;2)Main body of the paper——analyses on the impact of adverting on the car industry market concentration of China, while two factors being taken into consideration primary: market entrance and fluctuation of market share. For adverting are configurations and conduct variables, both structure-entrance barrier and strategy-entrance barrier should be analyzed. How much of impact adverting has on the market concentration could be conferred .With statistics in car industry of China, an empirical study has been done to verify the relation between adverting and market concentration, and exceptional explanation should be advanced;3) Specialty and universality of impacts on car-industry market concentration of China.The academic study indicate that adverting impact on car-industry market concentration in two way:1)to upgrade market concentration by resulting in entrance barriers;2)to degrade market concentration by improving new products.This paper reviews exiting studies on the relationship of advertising and concentration. Advertising to sales ratio, market shares are used to measure adverting and concentration. We picked Shanghai Volkswagen, FAW Volkswagen, Shanghai GM, Tianjin FAW Xiali, Guangzhou Honda, Dongfeng Peugeot Citroen Automobile, Changan Suzuki, Geely Car as empirical sample. The sampling period is from 2000 to 2005. The empirical results are as follows: there is lightly positive correlation between density of adverting and concentration of market, because the positive effect of adverting has been weakened while car-industry is undergoing rapid development in China at present.