Research On Relationship Between Market Structure And Market Performance Of Chinese Automotive Industry

As long as China entered the WTO, The automotive industry has experienced the best10years since then. In2011, both the numbers of output and sales of automobiles have extended to18.4million, leading China to the biggest production and sales basement in the world. At the same time, comparing with developed countries along with a long history of automotive industry, Chinese automotive industry really has a long way to go.This paper aims to figure out the best market structure and market performance for Chinese automotive industry combining with the theoretical and practical methods. First, we will analyze Chinese automotive industry from traditional SCP(Structural-Conduct-Performance)view. Then, we will use mathematical and econometrics methods to research on the relationship between market structure and market performance. Finally, according to the analysis results, useful and appropriate policy has been suggested.For the market structure, Chinese automotive industry has been changing from high-concentrated to low-concentrated and the phenomenon of production differentiation has largely extended. For the market conduct, most of Chinese automotive producers are engaged in price competition and an increase occurred in R&D investment. For the market performance, TFP of Chinese automotive industry keeps increasing at a rate of7%-13%and different car producers own different profit rate according to their market shares. As a result, for the Chinese automotive industry, there exit a "U shape" relationship between market structure and market performance, if the market share is low, the market performance can be improved as long as market share improves; otherwise. Besides, remarkably different from traditional SCP view, this paper has found out a double-direction relationship between market structure and market performance, which has sufficiently proved by mathematical and empirical analysis. Generally speaking, this paper has pointed out PCS(Performance-Conduct-Structure) framework. Not only can market structure affect market performance through market conduct, also market performance can affect market structure through market conduct. Finally, several policy of increasing market shares has been strong suggested.