The Research On The Market Structure And Performance Of Chinese Steel Industry Affected By Reorganization

The steel industry is the pillar industry in China, it is a technology, capital, resources,energy-intensive industry, the technical characteristics of the steel manufacture lead to theimportance of economies of scale in the steel industry. Chinese steel industry hasexperienced decades of vigorous rapid development, but also hides serious contradictionsof industrial structure, the low industry concentration is the most prominent issue. Lowindustry concentration not only allows companies cannot achieve economies of scale, andalso restricts the technological innovation, at the same time, it limits the enhancement ofinternational competitiveness. In recent years, China has issued a series of policies toencourage steel industry to reorganize, it shows that China has already realize the block ofdomestic steel industry development, and actively to solve this problem. This paper aims atanalyzing the influence of reorganization to the market structure and performance, to verifywhether reorganization played a role in steel industry.Firstly, This paper introduces reorganization process of china’s steel industry, theresearch scope limits as horizontal reorganization. At present, china’s steel industryreorganization is in the third stage, it is a speed up stage. The defeat of iron ore pricenegotiations, the poor technology level of small and medium-sized enterprise, the steelindustry policy support are the causes of the reorganization. The goal of the reorganizationis to improve the control of upstream and downstream industry chain, form the scaleeconomy, control the scale of investment and productivity, optimize product structure.Second, analysis market structure combing reorganization, specifically from enteringbarriers, exit barriers, market concentration，and the scale of the enterprise. Before thepromulgation of the policy of the steel industry, China’s steel industry has low barriers toentry, high exit barriers, driven by high profits, a large number of small and mediumenterprises enter the steel industry, local government has also given greater support to steelenterprises as a taxpayer for the development of local economic, it was a "reversecentralization" trend. After reorganization of China’s steel industry, entering barriersincrease, exit barriers decrease, market concentration increase, the scale of enterprise becomes larger, form several large-scale enterprises, but compared with foreign countries,there are still the characteristics of a low concentration.Third, analysis the behavior of enterprise, specifically from new product innovation,eliminate poor production capacity, and personnel training. After the reorganization,enterprise increase investment on the new product innovation, strengthen eliminated ofpoor production, pay more attention to the cultivation of talents.Finally, analysis industrial performance combing reorganization from two aspects:1,business performance;2, technological progress. It shows that market concentration has anegative impact of the total assets of the contribution rate, the profitability of industrialcosts, turnaround times of current assets. There may be other reasons: the purchase price ofiron ore, coke, scrap and other raw material and fuel; shrinking demand in the internationalmarket; trade protection; the impact of exchange rate changes. Market concentration ispositively related with technical progress, indicating that the reorganization promotetechnological progress. According to the structure, behavior and performance analysisresult, put forward some suggestions for the reorganization of China’s steel industry: in thefuture of the reorganization, make full use of national macro regulation and marketmechanism, perfect capital market; insist on technological innovation, ensure theoptimization of incremental structure; perfect the eliminated mechanism, strengthen thefusion of all aspects in the late reorganization.