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Vicious competition refers to the way in which companies use products that are far below the industry average price or even below the cost to provide products or services, or use non-commercial unfair means to gain market share. Industries that are prone to vicious competition are mostly industries with low barriers to entry, numerous production companies, low industry concentration, and huge product demand.
Vicious competition has the following characteristics, one integrity. That is, it is not the price reduction behavior of a certain enterprise or a few enterprises, but the overall price competition behavior of enterprises within the industry; It was triggered by the price reduction behavior of one or some enterprises in the industry, and spread rapidly to form a “domino effectâ€, which led to the price chain reaction of most enterprises in the industry; Vicious competition is not an instantaneous price act, but a competitive state in which the low or negative profit margins in the industry are relatively long-term and even exceed the company's ability to withstand.
The consequences of vicious competition are obvious. There are five things to come down. One is to disrupt the normal price order of the market, which is not conducive to the optimal allocation of social resources. The second is to damage the legitimate rights and interests of consumers in the long run; the third is to hinder the development of the industry and technological progress; The loss of assets, the national tax revenue has been greatly reduced; the fifth is to invalidate the market competition mechanism. As far as China's current actual situation is concerned, as the reform of the business system of the enterprise is still in progress, it is far from in place. Whether it is the low-price dumping of large enterprises in order to monopolize the market, or the price war of small and medium-sized enterprises in order to survive, if they are allowed to develop, it will lead to the elimination of the inferior and the best. The industrial safety of the machine tool industry will also be threatened, seriously jeopardizing the sustained and healthy development of the national economy.
The machine tool industry is a modern and traditional industry. To say that its modernity means that its high-end products have entered the digital age of integrating machine, electricity and liquid; its tradition means that its low-end products can still be the technical level and processing method 60 years ago. Therefore, the threshold for entry is not high, and the social potential labor force caused by the diversion of employees in the 1990s. Therefore, when the country invested 4 trillion yuan to withstand the financial crisis, the number of enterprises in the machine tool industry rapidly expanded. In 2011, the number of metal cutting machine tools was 1070. Home, the output is 403,935 units, but by 2013 it has reached 1,264, an increase of 18.1%. It is estimated that the annual output will reach 858,100 units, an increase of 112.4% compared with 2011. Excess production capacity is a soil for vicious competition.
Since 2012, the economic operation of the machine tool industry has been in a downward channel, and it has not yet got rid of the downturn. According to the statistics of the key enterprises of the China Machine Tool Industry Association, in the January-November 2013, the gross profit of the small-cutting machine industry decreased by 82.1%, and the sales profit margin was only 0.65%. The business situation of the company has deteriorated, the profit level has dropped significantly, and some enterprises have been at a loss. The homogenization phenomenon of enterprises is very serious, and the signs of vicious competition in the industry have already appeared.
There are many factors in the vicious competition in the machine tool industry. Therefore, there are many ways to control the vicious competition in the machine tool industry. There are institutional and institutional levels, institutional and policy levels, and enterprise and product levels. One of the most important tools is to play a coordinating role in industry associations. Industry associations are organizations recognized by major enterprises in the industry. They have the responsibility to strengthen industry self-discipline, standardize industry order, and avoid disorderly competition. For vicious competition, industry associations should first organize industry enterprises to form a consensus on vicious competition and issue a call to curb vicious competition, becoming a positive energy that constrains corporate behavior and maintains market order. In order to effectively curb vicious competition, some associations, such as the Iron and Steel Association, set up a price coordination organization to become a form of assisting the state in macro-control and indirect management of prices. Industry associations conduct appropriate price coordination when standardizing and guiding competition between industries. Industry associations assist government price authorities and industrial authorities to supervise the implementation of regulations by industrial product operators in the industry, and provide necessary criticism and warning for low-cost dumping activities below the cost of production to curb the continued spread of vicious competition; If you accept the persuasion and have low-cost dumping suspicion, report it directly to the government price department or ask the relevant competent department to investigate and deal with it; assist in the measurement and recommendation to release the average production cost of the industry.
Obviously, one of the important tasks of the Association's price coordination organization is to assist the government in measuring and recommending the average production cost of the industry. There are many kinds of products in the machine tool industry, the specifications are numerous, and the industrial concentration is relatively low. It is very difficult to measure and recommend the average production cost of the industry. The Machine Tool Association can give full play to the role of each club. The mature branch can try to assist the government in measuring and recommending the average production cost of one or several products with the largest demand in the small industry according to the product variety and specifications. The implementation of small industry regulations, so as to achieve the purpose of preventing vicious competition in the industry.
The work of preventing vicious competition in the industry is arduous and complicated. However, for the healthy development of the industry, the machine tool association and the branches must act. The industry enterprises should further strengthen self-discipline, cooperate with the work of the association, maintain market competition order, and be a machine tool. The industry creates a fair and equitable market competition environment, which makes the whole market develop in a standardized, orderly and healthy direction.
(Finish)August 11, 2024