Dawn of the Chinese Oligarch

The Economic Observer worries the age of the oligarch is coming to China (leaving aside the political dynasties ruling over the SOEs...) Overproduction is a result of many small producers in industries such as steel and if consolidation leads to a high concentration of assets, China will see the rise of oligarchs. It's beginning in tourism though, with the tie up of Ctrip and Qunar.

Ctrip and where to go past the competition for the market when the cop to kill each other certainly did not expect, in the October 26, 2015 and this day become a rival people.

But including CEO James Liang and Zhuang Chen Chao, including two of the two companies in terms of business elite, one thing increasingly clear: integration is an inevitable trend of industrial development focus, often more fully competitive industry, the more will form an oligopoly Results. Today, the tourism sector two "giants" bury the hatchet, suddenly created a giant occupy 70% market share.

The two companies work together is part of the current wave of mergers and acquisitions the Internet, and this China's economy the most active category, but also to some extent be regarded as the epitome of the domestic industry concentration.
Although steel is always a subject of consolidation, things have gone in the other direction:
However, the small scattered layout allows the industry concentration worse. In 1999, China's four biggest steel company steel production of the country's total output accounted for 31.3 percent; can be made to 2007, the top four steel companies accounted for only 19.3% of the market. While Japan and South Korea steel companies after the merger concentrated, by 2007 the proportion of four companies were more than 50%.

Disorderly developments have led to serious overcapacity and cut-throat competition in the face of the 2008 economic crisis, the false prosperity of the steel industry was hit back to the prototype - steel prices plummeted, 1 kg of cabbage lower steel prices than we have in the fourth quarter of the year broke the whole industry the huge loss of 47.6 billion yuan, countless small mills bankruptcy on foot.

In 2008, the government is determined to introduce a series of industrial planning and production phase-out policy, trying to enhance the industrial concentration through mergers and acquisitions integration. Among them, the Ministry of Industry and other 12 departments jointly issued a document "Guidelines on key industries and enterprises to accelerate mergers and acquisitions," the requirements of steel, cement, shipbuilding, pharmaceutical and other nine industries must mergers and acquisitions, increased industrial concentration. Which explicitly mention the requirements to 2015 10 steel enterprises industry concentration reaches 60%. However, by the end of 2014 this proportion reached only 36.6%. Iron and steel industry has so far failed to extricate himself from the industry-wide losses.
Some see the problem in the economy as too little consolidation:
Different industries like different species. Some evolved slowly from scattered to focus; some fierce competition, survival of the fittest quickly; there are gifted with huge volume, the number of rare groups, a few short years into the industry to focus on the end. That is a sensitive area - monopoly. "Right now, China tends to monopolize the industry is precisely distributed at both ends of a class of government and the market is completely dominated by the government, such as nuclear power, high-speed rail industry set up a 'team';. One is sufficient competition in the market through industry such as the emerging Internet industry. "Prof. renowned economist and vice president of the Shanghai Institute of Chen Zhan investment even on the" Economic Observer reported, "said the two types of enterprises through mergers and acquisitions are realized in a short time bigger and stronger.

According to SASAC director Li Rongrong, head of view, is not the monopoly of state-owned enterprises is precisely the problem, but rather the concentration is not enough.
Going back to the Internet, there's some parallel with China's TV industry of 20 years ago:
Present this scene twenty years ago and is very similar to TV war. In the late 1980s, the Chinese color TV manufacturers reached more than 120. Competition for the market, in March 1996, Changhong Group first announced price cuts, the entire industry into a price to Rush. After years of mergers and acquisitions, and now the TV market is highly concentrated, basically occupied by Hisense, Skyworth, TCL, Konka, Changhong, Haier and other major companies.
Chen Zhan even pointed out that under industrial concentration trend, the government and border markets should be clarified. In the individual areas, in order to set up large monopolies national interests to compete globally understandable. But the government should focus on establishing a sound unified legal rules, policies and regulations, providing equal market order and fair competition environment as little as possible intervention in the market.

After all, government intervention resulting monopoly and the monopoly of the formation of a fully competitive market, has a huge difference.
For all of China's centralization, it remains a very decentralized country. One reason why consolidation has been slow in some industries is that every province, and even some powerful cities, have their own champions. Choosing which company wins is as more political than economic is some cases, and raises issues of central versus local control. Consolidation by political means ends up being akin to herding cats.

EO: 寡头时代

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