Zhou Kai: The machinery industry can increase its concentration to compete with multinational companies

The Legislative Affairs Office of the Institute organized a seminar on "concentration of managers" and a seminar on foreign-funded enterprises in Beijing not long ago. The meeting invited 10 industrial associations such as machinery, automobiles, light industry, and steel, and five foreign companies such as U.S. General Motors and Microsoft (China) to participate in the forum. Zhou Kai, vice president of the China Machinery Industry Federation, said in his speech that China's machinery industry is fragmented and lacks concentration, and it needs to increase the degree of concentration in order to form the ability to compete with multinational companies.

Zhou Kai pointed out that the machinery industry is a traditional industry and it is a competitive industry. At present, the main problem of the machinery industry is the fragmentation and lack of concentration. Any enterprise in the machinery industry currently does not have the ability to over-concentrate on the formation of monopolies. The entire industry needs to work hard for a longer period of time to increase the degree of concentration before it can form the ability to compete with multinational companies. This is because there are many kinds of mechanical products, and even large enterprise groups cannot monopolize the market in product segmentation due to the variety of product varieties. Therefore, in the enforcement of the "Anti-Monopoly Law," it must be conducive to promoting the increase of industrial concentration of machinery enterprises, but can not suppress the increase of industrial concentration of machinery enterprises, otherwise it will affect the sound and rapid development of the machinery industry.

Zhou Kai believes that in the industrial chain, monopoly has the largest impact on the development of the mechanical industry is the upstream and downstream industries. The first is the resource monopoly industry. The machinery industry is a large raw material consumer, and the monopoly of the raw material supply industry will have a fatal impact on the development of the machinery industry. The second is user monopoly. Mechanical industrial products are mainly production materials, and their users have greater investment capabilities. Users invest in the development of machinery manufacturing industries, excluding the purchase of mechanical products outside the system, thus forming a monopoly of users to the market. This phenomenon has occurred many times in history. The third is foreign capital monopoly. In the situation where foreign capital mergers and acquisitions of domestic enterprises have formed or may form monopolies, they must be highly valued and restricted.

Zhou Kai put forward three suggestions for the “concentration of managers” report:

I. Indicators on the "concentration of managers" declaration. First, unified use of market share indicators. The main indicator for declaration should be market share, ie, market share. Because it is more difficult to obtain this indicator, statistical capacity needs to be strengthened. The second is that the sub-sector uses sales targets. This is the second best solution. However, this absolute amount of indicators does not indicate whether the company is in a monopoly position. Some industries have high sales, but their market share is small; some industries have low sales, but the market share is already high. Therefore, using sales targets requires different industries to set different standards. If it is unified as a standard, the law enforcement department is simple in operation, but it may affect the enthusiasm of companies to increase their concentration and make them bigger and stronger.

Second, on foreign capital mergers and acquisitions. When a foreign investor merges and acquires a domestic enterprise, where an M&A transaction may result in excessive concentration and a large share of market development, hindering fair competition and affecting competition, the anti-monopoly agency shall notify the relevant government departments and industry associations in advance to listen to opinions, or to call relevant parties. Hearings, approval according to law.

Third, we must give full play to the role of industry associations. To establish a working mechanism for anti-monopoly law enforcement between law enforcement agencies and industry associations, the Association shall be close to the enterprise, understand the enterprise, and grasp the dynamics of industry information. Through the analysis of the economic situation of the industry, it is possible to timely grasp the possible monopolistic operations and perform self-regulatory functions of the industry. The relevant information. As to whether or not an industry monopoly has been formed, law enforcement agencies must listen to the association’s opinions as a reference for decision-making.

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