Faced with the huge temptation brought by the amazing profits behind the blowout of the domestic automobile market, perhaps more and more executives are facing more severe challenges: enterprises that want to enter the domestic automobile industry need great courage and sufficient strength. Because of its inherent characteristics, the investment risks and investment barriers of the automobile industry may far exceed those described by the decision-making model under some uncertain conditions. As far as the entry threshold of the automobile industry is concerned, many links in the industry have become unattainable due to the influence of various forces. This paper will make a preliminary analysis of the entry barriers of China automobile industry:
According to strategist Mike Porter, the barriers to new entrants in an industry often come from six aspects:
1. economies of scale: these fields require new entrants to enter the market in the form of mass production, otherwise they will have to face the reality of cost disadvantage. For the automobile industry, this is more clear. Because of the huge R&D cost of automobiles, it is difficult to spread the products without reaching a certain scale. At the same time, the scale economy of automobile is also reflected in the management and procurement costs and sales costs. Although economies of scale can be regarded as an extension of foreign scale and greatly weakened for foreign automobile enterprises to invest in China, if there is no certain scale, this investment will inevitably fail: for domestic enterprises, the threshold of economies of scale will be more obvious, especially those enterprises that have nothing to do with cars except driving and cycling.
2. Product differentiation: Consumers' recognition of the original brands in the market will force new entrants to spend huge sums of money to overcome the adverse effects of consumer brand loyalty. Although China is a country with underdeveloped brand culture and its brand loyalty is not obvious, the importance of the brand will be more fully reflected for such a high-participation procurement project as automobile consumption: according to the survey results conducted by HC International for many times, factors related to brand reputation, such as peer introduction or herd mentality, are among the top decision-making factors of buyers. For a new entrant, this piece may be completely blank, except for those foreign brands that already have considerable influence in China.
3. Capital demand: When entering an industry that needs a lot of capital, it will cause considerable obstacles to new entrants, especially in the fields of advertising and R&D, which requires new entrants to have enough courage. At the same time, the financial strength will also have a great impact on customer trust and channel confidence. For the automobile industry, the automobile industry is also a capital-intensive industry in essence, and there are capital barriers in R&D, factory building, purchase of production lines and so on that are unmatched by general productive industries. From the perspective of channel confidence, if enterprises do not have enough advertising investment or financial strength as the backing, channel construction will be very difficult, not to mention that under the brand monopoly system of domestic car companies, dealers are required to have corresponding qualifications. Under the pressure of investment risk, operators who invest in automobile sales will inevitably give priority to those enterprises or brands with stronger strength.
The barriers of capital are reflected in all aspects of new entrants. If enterprises have no confidence in investing in the automobile industry, then the investment is likely to give up halfway, but at present, the total amount of funds of domestic enterprises may not even touch the threshold of automobiles, and the funds have already evaporated. At present, many home appliance industries in China have begun to consider or enter the automotive field under the circumstance that the overall profit rate of home appliances is declining, but these enterprises should clearly realize that this choice may be a gamble related to life.
4. Cost disadvantage independent of scale: In Porter's theory, the concept of experience curve is used to describe this part, which refers to the cost advantage that new entrants do not have through the experience accumulation and labor learning curve of the original enterprise. At the same time, the factors that constitute the cost disadvantage independent of scale also include patent rights, government subsidies and the increase in the initial purchase price of equipment due to inflation or exchange rate changes.
An empirical curve is similar to a learning curve. For the first batch of entrants in this industry, their accumulated experience in this industry for many years is more conducive to saving costs, while new entrants have a certain advantage of latecomers because of the lack of corresponding skilled personnel, but this advantage of latecomers is often much more naive than those with experience. For the automobile industry, although the overall level of China is not so good, it is precisely because of such a low-level and high-cost operation mode that the overall culture of the automobile industry in China has been achieved, so there are still some barriers for these new entrants.
5. Access to distribution channels: In addition to producing products, new entrants must also establish channels leading to consumers. In this respect, new entrants often have certain disadvantages, for example, they often find it difficult to gain the trust of dealers and have to pay more expensive prices; The shelves entering the supermarket must be discounted and promoted. To be allowed.
For the automobile industry, the sales channel is often responsible for several things, so it is more important. After all, under the current conditions, all car companies have to build their own channels, which requires enterprises to invest huge energy. Moreover, with more and more new domestic automobile brands, channel resources will become one of the scarcer resources. Old brands have occupied most of the channel resources, and once the automobile industry has passed this peak period, the channel will experience more tragic integration, so the channel fortress of newcomers will be even more unattainable.
6. Government policy: In many countries, the government often constitutes the biggest obstacle to certain industries, restricting the free flow of resources by issuing licenses and controlling raw materials. In terms of automobiles, China's state control is more obvious, and its domestic policies have always discriminated against its own private capital, but have been more lenient towards foreign investment.
In addition to Mike Porter's analysis, we will find other barriers from the domestic automobile industry: first, because domestic automobile enterprises do not have their own technical foundation, their most important competitive advantage in the domestic market comes from who can obtain the most advanced foreign products or technologies. From the perspective of foreign enterprises, the criteria for selecting domestic partners often need to examine the influence of the enterprise in the domestic automobile industry and its ability to tackle key problems in government approval, so as to build barriers for non-automobile industry investors or enterprises. Secondly, due to the influence of imported cars on domestic procurement, although many brands have not set up factories in China, they have set up barriers for many new entrants, and domestic word-of-mouth is enough to support the conditions needed to set up factories in China, which actually weakens the demand for other brands. Finally, the speculative psychology of domestic enterprises constitutes a worse entry barrier for the automobile industry. Cars are not an area that ordinary rich enterprises can play, and the investment period and return period are relatively long. Most domestic enterprises have the problem of speculative short-term behavior. In this case, if the results are not seen in the short term, the investment confidence of domestic enterprises will often be shaken, and finally new entrants will be defeated by themselves.
For enterprises interested in catching the last bus in the automobile industry, choosing the right breakthrough and the right investment method may be the most critical issue. It may no longer be wise to invest directly in vehicle production here, but domestic parts production and automobile-related services have not started simultaneously with the vehicle market at present. The hidden opportunities in these areas may be more suitable for those investors, although they are not as beautiful as Chunlan's investment in heavy trucks.