I. Administrative Monopoly Barriers
Taking the telecommunication industry as an example, on September 25, 2000, the State promulgated the Telecommunication Regulations of the People's Republic of China*** and the State. The Regulations*** established eight important management systems: a licensing system for telecommunication business operation, a system for regulating interconnection between telecommunication networks, a system for managing telecommunication tariffs, a system for the compensated use of telecommunication resources, a system for supervising the quality of telecommunication services, a system for managing telecommunication construction, a system for the entry of telecommunication equipment into the network, and a system for guaranteeing telecommunication security. Although the regulation allows private enterprises to operate value-added telecommunication services such as Internet information services for the first time, it also stipulates that for the operation of basic telecommunication services, the operator shall be a company established in accordance with the law and specializing in basic telecommunication services, and that the company shall have at least 51% of Chinese equity shares. This regulation not only stipulates the threshold of entry into the telecommunications industry, but also the price of telecommunications tariffs. This administrative industry monopoly with a planned economy flavor leads to a significant loss of social welfare. It is estimated that even if an IP phone card is sold at a discount, the telecom sector can still make 15 times the profit. The actual cost of China Telecom's IP telephony for domestic long-distance is only 0.08 yuan, and the actual charge is 0.3 yuan; the actual cost of international long-distance is 0.6 yuan, but it is charged at 4.8 yuan. This kind of high profit, from an economic point of view, will attract a lot of other low-profit industry enterprises to switch to the telecommunications industry, but the actual situation is different. Due to the state's excessive administrative intervention in the industry, the formation of high administrative barriers to the industry, making it difficult for other enterprises and social forces to enter this field of fair competition, the result will inevitably result in poor quality and high prices of products and limit the development of the industry, the development of the service industry as a whole also has a negative impact on the development of the industry.
Second, economies of scale barriers
Economies of scale is an important variable affecting the market structure, economies of scale of production and the relative size of market demand determines the number of vendors that a market can accommodate. The greater the economies of scale, the fewer the number of vendors that can be accommodated for a given market demand, and the greater the concentration of the market.
The scale indicators for measuring the height of industrial market barriers mainly include: the ratio of economic size to total market size, the amount of necessary capital, the number of industrial and corporate patent licenses, and the proportion of sales amount to total economic costs. Japan's famous economist Uekusa Ikki proposed the use of economic scale barriers high and low to measure the barriers to entry in the industry:
Scale barriers coefficient d = (optimal size / market capacity) × 100%
Uekusa Ikki proposed the measurement standard is: when d = 10% 25%, the industry is a high degree of economies of scale barriers; when d = 5% 9%, the industry is a high degree of economies of scale barriers; and when d<5%, the industry is a medium or low level barrier to economies of scale.
The second measure is the profitability level indicator. The measurement classification criteria proposed by Bain are: when the sales price is 10% higher than the average cost, the industry which is still difficult for new enterprises to enter is a high barrier industry; when the sales price is 6% 8% higher than the average cost, the industry which is still difficult for new enterprises to enter is a higher barrier industry; when the sales price is 4% higher than the average cost, the industry which is still difficult for new enterprises to enter is a medium barrier industry; when the sales price is higher than the average cost 1% 2%, the new business will be easy to enter the industry, is a low barrier industry.
From the point of view of the service industry in Heilongjiang Province, economies of scale barriers in the monopoly-type service industry is more prominent; in the current economic development, a region relying solely on the development of traditional catering and recreational services, it is difficult to play a greater role in driving economic development. Some emerging industries due to the operating characteristics, would have required a certain economy of scale, if the policy on the entry of a variety of private capital to limit the role of such barriers will intensify, hindering its own and the development of the economy as a whole.
Third, the amount of necessary capital barriers
The amount of necessary capital is a new enterprise to enter the market must be invested in the production of business capital. The amount of necessary capital of different industries due to technology, production, sales and other requirements are different and have a big difference. The larger the amount of necessary capital, the more difficult it is to raise capital, and the higher the capital "threshold" for new enterprises to enter. Taking the financial and insurance industry in Heilongjiang Province as an example, the financial and insurance industry uses funds as capital, and the number of funds needed in this industry is much larger than that in other industries. Enterprises that can enter the industry must have sufficient capital strength as a backing before they can operate.
Table 1: Assets of Financial Institutions in Heilongjiang Province in 2002 Unit: RMB 10,000,000
Source: 2002 Heilongjiang Financial Yearbook
From Table 1, we can see that the assets of the financial industry in Heilongjiang Province are all more than 1 billion yuan, and that of the Industrial and Commercial Bank of China (ICBC) is more than 100 billion yuan. That is to say, if other enterprises want to enter the industry, the total amount of assets should be at least over 100 million yuan. Such a high capital volume barrier may be beyond the reach of small and medium-sized enterprises.
And the telecom industry itself belongs to the capital-intensive and knowledge-intensive industry, determines its own high capital barriers at the same time also has a high technical barriers. Such as broadband access technology utility to ADSL represented by XDSL technology, with its objective rationality, low cost, and relying on the existing huge fixed telephone subscriber line resources in the country, the main operating companies to become the main broadband access methods. VSDL technology using Ethernet bearer technology is used to provide short-distance high-speed data intervention services for relatively dense user areas, and has gradually attracted the attention of the industry. In order to tap the potential of the existing network to better provide value-added business applications, major telecom operators are actively engaged in the development or application of various value-added business network technologies, such as IP video, MPLSVPN, browsing media and so on. It can be said that in this industry, who is the first to have the latest and optimal technology, who has the magic weapon to compete for market share. If other companies want to enter the industry, these patents and technologies are an insurmountable gap.
Relative to the above industries, community services, catering and entertainment industry, these industries require relatively less capital, technology, and therefore the barriers to entry of new enterprises in the industry is relatively small.
Four, regional barriers
Regional barriers refers to the industry is located in the region due to the economy, education and culture, transportation conditions, historical reasons and other external natural and social reasons caused by the barriers to entry. Comparatively speaking, municipalities, provincial capitals, special economic zones and their surrounding cities and counties compared to the speed of economic development is faster, the industry is relatively more complete, the industry has more opportunities for transformation, the relative barriers to entry than the economically disadvantaged areas are also lower. The following is an example of the insurance industry in Heilongjiang Province to further illustrate the impact of regional barriers on the industry. Table 2: Outlet statistics of life insurance member companies in the second half of 2003 Unit: one China Life Pacific Life Ping An Life Xinhua Life Taikang Life Harbin 544 178 206 326 174 Qiqihar 340 44 48 108 87 Mudanjiang 401 196 98 190 Jiamusi 184 40 62 100 Daqing 214 46 9885 Jixi 399 18 47 Hegang 101 96 Shuangyashan 37 164 Qitaihe 38 14 Qiqihua 179 14448 Heihe 217 24 Yichun 210 28 Daxinganling 139 As can be seen from Table 2, the development of the insurance industry in Heilongjiang Province is extremely unbalanced between regions. Large cities such as Ha, Qi, Mud and Jia occupy most of the market share of life insurance in Heilongjiang, while the relatively economically backward regions such as Jixi, Hegang, Shuangyashan and Heihe not only have a small share of the market, but even insurance companies of Xinhua and Taikang do not have any outlets in the region.