(Source: "Guangming Daily"2025-06-06）
[Guangming Commentary]
Recently, in response to a new round of "price wars", the China Association of Automobile Manufacturers issued the "Initiative on Maintaining Fair Competition Order and Promoting the Healthy Development of the Industry." The "Initiative" points out that disorderly "price wars" intensify vicious competition, which will further squeeze corporate profit margins, thereby affecting product quality and after-sales service guarantees. It will not only hinder the healthy development of the industry itself, but also endanger consumer rights and interests and bring safety hazards. The Ministry of Industry and Information Technology also stated that disorderly "price wars" among enterprises are a typical manifestation of "involution" competition, with no winners and no future.
In recent years, “involution” competition has gradually spread across many industries, causing an impact on the market order. This kind of competition is essentially low-quality, homogeneous, excessive and disorderly competition that deviates from economic laws. Its distinctive feature is that companies continue to invest a lot of energy and resources in competing for market share in a limited market space, but fail to improve efficiency or promote technological progress, which instead leads to a significant decline in profits for the entire industry. Take the new energy vehicle industry as an example. In the short term, low-price strategies may drive sales growth, but in the long term, this is tantamount to drinking poison to quench thirst. As industry profit margins have been significantly compressed, corporate profitability continues to decline, R&D investment continues to shrink, and innovation capabilities are restricted. Eventually, the entire industry falls into a vicious cycle of low-level competition, making it difficult to achieve sustainable development.
Previously, various industries have spontaneously begun to rectify, and the national level has also released clear signals to comprehensively rectify "involution" competition. The Political Bureau meeting of the CPC Central Committee held in July 2024 clearly stated that "strengthening industry self-discipline and preventing vicious competition from 'involution'"; the Central Economic Work Conference held in December of the same year once again emphasized "comprehensive rectification of 'involution' competition and standardizing the behavior of local governments and enterprises"; this year's "Government Work Report" included "comprehensive rectification of 'involution' competition" for the first time, which is of profound significance.
From an enterprise level, a key incentive for “involution” competition is blindly following the trend of emerging tracks. Some companies have short-sighted strategies. When the industry heats up, they rush in regardless of their own conditions and market structure, and blindly expand production scale to seize the market. Later, as the industry cools down and the market becomes saturated, they have to further lower prices to absorb excess production capacity, exacerbating the "involution" of the industry.
In addition, the lack of innovation power has exacerbated the homogenization dilemma of “involution” competition. Due to the large investment in innovation, the long cycle, the high risks, and the incomplete intellectual property protection mechanism, many companies are hesitant to move forward in research and development due to lack of funds or risk aversion. Most of the products it launches are simple imitations or fine-tuned upgrades of existing products on the market. They lack core technological breakthroughs and are difficult to form unique competitive advantages. This kind of homogeneous competition forces enterprises to fall into the quagmire of vicious price wars and passively rely on compressed profit margins to compete for market share, further exacerbating the imbalance of resource consumption and market order.
To effectively curb "involution" competition, the government, industry and enterprises must work together to form a comprehensive management force. The government should be guided by strong policies, standardize market order, and create a good innovation environment. Give full play to the traction and leverage of the "promising government", strive to standardize relevant behaviors in attracting investment, avoid lowering the threshold for enterprises to enter popular industries through unconventional policies, and guide enterprises with overcapacity and inefficiency to exit the market in a timely manner, release resources, and avoid disorderly competition within the industry. At the level of public service supply, we should increase the construction of scientific and technological innovation infrastructure, build advanced scientific research platforms, shared laboratories and technical support centers, and provide enterprises with necessary R&D resources and innovation environment. This can effectively help enterprises reduce innovation costs and improve R&D efficiency. In addition, strengthening the protection of intellectual property rights and ensuring the innovation results of enterprises will also help stimulate innovation vitality.
To build a healthy and sustainable competitive ecosystem, industry self-discipline is indispensable. As industry leaders and norm-setters, industry associations should promote the formulation and improvement of fair competition rules, curb low-price dumping, strengthen internal supervision, and promote fair competition. In addition, it is necessary to guide enterprises to shift from "data competition" to "quality competition" and promote the creation of a healthy market competition atmosphere. For example, the China Association of Automobile Manufacturers advocates that companies abandon sales ranking orientation and encourages brands to pay more attention to technological breakthroughs, product innovation and service upgrades when promoting.
As a market entity, enterprises must work hard and actively innovate as an effective way to break the "involution" situation. Enterprises need to uphold the spirit of innovation, increase investment in research and development, create core products with independent intellectual property rights, shape core competitiveness through technological innovation, and enhance market competitiveness. At the same time, we should actively expand the global market and reduce reliance on a single market. The "overseas" strategy can not only effectively alleviate the competitive pressure in the domestic market, but also open up a broader space for development.
Comprehensive regulation of "involution" competition is an important step in achieving a fair competitive market environment. It is believed that with the implementation of a series of policies and measures from the central to local governments, industries and enterprises insist on moving toward "newness", which will promote orderly competition and sustainable development in the market and inject new momentum into high-quality economic development.
(Author: Liu Bin, researcher at the National Institute for Opening up and the w88 casino of Government, w88 casino)
Attachment: Original linkhttps://app.gmdaily.cn/as/opened/n/06531f96517945e6abe59b7dc5136ad2
