The online price war, which is caused by unfair practices in China, has been a serious problem in recent years. Millions of retailers have participated in China’s online economy since 2000 due to the huge market and profit. According to the statistic in 2008, China’s online retail market was worth USD 18.8 billion, with a sustained stable growth rate of over 100 percent each year (Gong et al., 2013). Two wide-ranging online price wars happened last year. The majority of large-scale online retailers, such as alibaba, Jingdong, Suning and Gome were involved. A variety of economic issues have been caused by online price wars, which is troubling for the market economy, owning to the frequent unfair practices. It has also led to deleterious effects on social sustainability, such as the aggravated unemployment issue. This report will identify the effects and implications of online price war, focusing on China, analyze the causes and suggest possible solutions.
The unfair online price war may lead to grave economic issues. Firstly, profit margins will be generally reduced if online retailers regard price war as a long-term strategy. The extremely low price may lead customers to paying for the products they do not need indeed, which could contribute to the increase of sales volume. However, such impulsive purchases can hardly last for a long time. According to the statistic, the profit margin of Chinese home appliance industry is as low as 5% in more than a decade (Hu and Tang, 2014). Excessive online price war will even result in a zero profit consequence, which would bring an extreme difficulty to online retailers (Hu and Tang, 2014). Secondly, quality and after-sales service would be possibly ignored by online re...
... middle of paper ...
...ance their core competencies. Haier, which is one of the most famous Chinese enterprises worldwide, has explicitly rejected to attend the online price war between Jingdong, Suing and Gome in 2012. On the contrary, Haier concentrates on product research and circumspect after-sales service. Rely on the humanistic marketing philosophy, Haier has successfully become the biggest household appliance enterprise in China.
The main cause of online price war is the excessive price competition in e-commerce. It will be an extremely tough progress to stop online price war. Concerned efforts, including legal constraints, governmental supervision and changing strategies of the retailers, are required to avoid online price war. Despite the difficulties, this problem must be addressed because the wide-ranging online price war is unsustainable for both society and economy.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- My chosen topic was to discuss Doctor on Demand, PokitDok, MyCare online, and MDLIVE. I found these all to be interesting innovations that are advancing with technology. Some of the highlights I found with all four of these online resources and applications were they are growing constantly just like the health field. First off I would like to start off by describing what Doctor on Demand is. Doctor on Demand is a service that allows patients to video conference with their physicians through a webcam or something similar.... [tags: Health care, Medicine, Physician]
1849 words (5.3 pages)
- Prices will depend on the amount of supply and demand. After this year, companies are expected to dramatically increase production as new oil projects are introduced to the oil business, coming online with full production capacities. From 2008 to 2013, US crude oil production increased by 2.5 million barrels (EIA “Short Term Energy Outlook”). In fact, the International Energy Agency noted that "U.S. crude oil supply in 2013 registered the fastest absolute annual supply growth of any country in the last two decades, rising 15 percent in 2013." (IEA “Oil Market Report”, 2014).... [tags: fossil fuel industry]
981 words (2.8 pages)
- Xiaomi Have you heard about Xiaomi. Xiaomi is a Chinese technology company, and it was founded in April 6, 2010 by entrepreneur Lei Jun. He became one of the China’s top 20 richest person with net worth US$ 9.1 billion after four years that Xiaomi was founded(Olson, 2014). Therefore, Xiaomi was expending very rapidly. Up to now, the company produced smartphone hardware, software, and internet services as well as accessories. Xiaomi not only hires Chinese technical talents, but also recruit international talents.... [tags: Mobile phone, Smartphone, IPhone, Windows Mobile]
1918 words (5.5 pages)
- “It’s not what you say, it’s how you say it” (Luntz, cited in Scheufele and Tewksbury, 2007: 9). Introduction Agenda setting describes the ability of those in positions of power, such as the mass media and influential political leaders, to transfer salience to certain issues that they deem important, while pushing other issues that they deem less important to a lower priority and out of the public view. There is an abundance of literature on the agenda setting process, but it is mainly focused on agenda setting in the West.... [tags: Media Censorship in China]
3741 words (10.7 pages)
- Though the world is discovered to be round physically, it doesn’t necessarily mean that the world is round in the technology and business aspect. In fact, there are many reasons that prove the world is indeed getting flatter and flatter as time goes on; as more countries gain access to the internet, resources, and therefore knowledge, anyone from anywhere on the world is now gaining the ability to compete with the top leading nations such as the United States. As information and technology expand globally, the economy will be completely “flattened” in the future.... [tags: The World Is Flat, Globalization, Thomas Friedman]
937 words (2.7 pages)
- As we know, there are a lot of business types in the world. Each of the businesses has their own strategies to survive in this competitive business world. Economically, price discrimination is usually regarded as desirable, since it often increases the efficiency of an economy. In contrast, it often arouses strong opposition from a public. Like in this particular case, which is online price discrimination, a majority of consumers think that this kind of discrimination is illegal. Generally, discrimination has a very negative implication in our society, and various forms of it, which those based on age, gender, race and religion, are illegal.... [tags: Marketing, Pricing, Elasticity]
1037 words (3 pages)
- Social organisations in China have gained increasing importance when looking at power relations in China. This can partly be explained by the fact that China works through informal politics (decision making and policy making done behind the doors through negotiations and connections), and the Party’s focus on the economy. In other words, as long as social or civil organisations are beneficial to the country’s economy and its wellbeing, the Party will not interfere or even be of help to the former.... [tags: Civil Society China Politics]
2397 words (6.8 pages)
- There have been many things that have transformed our society today; one of those being online shopping. Online shopping began in 1979 and was invented by a man named Michael Aldrich. Michael invented online shopping to enable online transactions between consumers and businesses. Although shopping in stores has been the number one way for Americans to shop all of these years, shopping online has made a big impact on our culture by making advertising sway consumers through marketing, lead us to copy others, cause impulsive behavior, and succumb our moods.... [tags: Online shopping, Electronic commerce, Affect]
1201 words (3.4 pages)
- The price level in China increases these years. In 2000, the price for a bowl of noodles was 1.5 RMB, but now the price of it is 4 RMB. For these 16 years, the average price of housing changed from 4000 RMB per meter square to 35000 RMB per meter square. This increase in price level makes people buy less. However, as exchange rate of RMB to USD increases these 15 years, RMB appreciates, which means Chinese are able to buy more foreign goods. Then, we wonder what makes the price level increase. In this essay, I will use consumer price index (CPI) to represent the price level.... [tags: Inflation, Economics, Purchasing power parity]
735 words (2.1 pages)
- Chinas Economy China has experienced major economic growth in the past forty years, but how did it develop into the economically powerful country that it is today. China has been through many difficulties and complications to get to the place it is at today. China’s government is called the People’s Republic of China and it operates on a socialist market economy. The culture of China is very diverse, it has fifty-six minority groups and many cultures have their own languages. However, the Chinese culture is trying to transition from traditional Chinese culture to a more modernized version of Chinese culture.... [tags: People's Republic of China, China, Deng Xiaoping]
1263 words (3.6 pages)