What is a Buyer's Market?

The buyer's market is also known as the "buyer's market." "Seller's market" symmetry. Refers to a market where there is oversupply of goods, fierce competition among sellers, and buyers are in an active position. The supply of goods in the market exceeds the demand, and the sellers lower the sales conditions, and find ways to sell their goods, so that the goods are sold at a low price. This is very beneficial to the buyer, and has ample choice for the goods, causing the prices of goods in the market to drop. This competition is not only reflected in price, but also in terms of quality, color, style, function, service, delivery time, packaging and so on. ^[1]

buyer market

The buyer's market is also known as the "buyer's market." "Seller's market" symmetry. Refers to a market where there is oversupply of goods, fierce competition among sellers, and buyers are in an active position. The supply of goods in the market exceeds the demand, and the sellers lower the sales conditions, and find ways to sell their goods, so that the goods are sold at a low price. This is very beneficial to the buyer, and has ample choice for the goods, causing the prices of goods in the market to drop. This competition is not only reflected in price, but also in terms of quality, color, style, function, service, delivery time, packaging and so on. ^[1]

Under the conditions of the buyer's market, whether companies and commodity producers can organize production according to market consumer demand and adapt to changes in market consumer demand is of great significance to the survival of enterprises and commodity producers.

Supply is greater than demand, commodity prices have a downward trend, and buyers are in a favorable market trend for transactions.

Buyer's market refers to a market shape where the buyer has the initiative to market transactions under the condition of oversupply of goods

With the reform and opening up and rapid economic growth in the past 20 years,

Property market enters buyer market

After the founding of New China for decades, the shortage economy basically ended, and the buyer's market began to form. By the end of 1997, not only was there an oversupply of most consumer goods in China, but also oversupply of some investment products and even basic products. There was a relative overproduction in many industries, and people generally felt that the real existence of a rich supply of commodities was an epochal change . The formation of a buyer's market is a milestone in China's economic development process, and it will have a profound impact on the operation and development of China's economy in the 21st century.

The buyer's market is a market in which buyers are in a leading position in the relationship between supply and demand. It has different impacts on consumers who buy goods, industrial and commercial enterprises that supply goods, and economic management departments that are macro-controls, and cause a series of different behavior changes. Buyer markets are generally good for consumers. Consumers can shop around in a relaxed market product selection environment, buy cheap and good-quality products, and virtually increase actual income in the process of declining commodity prices to achieve greater consumption satisfaction. Especially for Chinese who have been in shortage for a long time, from grain, cotton, oil, meat, eggs, vegetables to daily necessities such as sugar, tobacco, wine, and matches are provided on a household-by-household basis, the formation of a buyer's market Give it more joy.

Buyer market changes

The buyer's market brings benefits to consumers, but it brings pressure and challenges to producers and operators. Pressure and challenge lies in the buyer's market

buyer market

After the formation of the fierce competition between enterprises for market share, competition will lead to the following changes:

1. The average profit rate of enterprises has decreased. The response of enterprises to fierce competition is often the price reduction of products. Since the enterprises in the same industry in China are generally small in scale and large in number, market competition is particularly fierce. Excessive competition has caused production companies and commercial enterprises to continuously reduce prices, even blowing up the wind of price reduction, and engaging in a pure price war. This often reduces the returns of producers and operators, and the annual average profit rate continues to decline. There has been an inverse movement in production and sales growth and decline in profitability.

2. Enterprise differentiation has intensified. Under the buyer's market conditions, market competition will promote survival of the fittest. Production and efficiency are concentrated to a few advantageous enterprises, and most SMEs are increasingly difficult to operate. In China, this situation most obviously occurs in the home appliance industries such as televisions, refrigerators, and washing machines, and the same changes have gradually occurred in industries such as steel and automobiles. That is to say, a few companies that produce brand-name products, large scale, and good operating efficiency have high economic benefits, increasing market share, and market expansion has promoted the scale (including SMEs with poor mergers and acquisitions), and gradually reach the scale. Economic level, and the majority of small and medium-sized enterprises and inferior enterprises that produce non-famous products, are too small, and have poor operating conditions, the market share is getting smaller and smaller, and even bankruptcy occurs. In atrophy. In the long run, an incompletely competitive market structure in which most large enterprises in a monopoly position coexist with a considerable number of small and medium-sized enterprises will be formed. In the short term, this change will cause some productivity to be idle and the unemployment rate to rise, but in the long term, it will be positive. It will strengthen the international competitiveness of enterprises and products, occupy more international markets, and improve social productivity and Comprehensive national strength is favorable. Partial idle production capacity can also be analyzed on both sides. On the one hand, some resources are wasted, and on the other hand, it can adapt to changes in market demand fluctuations, making the supply of goods flexible.

3. Improve the quality of enterprises. In addition to product price reductions, the company's response to fierce competition will do everything possible to improve its production technology level and operation

Real estate buyer's market

Management level, upgrade technology products, strive to achieve economic scale, improve product after-sales service, etc., in order to improve the company's own quality, reduce production costs, improve product quality, develop brand-name products, and strive to be in a favorable position in the market competition. This change is undoubtedly desirable and can improve the overall quality of the enterprise.

The formation of China's buyer's market will face a change in macroeconomic regulation and control for economic management departments. Under the seller's market conditions, the macro-control mainly solves the problem of supplementing the short-term and increasing supply. The control method is mainly to simply control demand and tighten the total gate of credit and investment scale to control the Chinese currency caused by excessive demand in a shortage economy. Inflation to grasp macroeconomic trends. Under the new situation of the buyer's market, oversupply has become a normal state of macro aggregates. The strengthening of market constraints has significantly weakened investment demand. Therefore, macro regulation and control is no longer a matter of simply controlling demand, but we must carefully study how to guide and promote it. Consumption demand, and the expansion of the consumption field, so as to maintain the role of consumption in promoting production.

In short, the formation of a buyer's market with sufficient supply of Chinese goods is not only beneficial to consumers, but also to the improvement of the productivity of the entire society and long-term economic development, which people have long dreamed of. Of course, we should also have sufficient understanding and mental preparation for the short-term pains that occur during the process of corporate structure adjustment in the buyer's market.

Buyer market formation

There are different views on the reasons for the formation of the buyer's market. One view is that due to tight monetary policy or the supply and decision of money

Consumer Consumption Structure under Buyer's Market

Caused by insufficient domestic demand, another point of view is that it is mainly a problem of structural contradiction or incompatibility between the supply structure and the demand structure. These two views are not wrong, but the most fundamental reason is that the reform and opening up aimed at establishing a socialist market economic system has achieved great results. By gradually removing the shackles of the old system, it has greatly aroused the enthusiasm of the Chinese people and directly promoted The development of industry and agriculture and the service industry and the significant increase in social productivity have effectively promoted the sustained and rapid growth of the national economy. The increase in supply has increasingly enriched the goods on the market, and finally realized the transformation of the supply-demand relationship from the seller's market to the buyer's market.

The seller's market is the product of a planned economy. The normal state of the market economy is the buyer's market, which is an inevitable process for the development of the market economy to a certain stage. With the final establishment and completion of China's perfect socialist market economy system, with further economic development and further increase in supply, the buyer's market will become more consolidated, more advanced and comprehensive. Of course, the moderately tight monetary and fiscal policies have effectively controlled inflation while promoting the transformation of the seller's market to the buyer's market; a large number of blindly repeated construction and industry and product structures have failed to upgrade with the increase of urban and rural residents' income. Disabling the supply and demand structure also promoted the formation of a buyer's market. The widening and accumulating disparity in per capita income levels has led to insufficient aggregate demand, which is another important factor that has led to the formation of a buyer's market but has not attracted enough attention.

According to related research, the disposable income expressed by the per capita living income of urban households and the disposable income of rural households is measured from

buyer market

From 1985 to 1995, the extreme difference rate, coefficient of variation and weighted coefficient of variation of 29 provinces, cities and districts in China (excluding Tibet) increased from 2.96, 0.2109 and 0.2291 to 4.75, 0.3302 and 0.3807, respectively. This shows that since the Seventh Five-Year Plan, with the gradual deepening of reform and opening up and the rapid growth of the national economy, the inter-provincial differences in per capita income of Chinese households have continued to expand, and the relative per capita income of residents in low-income provinces (except Guangxi) has been relatively large. The levels are declining, and the relative income levels of the per capita income of most of the high-income provinces, cities, and districts are rapidly increasing, and the so-called "Matthew Effect" has appeared. Due to the rapid rise in the relative income of residents in the three municipalities directly under the Central Government of Beijing, Tianjin, Shanghai and the southeast coastal provinces, and the decline in the relative income of the central and western provinces, the differences in the income of residents in the three major areas of east, central and west are the same as before. The foundation has also been further expanded. The widening income gap of residents is not only manifested between the provinces and municipalities and the three major regions, but also between urban and rural areas, and the income gap is even greater.

It should be noted that in the above-mentioned measurement indicators, the consumption income of urban households does not include various subsidies and labor insurance benefits provided by the government, and the net income of farmers' households includes the cost of expanding reproduction, without deducting various unreasonable allocations. He also built his own housing and paid for his own medical and pension expenses. Therefore, the actual income gap between urban and rural residents is greater than the gap reflected by the above indicators. If all kinds of abnormal incomes are taken into account, the gap between the rich and the poor and the extent of their widening must be increased. [

Compared with developed country buyer markets, China's buyer market has two distinct characteristics:

1. Elementary

Measured in terms of per capita GNP, per capita disposable income, and consumption demand structure, unlike the buyer's market with a high level of consumption of US $ 20,000 per capita in developed countries, the buyer's market in China is rudimentary. Buyer's market in transition from well-off to well-off. Based on China's national conditions, the demand structure corresponding to a certain income level can be roughly divided into four types, namely, survival type (the content of demand is mainly cheap survival data), and food and clothing (the content of demand is mainly to meet the necessities of food and clothing and Services), well-off (demand content is mainly durable consumer goods, housing, infrastructure and high-level services that improve the quality of life) and wealthy (demand content is mainly highly intelligent products and services that meet the needs of human development and enjoyment). The vast majority of rural residents in China have reached the subsistence-demand structure, and are shifting to the demand content of durable consumer goods and better housing for well-off families. A small number of them have just reached the survival type and poor families with a population of 40 million. Another small part has reached and exceeded the level of consumption demand of ordinary urban residents; the vast majority of urban residents have far exceeded the structure of consumer demand for food and clothing, and they have a variety of household durable consumer goods. Better housing, convenient infrastructure and high-level services are moving forward, and another small part has reached the structure of consumer demand for well-off and wealthy types, or is transitioning from well-off to wealthy types. It can be seen that China's main population group is in the stage of transition from a subsistence to a moderately prosperous demand structure, but rural residents are one step behind urban residents, and urban residents will take the lead in entering a well-off lifestyle. The buyer's market in China is the primary buyer's market formed on the basis of such a transition from subsistence to moderate consumption.

Relativity

Different from the absolute and comprehensive buyer's market in developed countries, the buyer's market in China is a relative and incomplete buyer's market. It is a market where coexistence cannot be bought and sold, and coexistence cannot be bought and bought without new things. For example, after more than a decade of technology introduction and development, the production capacity and output of Chinese household appliances such as color TVs, refrigerators, washing machines, recorders, and video players have greatly increased. The main population of rural residents also have the desire and impulse to purchase home appliances. The market has great potential Large, but unable to pay due to income constraints, causing a large number of durable consumer goods to be piled up in warehouses and stores, forming a backlog, which is manifested by oversupply in the consumer market. Urban housing is basically the same situation. There are a large number of urban commercial housing for sale in cities and towns. However, due to its high price, the main population of urban residents has great desire to buy a house, but it can only be discouraged. The huge potential purchasing power is difficult to turn into reality. Of purchasing power, resulting in a large number of urban commercial housing idle. Because durable consumer goods and commodity housing are the main consumption direction of the main consumer groups in urban and rural areas and China's main consumer goods supply area, their slow-moving sales constitute the largest share of the formation of the Chinese buyer's market.

Chinese urban and rural residents have emerged as high-income classes. Although these people account for a small proportion of the total population in China, due to China's large population base, its absolute number is not small, and the scale of consumption has been considerable, and they have reached The well-off and wealthy consumer demand structure has shifted its focus from general food, clothing, housing, travel, and use to medical care, education, entertainment, and tourism. However, products and services adapted to this high level of consumption are under-developed in China and in short supply, leading to the formation of a buyer's market as a whole, while leaving a gap in the market supply.

In short, the buyer's market in China is a primary buyer's market with a low level of per capita income and low overall consumption level. It is a relatively incomplete buyer's market in which the oversupply of the overall market coexists with the demand of local specific markets. The buyer's market formed in China can only show that it is basically but not fundamentally out of the state of shortage economy. There is still a long way to go to get out of the shortage economy and form a comprehensive buyer's market.