What Is a Declining Industry?

Declining industries refer to industries in a region or a country's industrial structure that do not adapt to changes in market demand, do not have a location advantage, and lack competitiveness, and have fallen into stagnation or even shrinking in the industrial structure.

Industrial decline

As far as specific industries are concerned, there is a life cycle from incubation period growth period maturity period decline period.

In the past, there were many definitions of recession industries. The most representative are the views of the following three scholars. Among them, Professor Michael Porter believes that the industry that has seen absolute decline in product sales over a sustained period of time is a declining industry; while Arthur Burns believes that the industry's growth percentage tends to decline as the industry ages. Declining industry; domestic scholar Mao Lingen believes that the aging industry sector with a regular slowdown in growth is a declining industry.

In addition, Zhou Xinsheng pointed out from the perspective of the process of industrial evolution that the decline of the industry is the process of the industry from prosperity to recession and then to decline. Industrial decline is an objective necessity, and it is the last stage of the industrial development process and the rise and fall of the industry. Industry decline is the lack of innovation capacity or decline, which has led to the decline of the industry's competitiveness. Industrial recession is also the process of exiting production factors. In theory, industrial recession and factor exit are closely related, but in practice, industrial recession does not mean that the factor exits. There are many factors in the relationship between recession and exit. kick in. Industrial decline is the process of negating the industry itself and breeding new industries and new products.

Starting from the nature of the industry's recession, Ren Hongbo and others believe that a declining industry should be defined as an industry where the market capacity of an industrial product in a certain country or region continues to decline or stagnate for a long period of time. There are two key points in this definition: the first is that the change in market capacity is the essential reason for the decline of the industry; the second is to discuss that the declining industry must have certain geographical restrictions, which can be a country or a region. [3]

Chen Baojiang began to understand the declining industry from the industrial cycle, and pointed out that due to technological progress, new industries have emerged. As new products grow, products from the old industry are gradually replaced, and their market share has gradually decreased. It also signals that the industry that produces the product has entered a recession. [4]

According to Lin Shanbo, a declining industry refers to an industry that gradually loses competitiveness due to factors such as technology and cost, loses its expansion capacity and gradually shrinks, and its income gradually decreases. As a result, its role and influence in the industrial structure are declining. And further pointed out that the recession industry is an increasingly common industrial form. In the transition economy, more and more traditional industries will enter the ranks of the recession industry. [5]

Chen Yijun and others pointed out that a recession industry refers to an industry in which the sales volume of products has absolutely declined over a continuous period of time, or an industry sector that has experienced a regular slowdown in growth. The performance of the declining industries is that the growth of demand slows down or even stagnates, and the industry yield is lower than the average yield of each industry and is declining. [6]

Chen Gang believes that a declining industry refers to a certain country or region that is in a certain period of the industry's own life cycle decline period, and at the same time, the status of the national economy tends to decline. [7]

Lu Guoqing believes that a declining industry is one of the types of industries classified according to changes in the growth rate of the industry. It means that under normal circumstances, the growth rate of product sales of an industry in a country or region continues to decline for a long period of time. Or the growth of industrial sectors with regular deceleration. [8]

In a region's industrial structure system, a declining industry generally has the following characteristics:

(1) The entire industry has a significant excess of production capacity, or production costs are too high, product sales are difficult, and start-up is seriously inadequate.

(2) The benefit of the entire industry is very low or even the entire industry is losing money. Due to severe overcapacity, competition among enterprises is fierce. In order to survive, enterprises are willing to adopt low-price competition methods. As a result, while a considerable number of enterprises have stopped production and half-suspended production, enterprises with sales and products that can maintain normal production are also in a situation of low returns due to low product prices. The industry has been in a state of small profits or even losses for a long time.

(3) The products produced are traditional products, and the growth rate of demand for products declines rapidly. The proportion of the output value provided by the industry in GDP is decreasing or accelerating. As a result, the number of new entrants continues to decrease, and the original manufacturers continue to withdraw.

(4) Reduced capital investment, loss of outstanding talents, and low technological content of products. Low rates of return make it difficult for these industries to absorb new investments, but structural adjustments require significant investment.

(5) Threatened by the replacement of emerging industries.

(6) Withdrawal behavior is difficult and has been in an "over-competition" situation for a long time. "Excessive competition" puts many companies in a state of low or even negative profit margins, but due to various difficulties, these companies do not withdraw from this industry, and the state of low or negative profit margins in the industry continues.

Although the withdrawal of the recession industry is a key link in the adjustment of the industrial structure, the existence of obstacles in various aspects makes it a difficult problem in the adjustment of the industrial structure. The main obstacles are as follows.

(1) Capital barriers.

For large-scale capital-intensive recession industries, due to the large number of dedicated fixed assets, conversion will bring huge losses, making it difficult to transfer spontaneously. And the "merger-type" transfer is difficult to find a transaction object that can accommodate huge assets.

(2) Technical barriers.

For a labor-intensive, declining industry, because its technical life has expired or is about to expire, backward equipment has lost its production or transfer value and can only be eliminated or scrapped. The main difficulty of this type of decline in industrial transfer lies in the backwardness of its technology and equipment, and it no longer has market competitiveness after the transfer.

(3) Social pressure and interest rigidity.

Withdrawal of the declining industry will inevitably be accompanied by unemployment and reemployment of employees, which will damage the rigid interests of employees and may cause strong social pressure.

(4) Monopoly discrimination.

In the process of asset transfer, the industries that are in decline are attracted by the monopoly position of the capital, technology, and market due to the monopoly position of the capital, technology, and market. In the process of asset purchase, merger, or merger of the inferior industries, they often adopt discrimination such as underestimation and undervaluation. Means to damage the interests of the declining industry. This kind of unfair monopoly trading behavior will hinder the effective transfer of the declining capital stock to a certain extent.

(5) Local protectionist barriers.

The strong local protectionist barriers to ensure local fiscal revenue, as well as the pursuit and impulse of government officials during their term of office marked by "economic output value" have also largely hindered the reasonable contraction of the declining industries and the capital stock. The transfer.

Product structure adjustment of the declining industry

The adjustment of the product structure of a declining industry refers to the behavior and process of changing and optimizing the varieties, specifications, styles, proportions, and the combination relationship between the products of the declining industry in accordance with market demand and structural change requirements. From the content point of view, the adjustment of the product structure of the declining industry includes the adjustment of the variety structure of the product, the adjustment of the product's specification and structure, the adjustment of the product's style and structure, and the adjustment of the product's quality structure.

Product structure adjustment is an important part of the adjustment of the recession industry. It has an important basic role in the adjustment of the recession industry. It is mainly reflected in:

(1) Product structure adjustment helps to improve the market adaptability of the declining industries. The main characteristic of the product structure of the declining industry is the deterioration of the product structure, which is not compatible with the changes in the market demand structure, which are reflected in: less product technical content, more traditional technology products and low-grade products, and less high-tech high-value-added products; varieties and specifications There are more invalid products and less effective products that do not meet the market demand; the key products are relatively backward, the technology bottlenecks are severely restricted, the technology development force is weak, the investment is insufficient, the product upgrading is slow, and it cannot keep up with the pace of market changes. The adjustment of product structure can change the above situation, so that the products of the declining industry can adapt to changes in market demand.

(2) The adjustment of product structure helps to improve the market relationship of excessive competition among enterprises in the declining industry. One of the main characteristics of the product structure of the declining industry is the single product variety, the product structure among enterprises within the industry is highly convergent, and excessive competition is severe. Product structure adjustment can change the status quo of a single variety and a high degree of product structure convergence, thereby improving the market relationship of excessive competition among enterprises in the industry.

(3) Product structure adjustment provides a micro-foundation for the asset structure adjustment, organizational structure adjustment, and technical structure adjustment of the declining industries, and it has guiding significance for the rational adjustment of the latter three. Because the product structure is a microscopic part of the production structure of the declining industry, it is directly related to the structure of the market demand. It can best reflect the structural indicators of the market adaptability and market viability of the declining industry. Therefore, the product structure of the declining industry is all the structure of the declining industry. The more basic structure of China, its adjustment or not, and its direction have a direct impact on the adjustment of the asset structure, organizational structure and technical structure of the declining industry.

2. Technical Structure Adjustment of Declining Industries

The adjustment of the technical structure of the recession industry refers to the adjustment of the composition, combination, and configuration status of the existing or potential technologies at various levels in the recession industry and their performance. Its meaning includes three aspects:

The first is the re-coordination, selection and integration of existing technology stocks in the declining industry;

The second is to improve the use and performance of existing technologies in the recession industry;

The third is the selection, development, absorption and introduction of potentially usable technologies in the declining industry.

From a system point of view, the adjustment of the technological structure of a declining industry is a process of re-selecting, coordinating, and integrating the qualitative combination and quantity of the technical elements in the declining industry's technology system. There are two ways to achieve this process:

The first is the adjustment of the technological stock of the recession industry, which means the first two aspects of the above meaning;

The second is the technological incremental adjustment of the recession industry, which means the latter aspect of the above meaning.

Technical structure adjustment is an important part of the adjustment of the recession industry. It plays an important role in the adjustment of the recession industry. It is mainly reflected in:

(1) The adjustment of the technical structure has improved the adaptability of the technical structure of the declining industry to the structure of market demand, and enhanced the market adaptability of the declining industry. One aspect of technical structure adjustment is the adjustment of technology stock. Through the screening, mining, integration and integration of existing technologies, the decline of the industry has improved the use and performance of existing technologies, activated the technology inventory, and improved the adaptability of the technology structure to the demand structure, thereby enhancing the market survival of the decline industry. ability.

(2) The technical structure adjustment has improved the quality, level and level of the technical structure of the declining industry, and enhanced the overall function of the technical structure of the declining industry. Another content of technical structure adjustment is the incremental adjustment of technology. Declining industries have optimized the existing technology structure and improved its functions through the selection, development, introduction and absorption of potentially available technologies, and the reorganization and integration of various useful old and new technologies.

(3) The technical structure adjustment has promoted and promoted the adjustment and optimization of the product structure, asset structure and organizational structure of the declining industries. Among the many structures within the declining industry, the technological structure is at the core. A certain technical structure always has a certain product structure, asset structure and organizational structure to suit it. That is, in the long run, the state of technological structure and its changing trend determine the state of its industrial product structure, asset structure, and organizational structure and its changes.

Therefore, the adjustment of the technical structure of the declining industry will inevitably cause a benign change in its product structure, asset structure, and organizational structure.

3. Adjustment of Organizational Structure of Declining Industries

The adjustment of the organizational structure of the decline industry refers to the decline of the industry in order to achieve high market performance, under the guidance of relevant policies, combined with its own product structure adjustment and asset structure adjustment, through related business mergers, mergers, bankruptcy, exit, sale, auction, Acquisitions and reorganizations change and optimize the external market structure of an enterprise, such as market concentration and market entry and exit barriers, and the internal structure of an enterprise, such as the structure of corporate property rights and the structure of an enterprise.

As an important part of the adjustment of the decline industry, the adjustment of the organizational structure plays an important role in the adjustment of the decline industry, mainly reflected in:

(1) Improve the market structure of declining industries. One of the problems with the decline of the organizational structure of the industry is the imbalance in the market structure, which is manifested in the uncoordinated relationships between market sellers, buyers, and buyers and sellers, such as uncoordinated supply and demand, overproduction, and excessive competition among enterprises. The adjustment of the organizational structure helps to correct the deviation of this market composition from the normal state and improve the unbalanced market structure.

(2) Regulate the market behavior of declining industries. The abnormal market behavior of enterprises is an important feature of the decline of industrial organization structure. Abnormal market behavior is not conducive to the further development of the declining industry. One of the important purposes of organizational structure adjustment is to regulate the enterprise's price behavior and non-price behavior through the improvement and optimization of the organizational structure, thereby changing the market behavior disorder.

(3) It can improve the market performance of declining industries. Low market performance is another feature of the declining industrial organization structure. Low market performance has put the declining industry in a difficult position. The purpose of organizational structure adjustment is to change the disadvantaged industries in terms of price, output, cost level, profitability, product variety and quality, technological progress, etc., and improve the market performance of the depressed industries.

Therefore, to sum up, the adjustment of the organizational structure of the recession industry will help to strengthen the adaptability and competitiveness of the organizational structure of the recession industry from the three aspects of market structure, market behavior and market performance, thereby improving the disadvantaged situation of the recession industry.

4. Asset Structure Adjustment of Declining Industries

As an important way to optimize the allocation of existing assets, the adjustment of asset structure is a major model for the adjustment of recession industries. It plays an important role in the adjustment of recession industries. It is mainly reflected in the following two aspects:

The first is to establish an exit channel for assets. One of the main characteristics of a declining industry is the excess production capacity, which in turn triggers vicious competition in the industry. And through asset reorganization, it is conducive to the flow of assets from inefficient enterprises and inefficient industries to efficient enterprises or industries, especially large enterprises can realize industrial diversification through asset reorganization, complement the recession industries and emerging industries, and stabilize the assets in the recession industries The land flows to emerging industries, and the process of industrial adjustment is smoothly realized within the enterprise.

Second, it can reduce the cost of the industry and increase the profitability of the declining industries.

First of all, advantageous companies in the industry can quickly achieve low-cost expansion through asset restructuring methods such as mergers, acquisitions, custody, and debt restructuring. Large enterprises can obtain higher economies of scale, thereby greatly reducing the cost of declining industrial products.

Second, asset reorganization can extend the length of the industrial chain and enable enterprises to obtain economies of scope.

Third, asset restructuring can reduce transaction costs between industries. The reorganization of upstream and downstream related industries has reduced transaction levels, improved transaction efficiency, and reduced transaction costs between industries, thereby increasing the profitability of the declining industries.

5. Spatial Location Adjustment of Declining Industries

The so-called adjustment of the spatial location of the declining industry means that the declining industry, through the active spatial migration of basic functional units such as production units, sales units, and control (decision) units, according to the external environment changes and its own development needs, The behavior and process of market location and decision location to perform all or part of spatial reconstruction. The essence of the adjustment of the spatial location of the declining industries is the spatial transfer of the declining industries. From a conceptual point of view, the adjustment of the declining industrial space location includes the adjustment of production location, market location adjustment, and decision-making location adjustment. Among them, it is of great significance to adjust the location of industrial production. Generally speaking, the adjustment of the declining industrial space location refers to the adjustment of the industrial production location.

As an important way to adjust the decline of industries, the adjustment of spatial location is of great significance to the decline of industries, mainly:

First, the adjustment of spatial location will help to delay the decline of the declining industry. As important environmental factors for industrial evolution, space and location have important effects on the efficiency and effectiveness of the declining industries. As a proactive behavior that conforms to the industry's own life cycle, it can improve the living environment, expand the living space, expand market share, extend the vitality of the industry, and strengthen the competitiveness of the industry, thereby delaying the decline of the industry.

Second, the adjustment of spatial location will help to realize the regeneration of the advantages of the declining industry. Due to the differences in location rent, location factor cost, location industry income, the external economy of industrial location agglomeration, and the benefits of regional resource reconfiguration, the adjustment of the spatial location of declining industries can obtain the benefits brought by the transfer. That is transfer economy. The acquisition of transfer economics will help the declining industries to transform from disadvantages to advantages and regenerate their potential comparative advantages.

[edit]

Technological transformation of the declining industry

The technological transformation of the declining industry refers to the application of scientific and technological achievements in various fields of industrial production by the declining industry, the use of advanced technology to transform backward technology, and the replacement of backward technology and equipment with advanced technology and equipment, thereby changing the technological and economic outlook of the backward industry and realizing The behavior and process of reproduction based on connotation. It includes the promotion and use of new technologies and equipment, the transformation of new technologies to existing technologies, and the combination of new technologies with existing technologies.

Technological transformation is an important way to upgrade a declining industry. It has promoted the upgrading of the recession industry from three aspects:

(1) Technological transformation has promoted the technological upgrading of the declining industries. The technological transformation of the declining industry has promoted the adoption of advanced technologies, advanced equipment and production processes, promoted the promotion, use and diffusion of new technologies and equipment, and promoted the effective combination of new technologies, new processes with existing technologies and processes, thereby The technology level of enterprises in the industry and the level of the entire industrial technology level have reached a new level.

(2) The technological transformation has promoted the optimization and upgrading of the technological structure of the declining industries. The decline of the industry through the use of new technologies to transform the original technology, through the reorganization and integration of new and old technologies and equipment, has promoted the benign change of the internal technology composition of the industry, and promoted the readjustment and optimization of the internal technology relationship of the decline industry, so that the industrial technology structure The overall functionality has been enhanced or upgraded.

(3) The technological transformation has promoted the optimization and upgrading of the product structure. Technological transformation has put the declining industry on a higher development basis and enhanced the ability of the declining industry to develop new products and develop new performance. Through technological transformation, the declining industries have improved the technical content of products, improved product quality and performance, improved product grades and specifications, increased product varieties, styles, etc., thereby promoting their own product upgrades and product structure at a higher level. rationalization.

2. Technological Innovation in Declining Industries

Technological innovation in a declining industry refers to the application of new inventions, new technologies, and new processes in a declining industry, the adoption of new production methods and business management models, the use of new materials, the development of new products, the improvement of product quality, the provision of new services, the occupation of the market and the realization Market value process. According to different goals and contents, technological innovation can be divided into product innovation, service innovation, process innovation and management innovation. According to different innovation methods, technological innovation can be divided into independent innovation, imitation innovation, combination innovation, and integrated innovation.

As one of the main models for the upgrading of the recession industry, technological innovation has a significant effect on the upgrading of the recession industry, mainly reflected in:

(1) Technological innovation has promoted the optimization and upgrading of the product structure of the declining industries. This is mainly reflected in two aspects. First of all, technological innovation has formed and created new products, which has fundamentally overcome the relative surplus of products caused by the low-grade and high-cost products in the declining industry and promoted product upgrading. Secondly, technological innovation has lengthened the industrial chain of the declining industry and promoted deep processing of the products, thereby further optimizing and upgrading the product structure of the declining industry.

(2) Technological innovation has promoted the upgrading of the technological level of the declining industries and the optimization of the technological structure. The technological innovation of the declining industry has achieved a leap in the technological level of the entire industry, that is, the industry-leading technology products and production technologies have reached a new level, and various supporting technologies in the industry have also reached a new level in the process of innovation. More importantly, because industrial technology is also interconnected, the development of one industrial technology will inevitably promote the upgrading of other industrial technologies, and then optimize the industrial technology structure and the development of the entire technology system.

(3) Technological innovation has promoted the optimization and upgrading of the organizational structure of declining industries. The intensity of technological innovation among different enterprises in the industry is different. Those successful innovative companies will have higher labor productivity, capital profitability and factor utilization rate, thereby attracting labor, capital, talents and other factors to flow to these companies, promoting the trend of industrial resources to be concentrated in high-efficiency enterprises, and thus the industrial organization Plays an optimization role.

3. Product Innovation in Declining Industries

Product innovation in a declining industry refers to the process by which a declining industry develops new products and services, creates new performance of existing products, and launches them for the first time in the market to realize their commercial value. According to the degree of innovation, product innovation in the declining industry can be divided into three categories: improved product innovation, replacement product innovation, and brand new product innovation. Improved product innovation includes the partial improvement of the original product by the declining industry to increase specifications, improve product quality, improve functional structure, save energy consumption, change some raw materials, etc., and also includes the declining industry to introduce product manufacturing technology or Improve the original patent. Replacement product innovation is a product that uses a new material, new original, or new technology to make a significant breakthrough in the function of the product. Improved product innovation and replacement product innovation, also known as product upgrades, are the process of transforming original products from low performance, low added value, and low technical content to high performance, high added value, and high technical content. All-new product innovation refers to the application of new principles, new structures, new materials, and new technologies to make unprecedented new products in the declining industry. This is a series of new achievements in industrial application of science and technology, which are then transformed into real products.

As an important part of the upgrading of the decline industry, product innovation has a significant effect on the upgrading of the decline industry, mainly reflected in:

(1) Product innovation can identify and guide potential market demand and maximize the market viability of declining industrial products. Product innovation Through the use of new technologies and processes to develop new products and services, to create new performance of existing products, and to launch and realize their commercial value in the market, it can make original products lag behind, irrational structures, and lack of vitality. Declining industries that are difficult to adapt to the development requirements of the market economy have shown new vitality.

(2) Product innovation can promote the diversification and rationalization of the product structure of the declining industry. The application of new principles, new structures, new materials and new technologies to the creation of unprecedented new products in the declining industry can change the disadvantageous situation of the single and rigid structure of the original product variety, and adapt to the increasingly diversified and complicated trend of market demand. Market competition to improve product market viability.

(3) Product innovation can accelerate the upgrading of products in declining industries. Product innovation, especially improved product innovation and replacement product innovation, can change the unfavorable conditions of low performance, low added value, and low technological content of the original products of the declining industry, and make it move towards high performance, high added value, and high technological content. In order to make the declining industry better adapt to the increasing demand level of the market, the demand hotspots are constantly changing, and the life cycle time of products from the market to the final withdrawal from the market is shortening.

[edit]

Lu Min. Summary of domestic research perspectives on the recession industry

Zhou Xinsheng.Industrial Decline and Withdrawal of Industrial Assistance Mechanism [J] .Research on Industrial Economy, 2003, (5).

Ren Hongbo, Li Xin.Logic of Industrial Evolution and Strategic Choice of Declining Industry [J] .Scientific Management Research, 2001, (10).

Chen Baojiang. Thoughts on the Declining Industry [J] .Learning and Exploration, 2000, (5).

Lin Shanbo.On the Withdrawal of the Declining Industry [J] .Journal of the Party School of Fuzhou, 2003, (4).

Chen Yijun, et al. Analysis of Enterprise Strategy Based on Declining Industry [J] .Journal of University of Electronic Science and Technology of China, 2002, (1).

Chen Gang.On the Basic Mode of Industrial Decline [J] .Exploration, 2004, (2).

Lu Guoqing.On the Adjustment Mode of the Declining Industry [J] .Learning and Exploration, 2001, (1).

9.0 9.1 9.2 9.3 Xu Luguang. Preliminary Study on Shenzhen's Declining Industry

Qi Xu, Zhang Qi. A Brief Discussion on the Adjustment and Upgrading Model of the Declining Industry, Contemporary Finance and Economics, No. 06, 2007