Large-scale price wars in many Chinese industry sectors haveemerged, especially in consumer electronics, along with the decliningprofit margin in these sectors. Based on the empirical study on theChinese color TV industry, this paper puts forward that the majorreasons which intensify the price wars over a long period are, theinsufficient differentials in the product and cost structure amongcompetitors in the same industry, and the improper governmentintervention that mean that the production factors and capacities cannotbe smoothly re-deployed according to the market signals, as well as theirrational competition logic formed in the process of successive pricewars. Finally, this paper gives some discussions over the competitionstrategy issues for producers in the price war and policy implicationsfor government and policy makers, with the aim to avoid no-winner pricewars
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