Anti-Monopoly law pushes medium dealers into dilemma

On August 30.2007, NPC standing committee passed “Anti-monopoly law of people’s Republic of China” (hereafter referred to as “the law”) on its 29th meeting. The law describes three types of business behaviors as monopoly:
1. Business operators reach a monopoly agreement;
2. Business operators abuse their dominate positions in the market;
3. Business convergence possible to exclude or restrict competition.

Generally speaking, heavy duty truck dealers carry out their competition strategy by the marketing mix of “4P” which are product, price, place and promotion. Heavy truck makers are very strict in control of price and places. Once a dealer breaches the usual marketing structure, punishment will be cruel which could be counted by 10 thousand RMB.

Low price is a conventional weapon for truck dealers. But there are several problems disturb the medium size dealers such as short of capital. For example, to start a new 4S store, fixed investment and working capital could reach 5 million Yuan which is surely a heavy burden for most medium size dealers.

In general, the enforcement of the law pushes medium dealers into dilemma and they are facing the danger of been merged by larger dealers.

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