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Caution Against Risks of Concentrated Market Exit of Enterprises (No.248, 2020)
2020-11-30
By Zhou Jianqi, Enterprise Research Institute, DRC & Qu Qingchao, the Economy Committee of Beijing People’s Political Consultative Conference
Research Report, No.248, 2020 (Total 5992) 2020-10-21
Abstract: In the period of January-August 2020, the year-on-year growth rate of the number of Chinese enterprises exiting the market was only -16.33 percent, down 76.61 percentage points compared with the corresponding period last year. The decline can be attributed to impacts of the covid-19 pandemic, relief policies of the government and measures of domestic enterprises against difficulties. Since the number of companies exiting the market is small in the period, caution is needed to fend off risks of large-scale exit likely to follow. Based on analyses of different industries, this report has adopted cumulative year-on-year growth rate of the number of companies exiting the market and the year-on-year GDP growth rate as main indicators to develop a model of risk projection for enterprises to exit the market. Research findings show that companies in 7 industries including wholesale and retail, leasing and business services may see great risks of market exit, making precaution measures necessary. The major entities in key industries that need measures for preventing risks are small and micro enterprises with registered capital of 10,000 to 1 million yuan. Related governmental departments need to make good use of the big data on enterprises exiting the market and introduce differentiated policies to prevent risks in a targeted manner. Efforts are also needed to simplify the procedures of market exit, release accurate data timely, enhance the efficiency of factor allocation, and improve decision-making through data analyses.
Keywords: market exit of enterprises, detection and measurement based on big data, model of risk projection, policy options
