1. you are dealing with state-owned enterprises or other non-sophisticated, who have no clear cost accounting at all.
sometimes people underbid each other without clear understanding of their cost structures. This happened to my audit clients veryoften. Shocked to see the low level in their accounting staff.
2. bank loan--generous loans help the firms to stay in the industry and capacity is always excessive.
3. labor intensive industries are inherently hard to increase in scales and without MERGER AND ACQUISITIONS/INDUSTRY CONSOLIDATION, the industry is always highly competitive through prices.
other non-price competitions are nowhere in China.
