Study on Competitive Strategy of China Railway Express Operation by Land Port Company

Abstract

With the in-depth implementation of the “One Belt One Road” initiative, the number of cities, which have opened direct train to European countries, is increasing in China. With the rapid development of China Railway Express (CR Express) market, the problems of insufficient supply, disorderly competition and high operation cost are becoming more and more prominent, which leads to increasingly disordered competition among CR Express. Finding a balanced subsidy among local governments is a key way to solve the above problems. This paper constructs a Hotelling model which is in line with the characteristics of the development of CR Express from the aspects of consignor’s utility and land port company’s revenue. Then the equilibrium price, market share and revenue of land port company are solved, and the optimal local government subsidy under equilibrium condition is analyzed. Subsequently, the land port company (Xi’an) and land port company (Zhengzhou) are chosen for empirical analysis. The establishment of government subsidy policies conducive to market development can effectively reduce the disordered competition among land port companies and contribute to the sustainable development of CR Express.