2024, it was pointed out that it was necessary to strengthen industry self-discipline and prevent "involution" vicious competition; at the Central Economic Work Conference at the end of 2024, it was proposed to comprehensively rectify "involution" competition; after that, the CPC Central Committee and the State Council issued a series of documents and policies to overcome involution and disorderly competition. At the meeting of the Political Bureau of the Central Committee held on July 30, 2025, it was also pointed out that the disorderly competition of enterprises should be governed according to law and regulations, the capacity management of key industries should be promoted, and the local investment attraction behavior should be standardized. On September 16, 2025, General Secretary Xi Jinping published a signed article in Qiushi magazine entitled "Promoting the Construction of a Unified National Market in Depth", in which he pointed out that the disaster-stricken areas should be effectively managed in accordance with the law and regulations, and that anti-involution should be included in the important task of the construction of a unified national market. The Proposal of the Central Committee of the Communist Party of China on the Formulation of the Fifteenth Five-Year Plan for National Economic and Social Development, adopted at the Fourth Plenary Session of the Twentieth Central Committee of the Communist Party of China, also explicitly calls for the comprehensive rectification of "involution" competition, and the governance of involution in the industry has risen from the level of industry self-discipline to the level of national strategic co-ordination.
In the past two years, speeches, articles, documents and revisions of laws and regulations at important meetings of the central government, ministries and associations on the governance of involution competition have gradually made people realize the harm of involution and the importance of anti-involution from the policy and legal levels, and deepened their understanding of the nature of involution vicious competition. Therefore, the anti-involution work in all walks of life has been started one after another, which should be said to be another major market restructuring of our government after the supply-side structural reform in 2015, with far-reaching practical and historical significance.
In fact, since the prevention of involution competition was first proposed, I have been planning to write the book Anti-involution: From Vicious Competition to Value Co-creation. Now I finally handed in the manuscript, which made me breathe sigh of relief and feel relieved.
Writing this book, I have a lot of pressure, because the volume is a heavy topic, even today, we often have different opinions. Some entrepreneurs and scholars often interpret involution as the necessity of market economy, believing that good enterprises should not be afraid of involution, that the more they roll, the more glorious they will be, and that they will roll out a new world and international brands. But as far as I am concerned, the pain of involution makes me feel the pain of the skin, whether it is the price war of gypsum board in Beixin Building Materials, or the vicious competition in the cement business of China Building Materials Group, or the serious involution of photovoltaic modules, new energy vehicles and power batteries that I have witnessed as the president of China Association of Listed Companies in recent years. These experiences have given me a deeper understanding of involution.
Over the years, I have been running around for the orderly competition of the market, the self-discipline of the industry and the innovation and transformation of enterprises. This book is a summary of my years of thinking and observation, how to look at the inner volume, how to change from vicious competition to benign competition, how to change from price competition to value competition, and how to change from cost-oriented to value creation. How to move from competition to competition and cooperation, how to shift from Red Sea strategy to Blue Sea strategy, and how to solve these problems are my original intention of writing this book.
Involution is an extremely destructive vicious competition in economic life, and some experts believe that it is the enemy of China's economic development. In fact, involution means that enterprises adopt homogeneous technology to carry out repeated construction, resulting in serious overcapacity, and finally fall into unfair competition in the form of low-price order grabbing. Its evil consequence is that enterprises enter the cycle of low quality and low price, unable to obtain reasonable profits, thus inhibiting the innovation and investment of enterprises. For consumers, it seems that the price is low, but because most of the consumers are also employees of enterprises, their income is reduced or even unemployed under the involution, even if the consumption is downgraded, there is still no good consumption expectation, this vicious circle will br e serious deflation in the market. Therefore, solving the problem of involution has become a top priority in all walks of life.
Market economy is a competitive economy, and competition includes benign competition and vicious competition. The competition among enterprises based on technology, quality, brand, service and reasonable price is benign competition, while the competition based on homogeneous technology at a low cost price is vicious competition. Benign competition creates value and vicious competition destroys value. Involution is a kind of vicious competition, which is a concept we should clarify.
Market economy is also a surplus economy. Moderate surplus will promote healthy competition, but serious surplus will lead to vicious competition. Generally speaking, if there is a surplus of 20% in an industry, there will be healthy competition, which will promote technological innovation and the survival of the fittest in the industry, but if the surplus exceeds 50%, there will be serious involution, and if it exceeds 100%, there will be a crisis. At present, the surplus of many industries is between 50% and 100%, which requires us to limit excess capacity, increase efforts to eliminate backward capacity, and to reduce capacity, we must regulate local investment and blind expansion of enterprises.
In a good and orderly market, the profit structure of the industry should be an olive structure, that is, a small number of enterprises make a lot of money, most enterprises make money, and a small number of enterprises lose money. In the involution environment, there are often a few enterprises that make money, most enterprises do not make money, and a few enterprises suffer huge losses, so their attitudes towards anti-involution are also different. Individual advantageous enterprises often take the lead in involution and fight a price war, while most enterprises oppose involution because of the suffering of involution. On the whole, involution will destroy the overall value of the industry, and even profitable enterprises will not make a lot of money. The low profits of Chinese enterprises are not because they are not doing well in technology, equipment and management, but because the ultra-low prices caused by involution have seriously affected their profits.
In the past few years, we always thought that involution was caused by the scattered and low concentration of the industry, which was caused by the fact that many small and medium-sized enterprises did not abide by the rules of the industry. Over the years, I went to many industries to conduct in-depth research and found that no matter which industry's involution is basically closely related to the involution behavior of the leading enterprises in the industry. Some industries are not seriously surplus, and some industries are quite highly concentrated, but they are still heavily involved. The reason is that the leading enterprises do not consider the overall interests of the industry, but rely on their own scale and cost advantages to seize more market share, hoping to clear the industry through low prices, resulting in the whole industry falling into the quagmire of declining profits or even losses. What is more puzzling is that these leading enterprises also believe that although their profits have declined, most of their peers are losing money, and their comparative advantages are "highlighted". As a matter of fact, this kind of competition of killing one thousand enemies and losing eight hundred is not worth advocating. On the contrary, in those industries with orderly competition and healthy development, large enterprises take the lead in abiding by the rules, not fighting vicious price wars, and actively safeguarding the overall interests of the industry, which has almost become a rule. For example, Chinalco in the aluminum industry, Luhua in the field of edible oil, Beixin Building Materials in the field of new building materials, Lianying Medical in the field of high-end medical equipment, and Jinfeng Science and Technology in the field of wind power generation, all of these enterprises have done very well. In the final analysis
, involution is a matter of values, that is, emphasizing production rather than operation, emphasizing cost rather than value, emphasizing competition rather than cooperation, in short, emphasizing oneself rather than others, regarding the market as a battlefield, regarding competition as a war, and taking pride in competing bravely.
In game theory, there are three kinds of games, zero-sum game is a win and lose, negative-sum game is a loss, positive-sum game is a win-win, involution competition is a negative-sum game, is a game in which everyone loses. If the nest is destroyed, there will be no eggs, and there will be no winner in the involution competition. Only by reshaping the concept and rules of competition can we achieve the healthy development of the industry as a whole. In the
past, the competition was carried out under the circumstances of low productivity and large market demand. Enterprises adopted the cost-leading strategy, adopted the management idea of quantity, cost and profit, and adhered to the principle of cost pricing, thus winning the last round of competition and creating prosperity. The emergence of high-tech and the arrival of the new economic era have greatly promoted the development of productive forces, coupled with the slowdown of market demand and consumption growth, the management idea of quantity, cost and profit has undoubtedly aggravated the involution. Therefore, enterprises must use the way of innovation and value creation, vigorously carry out the business model of differentiation, subdivision, high-end and branding, change from cost pricing to value pricing, and adopt the business idea of price, cost and profit, so as to make enterprises move from the Red Sea of price involution to the blue sea of value creation.
After more than a year, the market situation and enterprise efficiency have begun to improve, but it is still a long-term and arduous work to overcome the involution. To overcome involution, we need not only macro-control policies, but also self-discipline of the industry, as well as strategic transformation of enterprises aiming at creating value. There are 10 chapters in
this book, which can be roughly divided into three parts.
Policy guidance, anti-unfair competition, strengthening intellectual property protection and building a unified national market are all discussed at the macro and meso levels, aiming at transforming the Red Sea of competition into the Blue Sea.
Eliminating backward production capacity, industry self-discipline and cooperation, and mergers and acquisitions are the three key paths to balance supply and demand and improve quality, and to explore how to move from competition to competition and cooperation.
Reasonable pricing and new blue ocean strategy guide enterprises how to create their own new blue ocean in an innovative and value-creating way.
In the process of managing the balance of supply and demand, many people believe that industry liquidation depends on the survival of the fittest in the market, but from the experience of previous industrial developed countries, government policies and large enterprises have played an important role in the liquidation of some industries. Some industries can be cleared by the market, such as household appliances and some processing industries in the past, but some industries, such as steel, cement, automobile and photovoltaic industries, must be cleared by the government's industrial policies, the initiative of industry associations and the full efforts of enterprises.
Pricing is operation, so we should pay special attention to the issue of pricing. Enterprises should not passively adapt to pricing, but should grasp the initiative of pricing. They should shift from cost pricing to value pricing, and the pricing power should be returned to the management, not to the sales staff.When implementing the new blue ocean strategy, we can use differentiation, subdivision, high-end and branding to make enterprises shift from the Red Sea of price to the blue ocean of value creation, protect innovative value with the patent strategy model, and replace local preferential policies with creating an excellent business environment.
This book, like my previous books, is based on reason, which also benefits from my years of practice and observation. When I was the leader of two central enterprises, my business covered most provinces and cities in China. In the process of "going out", I went to many countries. During the seven years when I was the president of the China Association of Listed Companies, I investigated more than 600 listed companies and more than 100 non-listed companies. I like to see people and things, observe and communicate closely, which is also the source of the case stories in the book. Where can I write a book? I just summarize my observations and thoughts, especially the communication content I have done with enterprises in different industries and the training content I have done for entrepreneurs. My book really does not have too many profound theories, mostly a summary of practical experience and observation, which is characterized by easy reading and practicality.
In writing this book, I still follow the usual way of "thinking first, doing first, speaking later and writing later". From 2024 to 2025, I talked about anti-involution twice at the Shanghai Entrepreneurs Conference, at the meetings of China Iron and Steel Industry Association and China Photovoltaic Industry Association, and I also talked about it many times to different enterprises. Photovoltaic industry has the anxiety of overcapacity, this industry anti-involution should reduce production and capacity together, both hands should be hard, especially the leading enterprises and leading enterprises should focus on the interests of the industry, the interests of the industry are higher than interests of the enterprise, the interests of the enterprise are bred in the interests of the industry, as long as large enterprises take the lead in anti-involution, photovoltaic is still a promising industry. The overcapacity of the iron and steel industry is not serious. It is necessary to change from cost reduction and efficiency enhancement to quality improvement and efficiency enhancement, from cost assessment to profit assessment, from cost pricing to value pricing, and from scale cost to quality value. To solve the involution of the automobile industry, it is necessary to continue to increase exports, but not to bring the domestic price involution abroad, to pursue a stable profit, domestic sales should not be lower than cost of sales and squeeze the profits of suppliers, take the route of differentiation and high-end, from the Red Sea of vicious price competition to the Blue Sea of value creation. After explaining these things, I spent more than half a year constantly revising the manuscript, which is more and more perfect.
In fact, this book is different from my previous books, for example, the narrative content is more extensive. Now everyone's understanding of anti-involution is not exactly the same, and I have some worries in my heart, but anyway, this book is the first book to systematically discuss anti-involution earlier. The book also follows the best practice model of the book "The Hard Truth: Ten Disciplines for the High-quality Development of Listed Companies". At the end of each chapter, it talks about a best anti-involution practice case. These cases are also divided into three categories, one is the anti-involution of specific enterprises from the enterprise level, one is the anti-involution of the whole industry from the industry level, and the other is the anti-involution of attracting investment from the local government level. I hope that this book can further promote the common understanding of involution competition and provide reference for anti-involution work in all walks of life in China. How can
cement industry establish a new consensus and restore the healthy ecology of the industry in the game of the stock market? China Cement Network will hold a " < a href =" https://www.ccement. in Hangzhou on April 9-10.
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