Based on Chinese listed firms in manufacturing industry during the period of 2007- 2013, this paper analyzes the influence of customer concentration on corporate competitive advantages and the mediating effect of cash holdings. The empirical research shows that customer concentration is negatively related with corporate competitive advantages. The above relationship is more significant in the industry with a high degree of competition. Further, cash holdings can mitigate the negative effect of customer concentration on corporate competitive advantages significantly. Especially in the industry with a high degree of competition, the mitigating effect of cash holdings is more significant as well. This study enriches the literature of customer concentration and economic effects of cash holdings.