Research On The Vertical Integration Of Dairy Industry Chain In China

Since the year of 2020,China’s dairy industry has experienced its best development,with all the quality indicators at its best ever.Meanwhile,the industry also faces a series of problems.For example,the production cost of raw milk is high,the environmental protection policy constraints increase,the number of cows keeps declining,the import dependence on dairy products is too high,the industrial competitiveness is not high,and the production of high-end dairy products cannot meet the demands of the majority residents for high-quality life.The sustainable development of dairy industry faces severe challenge.Under this background,the research on the vertical integration of dairy industry chain bases on the following logic: the improvement of the dairy industry competitiveness in China makes the modernization of dairy industry possible,thus promotes the modernization of dairy industry chain,and finally completes the integration of dairy industry chain.The industrial development prospects and policy values of the study are as following: the modernization of the dairy industry chain makes significant contributions to the development of China’s agriculture and animal husbandry modernization.The dairy industry chain integration is necessary for the high-quality development of China’s dairy industry,which is of long-term and strategic significance to break through the shackles of Chinese dairy industry development.Dairy products are trusted products,and their productive process has a great demand to integration of industry chain and modernization level.“From pasture to table” involves the cultivation of forage grain and forage grass,feed processing,dairy cattle breeding and raw milk production,collection and transportation of milk stations,dairy processing,circulation channels of dairy products,etc.This process depends on whether the mechanism of behavior coordination and benefit distribution can run smoothly,and on how the business entities can keep their behavior coordinated and benefit distribution balanced within them.Therefore,the development and competition of dairy industry is not only among parties in the industry,but also in the whole dairy chain.Starting from the long-neglected industrial chain problem in China,this thesis mainly focuses on the systematic theoretical analysis,practice summarization and quantitative analysis of two important links and three main chains in the vertical dairy industry chain,by using the theory of industrial organization,transaction cost,information asymmetry and methods of econometric analysis.This thesis not only analyzes systematically the history,the current situation and the future development of China’s dairy industry and industrial chain but also makes a comprehensive observation and study of the dairy industry chain from the perspective of final consumption goods based on theoretical and practical analysis.This is an important innovation direction in the “Micro” field of industrial economics,which has great practical value and theoretical significance to the development of specific industries under the new development pattern background in Chinese society.The logic of this study is as follows.Firstly,the introduction part of the thesis expounds the theoretical and practical value of the topic summarizes a large number of domestic and foreign literatures to put forward the theme;secondly,the main concept involved in this study are defined,and the theoretical basis of this study is reviewed so that the research object is made much clear.Thirdly,a large number of detailed data is used to analyze the development status of the dairy industry and the integration of the industrial chain.It focuses on the ends of fresh milk production,dairy processing and circulation channel,and describes the forward and backward integration status of the dairy processing end to the dairy industry chain.The most special points are as follows: This thesis systematically analyzes the consumption links,which do not belong to the content of industrial organization,and the import and export of dairy industry.They determine the development space of dairy industry to a certain extent and have a great influence on the performance of dairy industry chain.The content in this part puts forward the dairy industry integration background.The fourth part is the theoretical research part of this thesis.Vertical integration of industrial chain is the process of internalizing external transactions,so it can reduce transaction costs;Industrial chain integration.The theoretical framework is as following: the core enterprises adapt to the changes in internal and external environment to form a new phase of development goals to motivate the integration.The core enterprises select and implement the integration strategy based on the internal and external resources to form the integration of different levels or consolidation strength,which affects the performance of every party and the integrated industrial chain in whole.The fifth part makes the empirical analysis.The vertical integration of industry chain can reduce the transaction cost and promote the industrial chain performance.This part builds the structural equation model to analyze the dairy industry chain vertical integration performance,and discusses the factors affecting the performance.This proves that integration of dairy industry chain can reduce transaction costs and enhance the competitiveness of the whole industry chain.There are many failures in the vertical integration of industry chain.Its main reason is that the integration operation mechanism does not work.The construction of effective internal operation mechanism is the guarantee of stable operation of integration body.First,China’s dairy industry chain vertical integration uniqueness should analyzed.The two ends of cow breeding and dairy processing depend on each other,and the former depends more on the latter;and then the three mechanisms of benefit sharing,control(including selection mechanism),communication and coordination(including learning mechanism)are put forward to ensure the healthy operation of the industrial chain.The final part states the vertical integration mode of Chinese dairy industry,focusing on the vertical integration mode of dairy processing enterprises,and summarizes the characteristics of the vertical integration mode of dairy industry chain.Chapter 3,4 and 6 of this thesis discuss the practice of vertical integration of Chinese dairy industry and put forward policy suggestions implicitly.Therefore,the last chapter is the summary in which the policy suggestions are improvement and supplement to the above decision.The conclusion of this thesis are as follows: first,the vertical integration of dairy industry chain can reduce transaction costs and improve the performance of industrial chain.Second,China’s dairy industry is developing rapidly,but the vertical industrial chain is in a loose and semi-natural state,which influences the modernization level and improvement of competitiveness of industry chain.Third,under the new development pattern,the enterprises have new development goals and motivation to adapt to environmental changes.According to the strength,they choose integration strategies and levels to improve integration performance and achieve sustainable growth.Forth,in the vertical integration of the dairy industry chain,the vertical integration direction of dairy core processing enterprises is the factor that directly affects the integration performance of dairy industry chain and has the greatest overall impact.The vertical integration ability of dairy core processing enterprises has the greatest indirect impact on the integration performance of dairy industry chain,and the direct impact of the vertical integration of resources of dairy core processing enterprises is less than the indirect impact.Fifth,the key points and directions of China’s dairy industry chain integration are as follows: the link formed at the ends of fresh milk production and dairy processing end is the core link of the industrial chain,and their integration at a higher level is economic in theory and practice.Sixth,the three operating mechanism of dairy industry chain integration is the basis of the maintenance and guarantee healthy dairy industry chain.Seventh,dairy processing enterprises are the core enterprises.They dominated Chinese dairy industry chain integration forward and backward.In the coming period,they are still the main body of China’s dairy industry chain development,and a leader of the industry chain vertical integration.The innovation of this article is as following.Firstly,from the perspective of specific products(dairy products),the dairy industry chain is comprehensively observed and analyzed from the theoretical perspective.The concretization of the governance structure of the chain is essentially the adjustment of the production relations of the various business entities of the industry,which is innovative in the research perspective.Secondly,based on the theory of industrial chain integration and the practice of vertical integration of industrial chain,the thesis puts forward the view that core enterprises(chain leaders)lead the vertical integration of industrial chain,and defines the core enterprises of dairy industry chain as enterprises with local dairy processing or above.Thirdly,based on theoretical analysis and research,the thesis puts forward the theoretical framework or integration logic of vertical integration of dairy industry chain led by core enterprises.Fourthly,the link formed by breeding and processing in vertical diary industrial chain is defined as the core of the dairy vertical industry chain in China.The chain between dairy processing and channel is regarded as the key link.The thesis explains the Chinese dairy industry chain vertical integration can save transaction cost from the theoretical and empirical,and breeding,processing and channel benefit from it to as to improve the performance of the industry chain,which enriches the modernization theory of dairy industry chain.