An Analysis Of The Strategy Of Chinese Thermal Power And Iron And Steel Enterprises' Reversal Integration

The rapid development of Chinese economy tend to demand more and more electric power, coal, iron and steel, which provide an unprecedented opportunity for the development of power plants and iron and steel enterprises. Meanwhile, with the increase demand of coal , iron and steel, the price and cartage expense of them also rise gradually, which bring serious risks to power plants and iron and steel enterprises. Under such situation, the negotiations about domestic coal price and supply and the price negotiations between domestic iron and steel enterprises and overseas iron ore enterprises are time consuming, usually ending with agreement of price rise.Based on contract theory, transaction cost theory, longitudinal integrated theory and the analysis of the present situation of Chinese power plants and iron and steel enterprises, the author argues in this paper that Chinese power plants and iron and steel enterprises should adopt the strategy of reversal integration and get stable and low cost raw materials through establishing their own raw material bases or by the way of buying stock and strategic alliance so as to reduce the cost of products and obtain competitive advantages.