Research On Strategic Transformation Of Vertical Integration Of International Engineering Contractors

With the development of economic globalization,and the implementation of “the Belt and Road” and international capacity cooperation strategies,China's foreign engineering contracting business has achieved remarkable results after nearly 40 years of development.However,most engineering contracting companies still position themselves as construction companies due to the constraints of inherent development model,rather than investment companies.Only a few enterprises began to explore strategic transformation at the business level,and the engineering contracting model also changed from EPC to BOT,PPP,and the integration of investment,construction and operation.Chinese enterprises need to integrate existing superior resources urgently,coordinate with national strategic planning,and adjust their internationalization strategies.The constructors will shift their roles to investors and enter the project operation field.Theoretical research and case analysis is combined in this paper.Firstly,the international engineering contracting theory,strategic transformation theory,international investment theory and investment and vertical integration theory were analysed,and the influencing factors of international engineering contracting enterprises' strategic transformation were found.Secondly,from the perspectives of macro environment,market status,development status of Chinese enterprises and gaps with European enterprises,the necessity of implementing strategic transformation of Chinese international engineering contracting enterprises is proposed.Thirdly,the path and mode selection of strategic transformation were found combine with the characteristics of engineering contracting enterprises,and provide enterprises with a feasible road to implement strategic transformation.Finally,a case study of the cascade hydropower development project of the Southern Power River Basin of the China Power Construction Group in Laos was carried out,and the successful experience of the project and the enlightenment to other enterprises were found.The competition environment of the international engineering contracting market is becoming more and more fierce along with the changes of the international environment,and the traditional construction business development model of engineering contracting enterprises can no longer meet the needs of sustainable development.The strategic transformation to investment-oriented enterprises is an inevitable choice for Chinese international engineering contracting enterprises to develop international markets,and Chinese enterprises have already possessed the strength of strategic transformation.In line with the development direction of Chinese enterprises,the vertical integration transformation path helps to increase the added value of corporate economic activities.At the same time,using the business model of integration of investment and construction,enterprises can achieve control over the entire life cycle of the project and the entire industry chain.Vertical integration theory which applicable to the manufacturing industry was used in the international engineering contracting enterprise in this paper,the vertical integration path of the strategic transformation of the international engineering contracting enterprise was proposed,and realizes the enterprise through the integration of construction and service(including investment and financing,survey design,operation and maintenance,etc.).Change to the identity of investors.At the same time,it focuses on the business model of integration of investment and construction camps,and proposes that the integration of investment and construction is an important choice for the strategic transformation of China's international engineering contracting enterprises,and also a powerful guarantee for its sustainable development.