Implementation And Performance Research Of Vertical Integration Of Photovoltaic Enterprises

The photovoltaic industry is an important part of the clean energy sector.Due to the characteristics of a long industry chain,high production cost and relatively low entry barrier,controlling the supply chain is particularly important to the PV industry.In addition,policy changes are one of the key factors affecting the development of the PV industry.Since 2008,the government has launched a number of policies such as “photovoltaic poverty alleviation” and “photovoltaic runner” to support the development of the industry.With the expansion of the industry and the gradual maturity of the market,the government gradually reduced the amount of subsidies for the PV industry to encourage market competition.In the process of moving from policy-driven to market-driven,some PV companies have adopted a vertical integration strategy in order to improve their market competitiveness.In order to study the impact of the vertical integration strategy of PV enterprises on the enterprises,this paper selects Tongwei as a case company and GCL Technology as a comparison case company.Tongwei completed the vertical integration layout and rapidly improved its business performance to become a leader in the PV industry,which has high research value.Based on the mechanism of the impact of vertical integration in business performance,this paper uses a combination of the event study method and financial indicator method to analyze and evaluate the effect of the implementation of vertical integration of Tongwei Co.in terms of both financial and non-financial performance and to provide suggestions for the implementation of vertical integration of PV companies.The research in this paper finds that the layout of Tongwei’s industrial chain integration affects business performance by widening the revenue chain,reducing costs,enhancing market power,promoting R&D innovation,and the choice of financing methods.First,Tongwei shares have a good short-term market response after the implementation of vertical integration,producing a positive effect of short-term performance increase.Secondly,the company takes advantage of the cost advantage of the upstream link to extend to the midstream and downstream,which has a significant positive impact on profitability,and financial indicators such as gross margin and return on net assets show a solid growth trend.Once again,Tongwei has chosen appropriate refinancing methods in the process of vertical layout,which controls the capital structure of the enterprise within a reasonable range and reduces the company’s debt burden,with obvious financial effects.In terms of non-financial performance,after the vertical integration layout of Tongwei,the production capacity of the industrial chain achieves high growth and the market share of products gradually increases,which lays the foundation for the enterprise to improve its revenue;in addition,the innovation ability of the enterprise is significantly enhanced;at the same time,the staff structure of the company is improved,however,the integration also increases the difficulty of management;finally,the layout of middle and lower reaches promotes the ESG management of the enterprise.The analysis results conclude that(1)when implementing vertical integration,PV companies should consider external factors such as policies and markets and seize the timing,because the choice of timing affects the effect of vertical integration;(2)the company should choose the appropriate refinancing method so that it is coordinated with the development strategy to ensure the smooth implementation of the company’s vertical integration and can prevent the risk caused by industry fluctuations;(3)finally,the company should ensure the positive effect of vertical integration in terms of cost,innovation and financing according to its own advantages and industry experience.This paper explores how PV companies implement vertical integration and its impact on business performance,using Tongwei as a case study.This paper aims to enrich the related research and provide a reference for PV firms to develop vertical integration strategies.