A Company Photovoltaic Business Vertical Integration Strategy

At present,China’s photovoltaic industry,as a new energy industry that is a national strategic priority,has ushered in a period of historical opportunity for vigorous development.Due to the huge future development opportunities of the industry,more and more companies have entered the photovoltaic track,and the competition between photovoltaic companies has become more and more fierce,especially in the midstream,where the entry threshold is relatively low.While midstream competition is becoming more and more fierce,profits are constantly being squeezed by upstream and downstream.Enterprises in the midstream,especially leading enterprises,have expanded the upstream and downstream of the industrial chain and implemented vertical integration strategies to increase product value and improve their market competitiveness.At present,leading photovoltaic companies have adopted vertical integration strategies and gradually established their own moats in market competition.However,some photovoltaic companies have also implemented vertical integration strategies,but have gradually declined in market competition.The reason for this is that the direction of vertical integration strategy and the key links that should be invested are not selected.This article takes as an example the PV up-and-coming company A,which has implemented a vertical integration strategy since its inception,and has developed its photovoltaic business well in the past ten years through its vertical integration strategy,and its module business has ranked among the top 15 in China in 2021.However,due to the high concentration of Company A’s business in the cell and module links in the middle of the photovoltaic industry chain,the integration of upstream and downstream development is very uneven,and there is a dilemma that it is easy to increase revenue and difficult to increase profits,and it is increasingly stretched in the industry competition.Taking Company A as an example,this thesis hopes to give companies in the midstream difficulties what strategic direction and optimization measures should be taken in the implementation of the vertical integration strategy to enhance their competitiveness through the research of a typical photovoltaic company facing midstream difficulties.This thesis adopts the exposition logic of "discovering problems-asking problems-analyzing problems-solving problems".Firstly,through field research and interviews,combined with the relevant research of vertical integration theory in the existing field literature,the research question is proposed: the problems arising from the current implementation of the vertical integration strategy of Company A.Secondly,according to the analysis of the current situation and problems of Company A’s photovoltaic business,it is found that Company A’s current photovoltaic business is mainly in the cell and module business link at the low end of the industrial chain and rapid technology iteration,with high competitive investment and low rate of return,facing huge risks of technological iteration,overcapacity and backward capacity.At the same time,the business investment in downstream photovoltaic power generation and application fields with deterministic and rapid growth is small,and the market development is seriously insufficient.Thirdly,through internal and external environment analysis and mathematical calculation,it is found that the current existing resources and capabilities support Company A to carry out key expansion and strategic optimization to the downstream market.Finally,it proposes solutions for what strategy Company A should adopt for the downstream market to achieve the goal of vertical integration strategy,that is,to achieve synergies.And formulate supporting strategic optimization implementation safeguard measures,so that the strategic optimization can be implemented smoothly,so that Company A’s photovoltaic business has further development,and its own competitive advantage and sustainable competitiveness can be significantly improved.The research of this thesis can provide solutions for photovoltaic companies in the highly competitive environment of midstream cells and modules in the direction of vertical integration.In addition,for a medium-sized photovoltaic company of the scale of Company A,how to develop its own market segment and gain advantages in the process of vertical integration provides reference.At the same time,it also provides ideas for how to open up business channels in the process of downstream expansion.