Huayou Cobalt Industry Chain Integration Performance Analyse

In 2015,China became the world’s largest new energy vehicle market,and as of the third quarter of 2020,China’s new energy vehicle sales have reached 1,768,700 units.In the cost composition of new energy vehicles,the power battery generally accounts for 30-40% of the manufacturing cost of new energy vehicles,and the highest installed capacity of new energy vehicle power batteries around the world is ternary lithium-iron batteries.In ternary lithium-iron batteries,cobalt is very important,mainly to improve battery charging efficiency,safety and extend battery life,but as a rare metal,the distribution of cobalt is extremely uneven around the world,which is not only expensive but also highly susceptible to international pricing.Therefore,in order to achieve stable raw material supply and cost control,enterprises in the cobalt industry chain have carried out industry chain integration to cope with market changes.In this paper,we take Huayou Cobalt,a leading cobalt enterprise,as the main subject of study and use PEST analysis to analyze the current situation of the industrial chain in which the enterprise is located.In analyzing the motives for Huayou Cobalt’s industrial chain integration,we can find that,combined with the theory of strategic adjustment and the theory of competitive advantage,the downstream market of the cobalt industrial chain is extremely dynamic and the upstream cobalt price is highly volatile.The enterprise not only wants to hedge against the cyclical changes in cobalt prices,but also hopes to adjust the industrial structure through industrial chain integration,create close ties with upstream and downstream enterprises in the integration process,reduce transaction costs and gain competitive In the process of integration,they hope to create close ties with upstream and downstream enterprises,reduce transaction costs and gain competitive advantages.Secondly,in the integration process of Huayou Cobalt,we can see that the industrial chain integration of Huayou Cobalt has the following characteristics: Firstly,at the early stage of integration,the main focus is on integrating upstream cobalt resources and gradually extending to lithium battery material resources at the perfection stage;secondly,the industrial chain layout is mainly carried out through the way of "self-built + joint venture";thirdly,the industrial pattern of integrated and coordinated development of the three major business sectors of resources,non-ferrous metals and new energy is finally formed.In the performance evaluation,this paper evaluates Huayou Cobalt’s industrial chain integration in terms of short-term performance and long-term performance respectively.In terms of short-term performance,investors hold a wait-and-see attitude when the enterprise is initially laying out the industrial chain,and the integration event shows a positive effect when the enterprise is at the stage of industrial chain improvement.In the medium-and long-term performance,using the balanced scorecard,the performance of the enterprise’s industrial chain integration is analyzed from four dimensions.From the financial dimension,the enterprise’s financial performance in the year of the integration event and the following years is average,and even poor due to frequent investment and construction activities,but with the gradual completion of the industrial chain integration,the financial performance is improved;from the customer dimension,the enterprise From the dimension of customers,industrial chain integration can help enterprises adjust their product structure and gain competitive advantages in the market;from the dimension of internal processes,industrial chain integration does not optimize the internal management of enterprises,but optimizes the production process;from the dimension of R&D,industrial chain integration promotes enterprises to increase their investment.Through the performance evaluation of Huayou Cobalt’s industrial chain integration,the following insights are drawn: When carrying out industrial chain integration,the company should refrain from blind expansion,choose a suitable method and appropriate timing,and carry out integration based on the industry background and enterprise development requirements.