Over-integration will lead to outstanding conflicts with the optimal allocation of social resources. Enterprises should form an integration on the basis of scale management and specialization, so as to achieve a win-win situation for both enterprises and society.
Since the "Eleventh Five-Year Plan" period, most of China's energy companies have developed their business models in the direction of diversification and integration, and formed a number of integrated enterprises including "coal power," "coal circuit," and "coal oil." Undoubtedly, the integration model brings great benefits to reducing transaction costs, increasing the production scale of the shortage industry, and harmonizing the relationship between industries. However, in the current situation, over-integration also brings a series of problems, especially if the market mechanism is not perfect, it will inevitably cause a waste of social resources. How to reasonably implement the "integration" of energy companies and make social benefits consistent with corporate interests is a problem that needs to be solved urgently.
The status of the integration model In the early 1980s, the former Ministry of Coal proposed guidelines for the three main bodies of coal production, capital construction, and diversification, and supported coal companies in actively developing diversified operations. The integrated business model of China's energy companies started. Since most of the integration development at that time did not form an economic scale and the economic efficiency was generally poor, the vast majority of companies that invested 3 billion yuan in coal each year were mostly formed through development funds and ended in bankruptcy or conversion.
Later, in order to solve the long-standing contradiction between coal, electricity, and transportation, and ease the pressure on transportation, the state has given Shenhua Group coal, electricity, roads, ports, oil and gas integration development functions, and explored the integration of energy companies. Pilot. After more than 20 years of practice of vertical integration, Shenhua Group has formed a comprehensive energy company that is based on coal, electric power, railways, ports, shipping, coal-to-liquids, and coal-based chemical industries. By 2011, coal sales have reached 500 million tons, with more than 40 million kilowatts of electric power installed, and the economic benefits are among the highest among the central enterprises.
It is in the Shenhua Group's integrated operating model, driven by the rapid expansion and development of energy companies' integrated business models since 2005, among which coal, electricity, coal, and coal chemicals have become mainstream. The top 10 coal companies in 2010 had all developed coal chemical projects; 7 have implemented coal and electricity integration; 6 are engaged in modern logistics trade; and 5 are engaged in equipment manufacturing. At the same time, other industries also entered the coal industry in large numbers. As of the end of 2010, there were 22 enterprises that had invested in coal mining by central enterprises. The coal production of coal-related state-owned enterprises has continued to increase substantially, from 280 million tons in 2005 to 7.1 million tons in 2010.
There are many reasons for analyzing the rapid expansion and development of the integrated energy business model. First of all, due to the implementation of price control in some industries, the difference in interest between industries has increased, and the return on investment between the upstream and downstream industries is far from one another. In particular, coal prices have been rising in recent years, and electricity prices have been controlled by the state, which has not been able to keep up with the overall rise in coal-based energy prices. As the gap between the power generation companies and coal production companies continues to widen, power generation companies have been forced to invest in coal production.
Second, the lack of transport capacity severely restricts the development of other industries, especially the coal industry. For a long time, coal transportation has been the main factor restricting China’s coal supply. By the end of last year, coal transportation had accounted for about 60% of the total railway transportation volume in China. Some coal transportation passages such as Daqin, Fengsha, Shitai and other railways have utilized capacity. Already in super saturation. The limitation of transportation resources has become a bottleneck for the development of coal companies. Some coal-fired power companies, in order to accelerate their own development and grasp the initiative of transport, have invested in the construction of railways in order to obtain more railway capacity.
Again, the successful experience of integrated operation has led more industries to try integrated business models and achieved certain results. In particular, after more than 20 years of vertical integration practices, Shenhua Group has formed a comprehensive energy company that is based on coal, electric power, railways, ports, shipping, coal-to-liquids, and coal-based chemical industries. By 2011, coal sales have reached 500 million tons, with more than 40 million kilowatts of electric power installed, and the economic benefits are among the highest among the central enterprises. The extraordinary rapid development of Shenhua Group has received extensive attention from domestic and foreign enterprises and the society. The success of this integrated business model has played a leading role for other companies, making other industry companies actively try integrated development and promoted coal-fired power. The development of integrated operations such as coal transportation, coal transportation, and coal chemical industry.
At the same time, national policy support and encouragement have also had a great impact. In June 2005, the "Several Opinions of the State Council on Promoting the Healthy Development of the Coal Industry" clearly stated: Encourage the development of coal-electricity integration, and encourage large-scale coal enterprises to join joint ventures with metallurgical, chemical, building materials, and transportation enterprises. In the same year, the China Coal Industry Association (CCIA) has promoted the integration of “coal, electricity, metallurgy, and chemical industries†and “integrated management of coal, electricity, roads, ports, and aviation†as one of the six important basic principles for the healthy development of the coal industry. . Under the encouragement and guidance of national policies, domestic coal companies rely on resources and location advantages to conduct integrated operations, and integration of coal, electricity, coal, and coal chemical industries has become mainstream.
The diversification of diversified energy companies, the rapid expansion of integration, expanding the scale of enterprises, improving the efficiency of business operations and efficiency, and promote the development of enterprises. However, from the perspective of social economy as a whole, over-integration has brought many problems.
First of all, over-integration will lead to insufficient professional division of labor, hinder the development of productivity, and limit the improvement of social production efficiency. Excessive integrated management allows companies to extensively place the products and businesses involved within the company to operate. With the expansion and extension of the scope of integration, the market space for companies providing market specialized services will become smaller and smaller. The scale effect is difficult to play and is not conducive to the improvement of social production efficiency. From the perspective of the society as a whole, this is a kind of behavior that obtains lower output with higher input, that is, over-integration will restrict the improvement of social production efficiency.
At present, there are many upstream upstream shipping companies. In order to extend their industrial chains, increase their profits, and expand their scale, they have entered the coastal transportation sector with their own advantages in cargo resources (such as coal), and have operated fleets with themselves or with other companies. It is difficult for enterprises that provide specialized coastal transportation services to expand scale and increase productivity through professionalization. As a result, it is difficult for each enterprise that operates coastal transportation to achieve a larger scale of operation, and it is difficult to further improve the service efficiency of the entire coastal transportation industry. If the coastal transportation business is under the responsibility of a specialized company, then specialized enterprises can reduce costs by improving the technical level, training talents, and improving equipment, and further improve service quality and quality.
Second, excessive integration will lead to low efficiency in the allocation of social resources, resulting in repeated input and waste of social resources. Broad integration will result in a large, complete, small and complete pattern, resulting in duplication of investment and waste of social resources. At present, many coal companies are engaged in the construction of pit power plants and the production of thermal power. At the same time, power companies have also entered the coal industry through integration to engage in coal production. Because there is no comprehensive support for the mining area, a large amount of funds needs to be invested for infrastructure, equipment purchase, and so on.
The statistics show that in the case of existing coal preparation plants, shipments, and other infrastructure, the construction of a medium-sized mine using continuous coal miners will generally cost less than 100 yuan per ton of coal. All these infrastructures need to be built. Under the circumstances, the investment per ton of coal is generally around RMB 160; if it is to build a coal mine of the same size, including coal washing plants and all other surface facilities, the investment per ton of coal will be over 200 yuan.
Again, over-integration will lead to resource contention and vicious competition, which is not conducive to the rational use of resources. With the expansion and extension of the scope of integration, the bidding resources of various types of enterprises are eagerly increased, and the competition for resources development rights is fierce. However, the economic development of follow-up resource development cannot be guaranteed. Some power companies entered the coal industry in order to obtain resources. In the case of unclear understanding of coal resources and lack of coal professionals, blind and high-cost access to coal fields with poor conditions led to a dilemma in which production would be lost and production would not occur. The loss of fixed investment in the previous period has caused vicious competition and disrupted the normal market order of resources.
The lack of cross-industry security management experience also brings the risk of safe production. Coal mine production is carried out under constant movement and change. It is always faced with water, fire, gas, coal dust, roof and impact pressure. Safety management and safe production are very difficult, and a large number of specialties are required. Talents, have considerable safety management experience, and have the appropriate safety production technology. However, the safety production technology, safety management personnel, and safety management experience of new enterprises entering the coal industry are all lacking, and it is difficult to accumulate and improve in a short period of time. This poses a great safety risk to the integrated operation of coal mines. Baosteel Group, which has just entered the coal industry, suffered a major coal mine gas accident that killed ten people last year.
Integration and Marginal Cost Energy companies choose an industry-oriented business model, or choose a diversified, integrated business model, depending on the marginal transaction costs and marginal management costs: When the marginal management costs are greater than the marginal When transaction costs, that is to say, the cost of an enterprise entering a new industry to achieve integration rather than specialization, is greater than the transaction cost saved thereby, the enterprise will not choose integration; when the marginal management cost is less than the marginal cost, Businesses will be integrated into the new industry for the purpose of reducing transaction costs. Therefore, under the conditions of a perfect market economy, the market mechanism will fully play its role, and automatically adjust the scope and degree of enterprise integration, so that in the case of corporate profits, so that the optimal allocation of social resources.
Due to the imperfect market system in China, the price of some products, especially the price of some products, is directly controlled by the government, such as electricity prices. Although the prices of some energy products are market-based, the government can also exert influence in various ways. Under such circumstances, companies will use the above-mentioned theory to decide whether the integration will obviously be biased, which will weaken or even invalidate the market's ability to automatically adjust the scope and degree of integration. Under a perfect market system, the choice of companies and the choice of markets should be the same, but this is not always the case.
Looking at the society as a whole, some integration is a way of high input and low output, which should not be chosen. For a given company, the benefits are greater than the cost, and the company will choose to achieve one. The. It can thus be seen that although the company can make reasonable decisions that are beneficial to itself, this choice cannot rationally allocate social resources, and there is a deviation between the choice of companies and the choice of markets.
How to Integrate Under current circumstances, to make healthy development of the integration of energy companies in China, we must first improve and perfect the market economic system, and gradually release electricity prices and coal prices so that coal prices can be determined by the market. In this way, coal-fired power companies will concentrate their resources on improving productivity, and strive to seek refinement in their own professional fields, enhance their competitiveness in the industry, and gain more benefits, but will not easily enter the upstream and downstream industries for integration. In particular, most power companies will put their main energy and resources into the power industry, and will not easily enter the coal industry they are not familiar with and are not competitive.
Second, the government's guidance on the integration of energy companies should be moderate, and it should not lead to excessive integration. Under the current imperfect market economy, the choice of enterprises and the choice of society are not exactly the same. Excessively encouraging enterprises to choose an integrated business model will inevitably result in wastage of social resources and failure to optimize the allocation of social resources. At present, it is particularly necessary to limit the integration of SMEs and increase the threshold of integration. Integration must be integrated under the premise of scale management and professional management, and it cannot be a big, comprehensive, small and complete phenomenon.
The integration of energy companies should be further strengthened to form a professional and scale-based integration. For those industries that are now integrated and have not formed scale operations, they must distinguish between different situations and adopt appropriate methods for integration. When the original power companies engage in a few coal production, they must integrate the coal industry into specialized coal companies as far as possible according to market methods. If the original coal enterprise is engaged in the production of a few electric power companies, the power plant may be integrated into electric power companies.
In addition, we must take various forms to achieve professional management. For the property rights transaction is still more difficult, companies with greater interest impacts may adopt entrusted management or leasing operations under the condition of unchanged property rights to maximize professional management; When coal and transportation resources are provided for protection, custody and leasing are adopted, which can increase efficiency, ensure the interests of integrated enterprises, and allow social resources to be optimally allocated.
Defining enterprise integrated management and professional management is a very difficult issue, and there are many factors that affect it. Under current circumstances, the government should further improve the market economic mechanism, correctly guide and grasp the scale and depth of integration of energy companies, and avoid excessive integration. The phenomenon of occurrence. At the same time, enterprises must increase their efforts to integrate and strive to form an integration based on scale operations and specialization so that the integration of enterprises' behaviors and social resources can be optimized, thereby achieving a win-win situation for both companies and society.
Since the "Eleventh Five-Year Plan" period, most of China's energy companies have developed their business models in the direction of diversification and integration, and formed a number of integrated enterprises including "coal power," "coal circuit," and "coal oil." Undoubtedly, the integration model brings great benefits to reducing transaction costs, increasing the production scale of the shortage industry, and harmonizing the relationship between industries. However, in the current situation, over-integration also brings a series of problems, especially if the market mechanism is not perfect, it will inevitably cause a waste of social resources. How to reasonably implement the "integration" of energy companies and make social benefits consistent with corporate interests is a problem that needs to be solved urgently.
The status of the integration model In the early 1980s, the former Ministry of Coal proposed guidelines for the three main bodies of coal production, capital construction, and diversification, and supported coal companies in actively developing diversified operations. The integrated business model of China's energy companies started. Since most of the integration development at that time did not form an economic scale and the economic efficiency was generally poor, the vast majority of companies that invested 3 billion yuan in coal each year were mostly formed through development funds and ended in bankruptcy or conversion.
Later, in order to solve the long-standing contradiction between coal, electricity, and transportation, and ease the pressure on transportation, the state has given Shenhua Group coal, electricity, roads, ports, oil and gas integration development functions, and explored the integration of energy companies. Pilot. After more than 20 years of practice of vertical integration, Shenhua Group has formed a comprehensive energy company that is based on coal, electric power, railways, ports, shipping, coal-to-liquids, and coal-based chemical industries. By 2011, coal sales have reached 500 million tons, with more than 40 million kilowatts of electric power installed, and the economic benefits are among the highest among the central enterprises.
It is in the Shenhua Group's integrated operating model, driven by the rapid expansion and development of energy companies' integrated business models since 2005, among which coal, electricity, coal, and coal chemicals have become mainstream. The top 10 coal companies in 2010 had all developed coal chemical projects; 7 have implemented coal and electricity integration; 6 are engaged in modern logistics trade; and 5 are engaged in equipment manufacturing. At the same time, other industries also entered the coal industry in large numbers. As of the end of 2010, there were 22 enterprises that had invested in coal mining by central enterprises. The coal production of coal-related state-owned enterprises has continued to increase substantially, from 280 million tons in 2005 to 7.1 million tons in 2010.
There are many reasons for analyzing the rapid expansion and development of the integrated energy business model. First of all, due to the implementation of price control in some industries, the difference in interest between industries has increased, and the return on investment between the upstream and downstream industries is far from one another. In particular, coal prices have been rising in recent years, and electricity prices have been controlled by the state, which has not been able to keep up with the overall rise in coal-based energy prices. As the gap between the power generation companies and coal production companies continues to widen, power generation companies have been forced to invest in coal production.
Second, the lack of transport capacity severely restricts the development of other industries, especially the coal industry. For a long time, coal transportation has been the main factor restricting China’s coal supply. By the end of last year, coal transportation had accounted for about 60% of the total railway transportation volume in China. Some coal transportation passages such as Daqin, Fengsha, Shitai and other railways have utilized capacity. Already in super saturation. The limitation of transportation resources has become a bottleneck for the development of coal companies. Some coal-fired power companies, in order to accelerate their own development and grasp the initiative of transport, have invested in the construction of railways in order to obtain more railway capacity.
Again, the successful experience of integrated operation has led more industries to try integrated business models and achieved certain results. In particular, after more than 20 years of vertical integration practices, Shenhua Group has formed a comprehensive energy company that is based on coal, electric power, railways, ports, shipping, coal-to-liquids, and coal-based chemical industries. By 2011, coal sales have reached 500 million tons, with more than 40 million kilowatts of electric power installed, and the economic benefits are among the highest among the central enterprises. The extraordinary rapid development of Shenhua Group has received extensive attention from domestic and foreign enterprises and the society. The success of this integrated business model has played a leading role for other companies, making other industry companies actively try integrated development and promoted coal-fired power. The development of integrated operations such as coal transportation, coal transportation, and coal chemical industry.
At the same time, national policy support and encouragement have also had a great impact. In June 2005, the "Several Opinions of the State Council on Promoting the Healthy Development of the Coal Industry" clearly stated: Encourage the development of coal-electricity integration, and encourage large-scale coal enterprises to join joint ventures with metallurgical, chemical, building materials, and transportation enterprises. In the same year, the China Coal Industry Association (CCIA) has promoted the integration of “coal, electricity, metallurgy, and chemical industries†and “integrated management of coal, electricity, roads, ports, and aviation†as one of the six important basic principles for the healthy development of the coal industry. . Under the encouragement and guidance of national policies, domestic coal companies rely on resources and location advantages to conduct integrated operations, and integration of coal, electricity, coal, and coal chemical industries has become mainstream.
The diversification of diversified energy companies, the rapid expansion of integration, expanding the scale of enterprises, improving the efficiency of business operations and efficiency, and promote the development of enterprises. However, from the perspective of social economy as a whole, over-integration has brought many problems.
First of all, over-integration will lead to insufficient professional division of labor, hinder the development of productivity, and limit the improvement of social production efficiency. Excessive integrated management allows companies to extensively place the products and businesses involved within the company to operate. With the expansion and extension of the scope of integration, the market space for companies providing market specialized services will become smaller and smaller. The scale effect is difficult to play and is not conducive to the improvement of social production efficiency. From the perspective of the society as a whole, this is a kind of behavior that obtains lower output with higher input, that is, over-integration will restrict the improvement of social production efficiency.
At present, there are many upstream upstream shipping companies. In order to extend their industrial chains, increase their profits, and expand their scale, they have entered the coastal transportation sector with their own advantages in cargo resources (such as coal), and have operated fleets with themselves or with other companies. It is difficult for enterprises that provide specialized coastal transportation services to expand scale and increase productivity through professionalization. As a result, it is difficult for each enterprise that operates coastal transportation to achieve a larger scale of operation, and it is difficult to further improve the service efficiency of the entire coastal transportation industry. If the coastal transportation business is under the responsibility of a specialized company, then specialized enterprises can reduce costs by improving the technical level, training talents, and improving equipment, and further improve service quality and quality.
Second, excessive integration will lead to low efficiency in the allocation of social resources, resulting in repeated input and waste of social resources. Broad integration will result in a large, complete, small and complete pattern, resulting in duplication of investment and waste of social resources. At present, many coal companies are engaged in the construction of pit power plants and the production of thermal power. At the same time, power companies have also entered the coal industry through integration to engage in coal production. Because there is no comprehensive support for the mining area, a large amount of funds needs to be invested for infrastructure, equipment purchase, and so on.
The statistics show that in the case of existing coal preparation plants, shipments, and other infrastructure, the construction of a medium-sized mine using continuous coal miners will generally cost less than 100 yuan per ton of coal. All these infrastructures need to be built. Under the circumstances, the investment per ton of coal is generally around RMB 160; if it is to build a coal mine of the same size, including coal washing plants and all other surface facilities, the investment per ton of coal will be over 200 yuan.
Again, over-integration will lead to resource contention and vicious competition, which is not conducive to the rational use of resources. With the expansion and extension of the scope of integration, the bidding resources of various types of enterprises are eagerly increased, and the competition for resources development rights is fierce. However, the economic development of follow-up resource development cannot be guaranteed. Some power companies entered the coal industry in order to obtain resources. In the case of unclear understanding of coal resources and lack of coal professionals, blind and high-cost access to coal fields with poor conditions led to a dilemma in which production would be lost and production would not occur. The loss of fixed investment in the previous period has caused vicious competition and disrupted the normal market order of resources.
The lack of cross-industry security management experience also brings the risk of safe production. Coal mine production is carried out under constant movement and change. It is always faced with water, fire, gas, coal dust, roof and impact pressure. Safety management and safe production are very difficult, and a large number of specialties are required. Talents, have considerable safety management experience, and have the appropriate safety production technology. However, the safety production technology, safety management personnel, and safety management experience of new enterprises entering the coal industry are all lacking, and it is difficult to accumulate and improve in a short period of time. This poses a great safety risk to the integrated operation of coal mines. Baosteel Group, which has just entered the coal industry, suffered a major coal mine gas accident that killed ten people last year.
Integration and Marginal Cost Energy companies choose an industry-oriented business model, or choose a diversified, integrated business model, depending on the marginal transaction costs and marginal management costs: When the marginal management costs are greater than the marginal When transaction costs, that is to say, the cost of an enterprise entering a new industry to achieve integration rather than specialization, is greater than the transaction cost saved thereby, the enterprise will not choose integration; when the marginal management cost is less than the marginal cost, Businesses will be integrated into the new industry for the purpose of reducing transaction costs. Therefore, under the conditions of a perfect market economy, the market mechanism will fully play its role, and automatically adjust the scope and degree of enterprise integration, so that in the case of corporate profits, so that the optimal allocation of social resources.
Due to the imperfect market system in China, the price of some products, especially the price of some products, is directly controlled by the government, such as electricity prices. Although the prices of some energy products are market-based, the government can also exert influence in various ways. Under such circumstances, companies will use the above-mentioned theory to decide whether the integration will obviously be biased, which will weaken or even invalidate the market's ability to automatically adjust the scope and degree of integration. Under a perfect market system, the choice of companies and the choice of markets should be the same, but this is not always the case.
Looking at the society as a whole, some integration is a way of high input and low output, which should not be chosen. For a given company, the benefits are greater than the cost, and the company will choose to achieve one. The. It can thus be seen that although the company can make reasonable decisions that are beneficial to itself, this choice cannot rationally allocate social resources, and there is a deviation between the choice of companies and the choice of markets.
How to Integrate Under current circumstances, to make healthy development of the integration of energy companies in China, we must first improve and perfect the market economic system, and gradually release electricity prices and coal prices so that coal prices can be determined by the market. In this way, coal-fired power companies will concentrate their resources on improving productivity, and strive to seek refinement in their own professional fields, enhance their competitiveness in the industry, and gain more benefits, but will not easily enter the upstream and downstream industries for integration. In particular, most power companies will put their main energy and resources into the power industry, and will not easily enter the coal industry they are not familiar with and are not competitive.
Second, the government's guidance on the integration of energy companies should be moderate, and it should not lead to excessive integration. Under the current imperfect market economy, the choice of enterprises and the choice of society are not exactly the same. Excessively encouraging enterprises to choose an integrated business model will inevitably result in wastage of social resources and failure to optimize the allocation of social resources. At present, it is particularly necessary to limit the integration of SMEs and increase the threshold of integration. Integration must be integrated under the premise of scale management and professional management, and it cannot be a big, comprehensive, small and complete phenomenon.
The integration of energy companies should be further strengthened to form a professional and scale-based integration. For those industries that are now integrated and have not formed scale operations, they must distinguish between different situations and adopt appropriate methods for integration. When the original power companies engage in a few coal production, they must integrate the coal industry into specialized coal companies as far as possible according to market methods. If the original coal enterprise is engaged in the production of a few electric power companies, the power plant may be integrated into electric power companies.
In addition, we must take various forms to achieve professional management. For the property rights transaction is still more difficult, companies with greater interest impacts may adopt entrusted management or leasing operations under the condition of unchanged property rights to maximize professional management; When coal and transportation resources are provided for protection, custody and leasing are adopted, which can increase efficiency, ensure the interests of integrated enterprises, and allow social resources to be optimally allocated.
Defining enterprise integrated management and professional management is a very difficult issue, and there are many factors that affect it. Under current circumstances, the government should further improve the market economic mechanism, correctly guide and grasp the scale and depth of integration of energy companies, and avoid excessive integration. The phenomenon of occurrence. At the same time, enterprises must increase their efforts to integrate and strive to form an integration based on scale operations and specialization so that the integration of enterprises' behaviors and social resources can be optimized, thereby achieving a win-win situation for both companies and society.
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