Research On The Formation And The Influence Of Vertical Integration Of Chinese Aluminum Industry

Aluminum is only inferior to iron among metallic material. In recent years, along with the rapid scale expansion, the inconsistency of production capacity and dissymmetry of structure in various stage of aluminum industry chain loomed large, which has seriously affected the sound development of aluminum industry. Under the circumstances, it is of great significance to conduct systematical research on the vertical integration of aluminum industry in the transitional period.This paper is proceeded hierarchically as the following five levels: Firstly, it summarized the present situation and existing problems of production capacity and structure of aluminum industry stage to stage; Then, it studied the formation mechanism of vertical integration of aluminum industry, analyzed the critical influencing factors theoretically, and then carried out empirical analysis; Next, based on the efficiency effect and exclusion effect, it probed into the impact of vertical integration on the market structure of aluminum industry microscopically and made empirical verification; Fourthly, it evaluated the dynamic efficiency of aluminum enterprises, and gave empirical verification to the influence of vertical integration on the efficiency of enterprise. Finally, based on the above conclusion, this paper reflected on the industrial policies of aluminum industry, and put forward relative improving measures.The problems of aluminum industry chain in our country focused on the next three aspects:First of all, the inconsistency of production capacity which was represented as the scarce supplies of aluminum and overcapacity of electrolytic aluminum and alumina; Dissymmetry of industry chain, the concentration degree of alumina was strictly higher than electrolytic aluminum and aluminum processing; Reciprocal separation of industry chain and low degree of vertical integration. The three major problems contributed to the transfer of profit to the two ends of industry chain and the deterioration of intermediate entrepreneurial management, which impeded the sound development of aluminum industry. Grounded on the extension of Hart-Tirole model, this paper deduced the formation mechanism of vertical integration of aluminum industry under the circumstance of scarce supply and overcapacity of production respectively. Scarce supplies and overcapacity created motives for backward and forward integration of aluminum industry successively, and the dissymmetry of industrial chain structure strengthened this motivation. The sensible difference between enterprises seriously hindered the realization of high level vertical integration of aluminum industry, therefore Oligopoly competition is the ideal model of aluminum industry. The government intervention under the background of transitional economy had varied the relative cost of integration among distinct enterprises and distorted the structure of industry chain.It conduct theoretical analysis of the influence of market structure, market scale, uncertainty, government intervention etc to the level of vertical integration of aluminum industry, and utilized some methods like unit root and Engle-Granger association to proceed empirical study. And it concluded that uncertainty,market structure and government intervention was the main influencing factors on the integration of aluminum industry. As the source of uncertainty, scale supply and overcapacity promoted the upturn of integration level. The upgrading of the concentration degree of electrolytic aluminum and aluminum fabricating enhanced the entrepreneurial integrating capacity, and boosted the vertical integration. The high degree of concentration of alumina retarded the development of vertical integration of aluminum industry. The intervention of central government provided the most obvious advantages to the upgrading of integration.It constructed game model based on efficiency effect and exclusion effect, and inferred the impact of the backward integration of electrolytic aluminum to the market structure of aluminum industry. Electrolytic aluminum enterprises which backward integrated was in favor of transverse expansion, and the vertical integration of disparate electrolytic aluminum enterprises inclined to strategically substitute, therefore vertical integration game would lead to polarized market structure, and resulted in higher market concentration degree of electrolytic aluminum. According to the conclusion of extended model of Gilbert-Hastings, the forward integration of electrolytic aluminum didn't possessed exclusion effect and can't promote the concentration degree of market. Empirical study confirmed the above mentioned viewpoint.It measured the dynamic efficiency of aluminum industry by means of Malmquist index, and the result shows that:In recent years, total factor productivity of our aluminum industry was promoted prominently, with local state-owned enterprises enjoyed the fast development; The merger and acquisition of Chinalco had acquired scale effect in short term, but it was not obvious in the long run; The executing mechanism of non state-owned enterprises enables it possessed the fastest technology efficiency progress. Then by using of panel data models, it analyzed the impact of backward and forward integration on the dynamic efficiency of aluminum industry, and concluded that vertical integration promoted the enhancement of enterprise efficiencies, while the intervention of government makes this effect slight.The above facts indicated that our aluminum industry undoubtedly has the self-adjustment mechanism to solve its problems lies in industry chain. If we can eliminate the improper intervention of government and enabled the enterprises to become the main players in the market, the vertical integration of aluminum industry will be greatly enhanced, which is profitable to the reducing of surplus production capacity and improving the concentration degree of market. The upgrading of concentration degree of electrolytic aluminum will eventually change the conclusion of "forward integration doesn't cause exclusion effect", and also further promote the concentration degree of aluminum processing. In accordance with this logic, our aluminum industry ultimately will form the oligopoly competitive structure which is characterized by high degree of integration and concentration, and the overall competitiveness of the industry will be evidently improved. The empirical result of vertical integration's impact on the entrepreneurial efficiency proves the rationality of this mechanism.The government should promote the boosting of vertical integration of aluminum industry:Bring into full play of the effect of market mechanism in the optimization of industry structure; Promote the mergers and acquisitions of aluminum industry over the country; Support the control of overseas aluminum resources by national enterprises; Motivate the engagement of international competition so as to enhance the technical progress of aluminum fabricating.