Air-conditioning Industry In China After The Integration

After over 20 years' development, China has become a leader in its products and sales in air conditioners. Especially, after 2002, China's Air Conditioners (A/C) industry has stepped into a quick developing period. Meanwhile, the manufactures of A/C compete more fiercely. For example, in home air conditioners industry, the competitions are not only internally, but also in its upward suppliers and downward distributors. Under this background, what makes us attract and interest is the fact that many prestigious manufactures choose to integrate backward simultaneously.Based on a review of backward integration theory, this thesis analyses the industrial competitions in A/C industry. It discusses the motivation, the estimate and the performance of backward integration strategy in its manufactures respectively. Also, it analyses the backward integration's impact on the market structure of A/C industry and one of its essential upward industries, the compressors used in air conditioners.As to the structure of this thesis, it is separated into five parts. The first part is the introduction, giving some background information related to research, methodology and its contribution. The second part is a review on the development of vertical integration, the research of vertical integration under the framework of industrial organization, transaction cost and management strategy theories. The third part analyses the competition in China's A/C industry and the motivation of its backward integration, which are based on the discussion in its technology and chain. The fourth part is the empirical research on the backward integration in A/C industry. The fifth part gives conclusions and some suggestions for further research.Additionally, in empirical research, the thesis gives main conclusions as follows. Firstly, as to the leading competitors, the increase on backward integration may result in the decrease in return of asset (ROA). Secondly, as to the competition between three industrial leaders, the increase of backward integration may add the ROA. Thirdly, the backward integration doesn't make obvious effect in the market structure of A/C industry and compressor used in A/C industry.