Research On The Issues Of Vertical Integration Strategy Of AnHui Hua Mao Group Co.Ltd

As a livelihood industry,textile industry is the first good industry of “basic necessities of life” and the traditional pillar industry of the national economy.Since the beginning of this century,the textile industry has developed rapidly and comprehensively,making China become the world's largest textile power.In recent decade years,textile enterprises,especially listed companies appeared the trend of vertical integration.Anhui Huamao Co.,Ltd.(hereinafter referred to as: Huamao Holdings)is a cotton textile enterprise listed on the Shenzhen Stock Exchange.Its previous main products were yarns and gray cloths.Since 2008,in order to quickly expand the scale of the enterprise,Huamao Holdings has developed and implemented the strategy of vertical integration.As of 2016,the enterprise has initially established a complete textile industry chain of “cotton-weaving-printing and dyeing-clothing and non-woven fabrics-terminal clothing sales”,which regarded property right as the link and adopted the form of holdings and shares.Although,the scale of the company was quickly expanded and the company broke through a lot of bottlenecks restricting the growth of the enterprise and achieved considerable business performance,the vertical integration strategy of the company is too extensive in view of the corporate mission of Huamao Holdings.Besides,there are some unmatched places in the block structure of the industrial chain,and the whole industrial chain effect was not maximized.So far,the enterprise has expanded the scale,but it still needs to make efforts to be “stronger and better”.Therefore,it is imperative to adjust and improve the overall strategy of the company and deepen the vertical integration strategy.Based on the theory of strategic management,this paper uses the research methods of literature research,combination of qualitative study and quantitative study and combination of theory and practice.Through the application of the basic research framework of strategy,this paper analyzes the external environment and internal resources and capacities of Huamao Holdings systematically.On the basis of the comprehensive elaboration of the formation and implementation of the vertical integration strategy,this paper focuses on the problem of vertical integration strategy of Huamao Holdings and puts forward the ideas and countermeasures to deepen the vertical integration strategy of Huamao Holdings.The research shows that at the present stage,the vertical integration strategy implemented by some textile enterprises in China for the sake of expanding the corporate scale is too extensive;the key to implement vertical integration strategy successfully for enterprises lies in “integration”.The paper hopes that the above research conclusions can provide some references for other textile enterprises to implement vertical integration strategy.