Analysis of the advantages and disadvantages of cement company business

Summary: In our memory, cement companies should be specializing in cement products, but today's market development has caused us to start curious, and some companies have begun to set foot in the concrete business, and some companies have begun to get involved in the aggregate business. There is nothing wrong with it. After all, they are related products. But there is also a point that there are many companies also involved in real estate, chemicals, smelting and other industries, can be described as all kinds. However, judging from the current market situation, the cement industry should belong to a relatively weak profit in the short term, but it will not result in a total loss of the entire industry. As a result, some companies are beginning to expand their business scope. Although they are in the interest of capital, they may have mixed advantages and disadvantages. Ultimately, the impact on the entire market is still unknown.

Jiangxi Cement: Increased investment in concrete business in November 2011. Jiangxi Cement successively acquired shares of six concrete companies and continuously invested funds in the concrete business. There is also a great deal of ambition to achieve a unified market, but ultimately it will affect the market, and whether the company will receive the full amount. In return, it is still unclear to see now.

In fact, the investment in concrete business is far more than Jiangxi Cement. Huaxin, China Resources, Jinye and other major cement companies all have done so. However, Jiangxi Cement's investment action happened in the period when the cement industry was in a downturn recently. People are concerned about it. The main reason why cement companies invest in concrete business is fundamentally interest-driven. However, there is still another reason for this: Currently, there is already an excess of cement production capacity. The NDRC's examination and approval of new cement projects is also very restrictive. If cement companies want to grow bigger, there are only two leftover roads. One is the merger and reorganization of other cement companies, and the other is the expansion of business and involvement in related industries. The concrete business as a direct transitional body of cement demand, coupled with the financial pressure generated by investment is also much smaller than the acquisition of cement companies, and thus has become the first choice for cement companies.

Business Steering: Pros and Cons Game For companies, regardless of whether the business chain is extended or widened, its main goal is to pursue two words: interest. However, under the current situation that the overall earnings of the cement industry are sluggish, it is difficult to talk about the interest. Especially in the southwestern region, many small businesses are on the verge of a loss or even in actual losses. As a result, cement companies have chosen to expand their business scope at this time, which is exactly the current slump in the entire cement industry.

In fact, at present, the global economy is in a downturn, so the downturn is not just in the cement industry, and other industries are still sluggish. To be more straightforward, the cement industry is just a small branch under the building materials industry. The current downturn in the economy affects the entire real economy. The entire building materials industry is spared. If the cement industry is currently on the verge of a loss, it is difficult to expand its business scope in the building materials industry, then this loss will continue. However, if we can keep the promise of cloud development, then follow-up will also bring considerable benefits for them, so it can be said that the current cement companies have their own advantages and disadvantages.

Specifically, the main benefits are as follows: First, strong financial advantages can easily generate enough enthusiasm for new business competitors to gain market discourse rights; second, after the extension of the business chain, intermediate links will reduce some of the costs For cement companies, this can be regarded as a very significant income; Third, the extension of the business chain is equivalent to diversification of corporate investment, the market risk will be more tolerable; Fourth, after the market recovery will be Bring sufficient revenue for the company; another point is that in the current depressed market, although involved in other industries take great risks, but the cost is very low, so it is easier to use the least money to obtain more market resources .

However, all things have advantages and disadvantages. As cement companies expand their business scope, they also bear enormous risks and correspond to interests. The first is the funding issue. Although the cement company's financial strength is indeed relatively strong compared to other building materials businesses it is now turning to, the easy expansion of its business scope may result in a tightening of the capital chain and adversely affect the follow-up market development. Therefore, even large companies will be cautious; secondly, although the extension of the business chain will reduce some of the costs, but the same benefits will also be scattered in all aspects, in the short term it is not necessarily a good thing for cement companies; again, the business chain Although the extension is in decentralized investment, it is known that the expanded business scope is still in a basket compared to its own cement industry. The so-called decentralized investment is like changing the original one plastic bag into two or three. However, the risk is almost the same as always loading a basket. The fourth point is how long the current economic downturn will last. No one can assert that although the follow-up may bring substantial profits, it must be able to pass it first. This hurry, otherwise everything is an illusion; the fifth point is that your company can think of expanding its business face. Others Industry will follow suit, the end result is competition among cement companies are still continuing, and has been expanding the scope of the battlefield, but it's hard to say who laughs last.

Summary: In any case, the cement company's investment is ultimately to make money, and any investment is in the interests and risks, so we have to consider so many possibilities. Although the market conditions in different regions are different, the expansion model of the business chain is indeed the same. The only difference is that in the A market, there may be some hidden dangers, but in the B market, it will bring about a good market response. Therefore, if the cement company grasps the business aspects sufficiently well, it can be determined that the ultimate benefits outweigh the disadvantages.

Another point of concern is the issue of the distribution of benefits. Take the concrete business as an example. After cement companies such as Jiangxi Cement, China Resources Cement, and Huaxin Cement are involved in the concrete industry, they can ensure their market share to some extent, but they may touch the interests of other companies in the concrete industry. Properly handled, it is a win-win outcome for the entire concrete industry and cement companies; but if not handled properly, it may be due to hand over the target customers in the concrete industry to others. It may be that we are a bit worried and over-satisfied, but the so-called “intellectual sensibility must have been lost”, which also has to allow cement companies to worry more about the vertical development of the business chain.