At present, compared with the international advanced level, China's magnetic materials industry is at a disadvantage. In the fierce international competition, the domestic magnetic materials industry will surely grow out of the international magnetic material giants, and even the international electronic component giants. We expect that the growth of international giants from national magnetic material enterprises will go through the following stages.

Concentration strategy

Starting from scratch and growing from small to large is generally suitable for adopting the centralization strategy. From the point of view of the product's international life cycle, the product is generally in a period of expansion into developing country markets, and the means of competition has generally reached a stage where it relies mainly on cost leadership to gain an advantage. The huge domestic market, restrictions on the invasion of the country by multinational enterprises, cheap labor and abundant resources in the country, and the background of international division of labor and industrial transfer form the basis for the emergence and growth of national enterprises.

Adopting the centralization strategy, some products with broad market prospects should be selected for centralized operation, such as the current high permeability soft magnetic ferrite, EMI ferrite, bonded NdFeB and so on. At the same time, this choice of centralization should be able to more fully utilize the advantages that enterprises already have, or enterprises can construct advantages in the field.

At present, many domestic magnetic material enterprises are in the stage of centralization strategy. Many of them have the foundations for further development and the potential to grow into international giants. But who will stand out? How to get sustainable development? We are all trying to figure it out.

Horizontal integration

At present, the domestic magnetic materials industry needs to first complete the internal integration. Due to historical reasons and multiple introductions, the magnetic materials industry, some small enterprises (even our large enterprises, in the international are only small enterprises) grew up. According to the law of industrial development, in a completely free market economy, the development will reach a certain stage, and enterprises will complete the internal integration of the industry through joint ventures, cooperation, acquisition and merger, alliance and cooperation, free competition, etc., to improve industrial concentration and give full play to the effect of economies of scale.     

Vertical integration

The phenomenon of basically completing horizontal integration and then carrying out vertical integration is more common. When the horizontal integration is carried out to a certain extent, the industry is mainly a few important enterprises in the competition. It is generally difficult for these firms to consume each other; if they want to merge with each other, they are often restricted by antitrust laws. Vertical integration is an important means of improving efficiency and gaining a competitive advantage. Vertical integration can be extended to the upstream and downstream of the industry through self-development, mergers and acquisitions, joint ventures, strategic alliances, and so on.

Vertical integration to the upstream first may be more suitable for the domestic magnetic materials industry. First of all, because many of the raw materials of magnetic materials are scarce resources, first of all, effective control of scarce resources, will be more helpful to the industry to build advantages. Secondly, due to the wide range of magnetic materials, more downstream customers, customers' bargaining power is limited, magnetic material enterprises to downstream integration requirements at once will not be very strong. Again, many downstream industries are either already highly competitive or have high barriers to entry, while upstream is easier to develop domestically.

After the main enterprises of magnetic materials have realized horizontal integration and integration to the upstream, it will have a greater competitive advantage in the industry chain. At this point in time for vertical integration to the downstream, the enterprise will occupy a more favorable position. Of course, there may also be a situation where integration to the upstream is not carried out, but extension to the downstream is carried out first. There are three possibilities for this situation: 1) it may be more difficult for a specific enterprise to integrate upstream first; 2) there may be favorable investment opportunities downstream; 3) extending downstream first can better utilize the enterprise's own advantages.

Diversification Strategy 

As the degree of horizontal and vertical integration becomes higher, the scale of the enterprise and its position in the industry will be greatly enhanced. However, after a certain level of development, the enterprise will encounter a bottleneck. So far, whether horizontally or vertically integrated, enterprises have adopted a strategy of relative centralization in their product lines. Since there are limits to growth in each product category, companies must enter the fourth stage of growth - the diversification strategy stage - in order to achieve greater growth.

There are some situations in which the diversification strategy stage may come early. One situation is the emergence of substitutes. When a firm's dominant product is strongly impacted by a more superior substitute, the firm is under pressure to need to diversify. Another situation is when the growth potential of the firm's dominant product is much less extensive than originally anticipated, or when, although the growth potential of the dominant product is still enormous, the overall industry structure has deteriorated so much that the basis for making satisfactory profits from it no longer exists. Therefore, as early as in the stage of centralization strategy, enterprises should plan ahead, always pay attention to industry trends and future trends, and try to do their best to cultivate future "star business" when the leading products are still in the "golden calf period".  

Generally speaking, "related diversification strategy" is more favorable than "non-related diversification strategy", which can give full play to the existing advantages and use the original resources. For example, expanding from the production of soft magnetic ferrite to the operation of rare earth permanent magnets, and from the production of magnetic materials to the operation of MLCC, chip inductors, chip resistors, can fully utilize the original technology, equipment, talent, experience, purchase channels and marketing network.

"Unrelated diversification strategy" is also sometimes a viable option. In reality, there are also very successful examples. Generally speaking, the adoption of "unrelated diversification strategy" is applicable to the following situations: 1, the original related fields can not accommodate the further growth of enterprises, or no longer have sufficient attractiveness; 2, the enterprise in the original field can not maintain a dominant position; 3, the new unrelated target areas with sufficient growth, generally in the initial stage of industry formation; 4, the new unrelated target areas have sufficient growth, usually in the industry The new unrelated target field has sufficient growth and is generally in the initial stage of industry formation; 4. There are no strong enough rivals in the target field for the enterprise to effectively cross the barriers and establish an advantage.

Transnational business strategy

Entering the stage of multinational business strategy generally requires three prerequisites: First, the original technology following and catching up strategy of the enterprise has achieved great success, and the enterprise's technology has been leading in the international arena, and is in the position of technology export; second, the overall national economic level has been greatly improved, and the domestic labor force and raw materials are no longer obviously cheap, and the cost-leading strategy has lost the solid foundation for implementation in the country; third, in order to enter the other stage of the multinational business strategy, the enterprise should be able to establish its advantages effectively. Third, in order to enter the market of other countries need to bypass some barriers, other countries have cheaper labor and raw materials, or in order to improve the efficiency of the need to organize international production and operation. If we can successfully enter this stage, the domestic magnetic materials industry has grown out of the real international electronic components giants, the entire national economy has also reached a very developed level.