China, special funds to improve the competitiveness of the steel industry

07/09/2018

 

According to a report in Economic Information Daily, China is setting special funds to promote mergers and acquisitions within the steel industry

 

The Chinese steel industry is certainly one of the strengths of the Chinese economy in the world. To give an example, just think that the United States, among the first products to be taxed, had chosen Chinese steel.

To enhance the overall competitiveness of the sector, according to a report in Economic Information Daily, Chinese policymakers have decided to set special funds to promote mergers and acquisitions within the steel industry.

 

The combined market share of the 10 largest steel enterprises in China was 37 percent in 2017

 

Among the aims to be reached with these funds are: to enhance industrial upgrades by promoting mergers and acquisitions in the steel sector; help the big operators in the sector to gain more market shares; achieve lower production costs to better cope with external pressures.

Li Xinchuang, president of the China Metallurgical Industry Planning & Research Institute, said: “Improving industry concentration is necessary for the further development of the Chinese steel industry as the overcapacity cuts have proved beneficial”.

 

China accounts for nearly half of the world’s annual steel production

 

Wang Guoqing, research director at Lange Steel Information Research Center, said that the goal for policymakers in the last few years has been to rid the industry of its excess overcapacity and structural optimization.

Precisely to hinder the surplus, the Ministry of Industry and Information Technology in 2016 issued a document encouraging interregional and inter-industrial mergers in steel-related companies.

 

Steel enterprises fall into different ownership categories, including being State-owned, privately owned, and collectively owned

 

It should be noted, according to Wang, that for a M&A success, the complete integration and adaptation not only of staff resources and members, but also of corporate culture, strategies and operations is required.

According to Zhao Chenxin, head of the National Development and Reform Commission’s economic operations office, China has removed 80% of the 30 million tons of steel overcapacity that it was supposed to remove in 2018.

 

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