Shanghai Baosteel Group Corporation

International Directory of Company Histories, Volume 71 (2000) by M. Cohen

Shanghai Baosteel Group Corporation

Fujin Lu-Baoshan District, Guoyuan, Changqian Zhonglu Shanghai 201900 China Telephone: 86 21 5664 8648 Fax: 86 21 5664 8046 Web site: http://www.baosteel.com

Government-Owned Company Incorporated: 1978 as Baoshan Iron & Steel (Group) Corporation Employees: 32,000 Sales: CNY 120.4 billion ($14.5 billion) (2004) NAIC: 331111 Iron and Steel Mills; 331210 Iron and Steel Pipes and Tubes Manufacturing from Purchased Steel; 331221 Cold-Rolled Steel Shape Manufacturing

Shanghai Baosteel Group Corporation is the Chinese government-owned holding company for a group of steel, steel products, and steel trading companies, which themselves operate under the publicly listed flagship Shanghai Iron & Steel Co. Ltd. Shanghai Baosteel is China's leading steel producer: In 2005, the company's annual output topped 20 million tons, and the company expects to double that by 2010. As such, the company dominates the Chinese steel industry, controlling some 10 percent of the total market, and ranks among the world's top steel producers. Shanghai Baosteel focuses on the production of steel plate and steel tubing. The company produces high-grade steel for the automobile, shipbuilding, pipeline, household appliance, and other sectors, primarily for the domestic market. The company's steel is also used for tool & die equipment, springs and bearings, and for the aerospace and commercial aviation industries. Shanghai Baosteel has begun investing in developing new steel production technologies, in part in an effort to win a greater share of the international automobile market. The company is a major supplier to international automakers such as Fiat. Shanghai Iron & Steel Co. operates the largest and most modern facility in China, accounting for more than half of the group's total production. Other companies in the group include Baosteel Shanghai No. 1 Iron & Steel Co., which produces premium stainless steel, among other products; Pudong Steel Corporation, a plate producer; and No. 5 Steel Corporation, a specialty steel products producer. Shanghai Baosteel also has interests in mining, particularly coal mining, both in China and abroad. The company's sales and distribution are handled through subsidiary Shanghai Baosteel International Economic & Trading Corporation Ltd., which operates a marketing network throughout China and in ten countries internationally. Shanghai Baosteel is led by President and Chairwoman Xie Qihua.

Founding a Modern Steel Giant in the 1970s

Prior to the early 1950s, China's iron and steel industry remained undeveloped in large part, with very few plants in operation. The first (and only) modern steel plant had been built by the Japanese in Anshan soon after World War I, and this complex eventually featured nine blast furnaces. Yet total production never topped one million tons. The Anshan complex was mostly destroyed during World War II, and again during the Chinese civil war, and its equipment and machinery were appropriated by the departing Soviets.

With the creation of the People's Republic of China, the country made a new effort to develop an industrial infrastructure. The central government began investing in the construction of new steel plants, for the most part based on Soviet designs and technology. The Anshan complex was rebuilt, and eventually reached a total output of seven million tons. Another large facility was built at Wuhan in the early 1950s. Many small, but modern, steel plants were constructed during this period. At the same time, many local and regional governments began installing a large number of so-called "backyard" furnaces for the production of pig iron. The period launched by the Great Leap Forward saw a dramatic increase in the country's steel output.

The Chinese steel industry collapsed again into the 1960s, in part because the overworking of the country's larger furnaces forced them to be shut down. By 1961, production had dropped to half of its total from the year before. The government began an effort to centralize control of the steel industry, shutting down many of the smaller plants and importing new technology from Austria, Japan, and elsewhere.

The steel industry remained linked to the political situation in the country, with output rising in periods of relative stability, such as the early 1960s, and dropping back during crisis times such as the Cultural Revolution in the late 1960s and the political battles of the post-Mao era. Nonetheless, steel remained an essential component of China's effort to modernize its industrial and economic infrastructure. By 1979, the country's total output topped 34 million tons. Into the 1980s, the country boasted 13 plants capable of producing more than one million tons annually. In addition, some 800 small-scale plants remained in operation.

The Chinese government began instituting economic reforms at the end of the 1970s in an effort to move beyond the disastrous policies of the Great Leap Forward era. Steel continued to play a central role in the government's plans. At the end of the 1970s, the government set a total domestic production target of 80 million tons per year to be reached by the end of the 1980s. For the most part, the government sought to refurbish and modernize its existing plants, including an effort to improve fuel efficiency at the predominantly coal-burning sites.