冶金工业经济发展研究中心 shi hongwei apr. 1,2015 policy environment analysis for...

冶金工业经济发展研究中心

Shi Hongwei

Apr. 1,2015

Policy Environment Analysis for China’s

Steel Industry

Business Consulting Services

Contents

China Steel Development & Research Institute

1.New type of relation between government and enterprise

2. Main issues concerning China’s steel industry

3. Policies dealing with steel industry







Macro regulation

Market supervision

Public service

Social service

Environment protection

Government function

Main player of market

economySelf decision makingSelf operation Responsible for profit

and lossParticipating in market

competition fairly

Market is decisive in resource allocation

Enterprise




Relation between national competitiveness, industry competitiveness and enterprise competitiveness

Cluster effectPenetrating effect

Crosscut effect National competitiveness

Industry competitiveness

Enterprise competitiveness (competitive advantage)

Multiplier effect




China as a large manufacturer

Mid and low end of global

industry chain

China as a strong manufacturer

High end of global industry

chain

Emerging countries attract mid and low

end industries

to be transferred due to low cost

Emerging countries attract mid and low

end industries

to be transferred due to low cost

New material (new type of steel material)

is the basis for manufacturing sector

steel industry

New type material industry

steel material

New material

New type steel material




Overcapacity is prominent, widely-spread industry layout

Imperfect market competition order (regulation, element

allocation)

Self innovation is insufficient




Standardization Requirement for Iron & Steel Industry (ver. 2012) by MIIT

Product quality

Environmental

protection

Production capacity

Technique &

equipment

Energy consumption & resource

Safe production

Guidance on Dealing with overcapacity by the State Council (2013)

Notice on Dealing with Productivity Substitution of Certain Overcapacity by MIIT

Revised law and new standards on the environmental protection, strict enforcement will be the new normal

Action Plan for Transforming Iron & Steel Industry by MIIT

Standardization Requirement for Iron & Steel Industry (ver. 2015) by MIIT




Polarization is worsening

Percentage of steel production for main producers with various asset-liability ration in 2013

Percentage of steel production for main producers with various asset-liability ration in 2014

ALR below 70%ALR between 70% - 80%ALR between 80%-90%ALR above 90%

ALR below 70%ALR between 70% - 80%ALR between 80%-90%ALR above 90%




Profit top 20 reach

22.75 billion RMB

Profit top 20 reach

22.75 billion RMB Profit top 50 reach

11.9 billion RMB

Profit top 50 reach

11.9 billion RMBLoss top 16 reach

-11.83 billion RMB

Loss top 16 reach

-11.83 billion RMB

Total profit of 86 member enterprises of CISA reach 22.82 billion RMB in 2013Total profit of 86 member enterprises of CISA reach 22.82 billion RMB in 2013

Profit top 20 reach

31.95 billion RMB

Profit top 20 reach

31.95 billion RMBProfit top 55 reach

10.24 billion RMB

Profit top 55 reach

10.24 billion RMBLoss top 13 reach

-11.75 billion RMB

Loss top 13 reach

-11.75 billion RMB

Total profit of 86 member enterprises of CISA reach 30.44 billion RMB in 2014Total profit of 86 member enterprises of CISA reach 30.44 billion RMB in 2014

A number of enterprises are on the verge of existing the market. Marketized shutdown begins to take effect, which is conducive to improving capacity utilization. The government shall assist the closed enterprises to deal with staff relocation and asset disposal.




Creating fair

market

competition

Implementing the revised law and new standards on environmental protection, strict enforcement shall be the new normal, promoting enterprises to fulfill their responsibility in protecting the environment, complying with the revised law and standards and fair operation

Adopting the Standardization Requirement for Iron & Steel Industry (ver. 2015), improving and standardize enterprises, with the focus on environmental protection and energy consumption.

Adopting Action Plan for Transforming Iron & Steel Industry, promoting the development environment where enterprises share production elements, the market environment where business is operated by the law, and the fair and transparent market mechanism.




Action Plan for

Transforming

Steel Industry

Resolutely stop new an added productivity, refocus on optimizing the layout

Encouraging M&A, fostering advantage enterprises

Developing circular economy, promoting green development

Implementing innovation, promoting branding strategy

Promoting convergence and intelligence in steel manufacturing

Adopting go global strategy, elevating enterprises to global level

Enhancing market regulation, developing fair market environment




Expected outcome

of policy

implementation

Overcapacity alleviated

Improved convergence

Self innovation capacity enhanced significantly

Great outcome in M & A

Zero increase in total energy consumption, sharp decrease in total pollutant discharge


Thank you !

Shi Hongwei； (010)85111221； [email protected]


冶金工业经济发展研究中心 shi hongwei apr. 1,2015 policy environment analysis for...

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