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From the establishment of Baosteel to the unbearable iron ore negotiations in the past two years, numerous steel events have had a delicate connection with Mitsui and other companies.
The Chinese steel industry maintains many "world's best." Chinaâ€™s steel production has been ranked first in the world for nine consecutive years. China is the worldâ€™s largest steel producer and the largest steel consumer. However, a survey by the â€œGlobal Financialâ€ reporter found that such an â€œiron and steel spiritâ€ appears to be incongruous compared to the actual Chinese automotive steel and other high-end steel products.
It is reported that at present, domestic steel companies have limited production and technical capabilities in automotive steel projects, especially high-end automotive steel used in car production. They are also scarce, and more than 50% of automotive steel on the market is dependent on overseas imports. Among them, cold-rolled sheet technology, especially high-end automotive panels as â€œhigh-tech productsâ€, was selected by several foreign steel companies such as Luxembourgâ€™s Arsenal, Nippon Steel, South Korea's Pohang, and ThyssenKrupp Steel in Germany. Giants master.
In the face of such a global industrial pattern, Chinese steel companies have chosen to establish joint ventures with foreign companies. The "market-for-tech" approach popular in many industries has once again appeared in the steel sector.
As a result, Japan's Mitsui Financial Group successfully entered the long-awaited Chinese steel industry.
A few days ago, â€œGlobal Financialâ€ reporter interviewed Mr. Yamaguchi Yamaguchi, deputy general manager of Mitsui & Co., Ltd. in China. Because of language differences, it is difficult to communicate.
According to Yamaguchi's introduction, Mitsui cooperated with Chinese steel companies early on. In the early stage of cooperation, Chinese steel companies were still â€œprimitiveâ€ and were only implementing agencies under the government's plan. They did not have the concept of customer demand orientation. "Mitsui brings advanced market concepts to Chinese steel companies. Of course, we will also benefit from this big market in China."
Borrowed by Baosteel
Through this line of Baosteel, Mitsuiâ€™s influence has been extended more widely in Chinaâ€™s steel industry.
The cooperation between Mitsui and the Chinese steel companies began with the cooperation with Shanghai Baosteel. â€œThe cooperation with Baosteel has always been very pleasant and very close,â€ Yamaguchi Kazuo told Global Economics.
Nippon Steel has a world-class R&D capability in automotive panels. The first step in the joint venture between Mitsuiâ€™s consortium and a Chinese steel manufacturer was completed by Nippon Steel. On November 9, 2005, Baosteel, Nippon Steel Corporation and Arcelor Corporation jointly invested in the construction of Baosteel Nippon Steel Automotive Plate Co., Ltd. with a total investment of 6.5 billion yuan and a registered capital of 3 billion yuan. Among them, Baosteel contributed 50%, Nippon Steel 38%, and Arcelor 12%. The company's annual production scale reaches 1.7 million tons of automotive panels, and the main production equipment and core technologies are from Nippon Steel.
Baosteelâ€™s share of the automotive plate market in China is quite large. In 2005, Baosteel's representative product, cold-rolled auto plate, sold 1.726 million tons for the year. Its domestic market share increased from 47.3% in 2004 to 51.6%. FAW's trucks, Xiao Hongqi sedan, Jetta sedans, Shanghai Volkswagen's Santana sedans, as well as Shenlong, Guangzhou Honda, and Fengshen Auto all make use of Baosteel's auto plates in large quantities.
By supplying steel plates to Japanese auto companies such as Toyota and Honda, Nippon Steel has achieved a share in the Chinese market. Japanese steel companies have traditionally provided Japanese automakers with a supporting steel plate. Of course, this is no exception in China's emerging automotive market.
The cooperation with Baosteel has laid a strategic fulcrum for Mitsui to incite the Chinese market. With the influence of Baosteel, Mitsuiâ€™s forces have spread in the Chinese steel industry.
If a joint venture with a Chinese steel producer is viewed as a tree planted by the Mitsui Consortium in China, many downstream joint ventures in steel are the roots of the tree's survival.
Bai Yimin, author of "Mileai Empire Revelation" analyzed "Global Finance" reporters. On the one hand, Mitsui & Co., Ltd., with its excellent logistics management technology and experience, established a steel joint venture supply chain with Chinese companies; on the other hand, the Mitsui Financial Group affiliated Toyota. Automobiles and other Japanese companies purchase large quantities of steel joint venture products. Through these two major means, the influence of the Mitsui Financial Group has been consolidated and developed.
Previously, on December 2, 2002, Mitsui & Co., Ltd., the world's largest integrated trading company, had established a joint venture with Baosteel to establish Shanghai Baojing Steel Processing and Distribution Co., Ltd. Shanghai Baojing has a registered capital of 12.25 million U.S. dollars and Mitsui & Co., Ltd. owns a 35% stake in metal materials processing, distribution, and management services.
In accordance with its strategic plan, in the three years after its establishment, it will establish a processing center system in major steel consumption areas in China, and build a logistics system that can provide rapid steel distribution and high-quality services to users both in China and abroad. The goal of processing 3 million tons a year.
Today, Shanghai Baojing has achieved its goal of becoming bigger and stronger in the logistics market. Its subordinate Chongqing Baojing, Guangzhou Baojing, Fuzhou Baojing, Hangzhou Baojing, Eastern Division, Wuxi Baojing, and Qingdao Baojing have formed a certain influence in the local area. After years of development, the appeal of Baojing in the high-grade steel fields such as automotive sheet metal and household electrical appliances has been very strong.
Mitsui & Co., Ltd. has not only established a joint venture with Baosteel to build Shanghai Baojing. Mitsui's products are always involved in the process of Shanghai's acquisition of local companies. In Mitsuiâ€™s Guangzhou Baojing, Fuzhou Baojing Hangzhou Baojing and Wuxi Baojing, Mitsuiâ€™s products all have shares and the average shareholding is about 30%.
With strong financial and technical strength, and the demand of the financial and consortium companies for steel products, Mitsuiâ€™s influence and control over the Takao Line is very clear.
The Mitsui Financial Group has basically controlled the high-end steel market in East China and South China through its cooperation with Baosteel. In fact, the Mitsui Financial Group's goal is far more than that. It is difficult to satisfy its ambitions for the Chinese steel market just by cooperating with Baosteel. Mitsui Financial Group also appeared in the northeast and central China regions where the other two major steel manufacturing and consumption regions are located.
In northeast China, Anshan Iron and Steel Group, Changchun First Automobile Group and Mitsui & Co., Ltd. jointly formed Changchun FAW Well Steel Processing and Distribution Co., Ltd.. In an investment of up to 150 million yuan, Anshan Iron and Steel accounts for 50% of the company's shares. Changchun FAW and Mitsui The properties each account for 25%. The joint venture plans to produce 200,000 tons of automotive steel plates annually, mainly providing automotive steel products and various processing and distribution services. The company plans to start production in April 2006.
In Wuhan, where the provinces were wanted, as early as December 1995 before China's accession to the WTO, Mitsui & Co. established a joint venture with Wuhan Iron & Steel (Group) Co., Ltd. to establish Wuhan Hingje Steel Processing Co., Ltd. With a registered capital of RMB 50 million, which is mainly engaged in deep processing of steel products. Products are widely used in motors, transformers, large generators and household appliances and many other products and industries. The annual processing capacity is 50,000 tons.
It is reported that Mitsui's other major joint ventures in China include: Nantong Baosteel Xinri Steel Co., Ltd., Ningbo Baoxin Stainless Steel Co., Ltd., Jiangsu Tokyo Cable Company, and Beixin Housing Co., Ltd.
Among Japanese companies, there are more than one consortium with ambitions such as Mitsui for the Chinese market, and Japanese companies interested in the Chinese steel industry are not just Nippon Steel. One of the largest steel companies in the world, Japan JFE Steel Co., Ltd. and Guangzhou Iron & Steel Enterprise Group Co., Ltd. signed a cooperation agreement to establish a joint venture to build a steel plate production project with a total investment of US$1 billion, and JFE and Guangzhou Steel respectively have 51 % and 49% of shares. At present, the joint venture has a galvanized sheet production line with an annual output of 400,000 tons, which mainly provides high-quality thin sheets and related services for the automotive, home appliance and construction industries. JFE's investment move is precisely the great demand brought about by the strong production capacity in the Guangzhou region.
It is understood that in 2005, the surrounding area of â€‹â€‹Guangzhou City has a production capacity of 550,000 cars, and the Pearl River Delta region is one of the centralized production areas of household electrical appliances in China and requires a large number of high-grade galvanized sheets.
All industrial chain deployment
Mitsui tried to "influence" China's iron and steel industry by introducing advanced technologies and supply chain management through the all-round infiltration of the upstream and downstream industrial chains of the Chinese steel industry, and laying out iron ore sources and steel users at the end.
In Japan, Mitsui is called an "industrial organizer." Does Mitsui also intend to become the "industry organizer" of the Chinese steel industry? Yamaguchi Kazuo did not respond positively to the question from "Global Financial" reporter.
Mitsuiâ€™s approach is very special, trying to â€œimposeâ€ the Chinese steel industry through the full penetration of the upstream and downstream industrial chains of the Chinese steel industry.
Mitsui's core company, Mitsui & Co., Ltd. has invested in high-end steel, auto parts, color steel, and other fields. Toyota, one of the consortium's pillar companies, is directly involved in the Chinese steel market. Through the cooperation of these two major companies, the layout of the Mitsui Financial Group in the Chinese steel industry has been completed and effectively operated:
On April 20, 1994, Mitsui & Co., Ltd., Baosteel Group, Baoshan District Yuepuzhen Industrial Co., Ltd., and Italy Seco Consulting Co., Ltd. jointly established Shanghai Yida Da Tu Steel Products Co., Ltd., with a total investment of US$9.52 million. It was completed and put into production at the beginning
On April 25, 1997, Guangzhou Pacific Tinplate Co., Ltd., a joint venture of Mitsui & Co., Ltd., Nippon Steel, Itochu Marubeni Corporation, Hong Kong Beihai Group, Guangzhou Economic and Technological Development Zone Industrial Development Group Co., Ltd., and Guangzhou Brewery, was put into production. With an annual output capacity of 160,000 tons of high-quality tinplate, the products are mainly used for the packaging of beverage cans, chemical cans, food cans and other containers.
On September 16, 1998, Mitsui & Co., Ltd., Shanghai Shipyard, and Kawada Industrial Co., Ltd. jointly funded the establishment of Shanghai Sheung Chuantian Steel Structure Co., Ltd. Among them, Shanghai Shipyard is one of the 500 large state-owned enterprises in the country.
In April 2002, Toyota decided to purchase steel parts for door parts from Shanghai Baoshan Iron & Steel, China's largest steel company, at a cheaper price when it decided to manufacture passenger cars in China. In the future, it will also consider purchasing surface-treated steel sheets for car bodies.
On September 29, 2003, Mitsui & Co., Ltd., Japan's YOROZU and Baosteel International invested RMB 217 million in a joint venture to build Guangzhou Wanbaojing Auto Parts Co., Ltd. The company has a joint venture period of 50 years and is mainly engaged in the stamping and assembly of automotive suspension components and the manufacturing and sales of associated components. The production capacity can meet the demand for the accessories of 220,000 cars per year, and is mainly provided by Dongfeng Nissan Automobile.
In December 2003, Toyota selected Shijiazhuang Steel as its main supplier of steering axles for automobiles.
On February 10, 2004, Toyota Tsusho Corporation registered Tianjin Toyota Tsusho Steel Co., Ltd. in Tianjin TEDA Development Zone to engage in the cutting and processing business of steel plates and directly support the second Toyota plant. The registered capital of the company is 9.66 million US dollars and the total investment is 24.15 million US dollars. The company is the second steel processing center invested by Toyota Tsusho Corporation in Tianjin after the Tianjin Toyota Steel Co., Ltd., which was established in 1995. It is responsible for the centralized procurement, production supply, and quality management of Toyota's steel products. Toyota designated supplier of steel procurement and processing business.
On May 19th, 2005, Mitsui & Co., Ltd., Shijiazhuang Iron & Steel Co., Ltd., Japan's Kobe Steel Co., Ltd. and Kobe Steel Co., Ltd. and Japan's Sangriji Co., Ltd. cooperated in the "rapid iron" manufacturing project, with a total investment of 99 million U.S. dollars and 36.27 million U.S. foreign capitals are planned to be utilized. Dollars.
In June 2006, Guangzhou Shengxu Auto Parts Co., Ltd., a joint venture established by Mitsui & Co. and Japan's major steel pipe manufacturer Asahi Steel Tube Works, will start operations. The company has a registered capital of 35 million yuan, Mitsui & Co. and its subsidiary in Hong Kong contribute 30%, and Nippon Steel invests 20%. The establishment of the company is mainly to meet the demand of Japanese auto companies for steel pipes. ......
Recently, Mitsui China Trading Co. passed the approval of the Ministry of Commerce, obtained a business license, and can engage in trade work in China. "But not the same, it is very difficult for a large company to get a license. It needs approval from the Ministry of Commerce, but Mitsui gets it." Yamaguchi Kazuo told Global Financial News.
In the following figure, one can intuitively feel the size and depth of Mitsui's layout in the Chinese steel industry.
Over time, the power of Mitsuiâ€™s consortium in the Chinese steel industry has become more and more important. Today, it cannot be ignored.
Through this all-round infiltration, the Mitsui Consortium has taken an extremely favorable initiative in the process of cooperation with Chinese steel-related companies. Whether it is the price of iron ore or the merger and reorganization of steel companies, Mitsui can deal with it calmly and seek its own best interests in a chaotic situation.
"In the face of Mitsui Weaving's large network, the domestic steel giants who have been controlled by the entire industry chain may only be reduced to hard-working guys." An industry source told the "Global Financial" reporter.
Iron ore Chen
The sudden sensation in the price of iron ore in 2005 that was sensational has fully reflected the serious consequences of lack of control ability.
The development of the Chinese steel industry cannot be separated from the supply of imported iron ore. In the face of the iron ore demand pressure brought about by the rapid expansion of the steel industry in recent years, imports have become the only option, and offshore iron ore trading has become the main import route.
In 2003, all 520 million tons of iron ore in the global maritime trade mainly came from the following countries: Australia 36%, Brazil 35%, India 9%, South Africa 5%, Canada 4%, other countries 11%.
Among them, the largest suppliers are: 35% of Brazil's CVRD, 25% of Rio Tinto (Australia), and 18% of BHPBillion (Australia). The three companies account for 78% of the global iron ore sea trade. Similar to the oligopoly of the supply side, the iron ore consumer is also composed of a number of ultra-large steel companies, and Chinaâ€™s Baosteel is also one of them. China, known as the "global magnet," is currently the largest buyer of the world iron ore market. More than one-third of the iron ore in international trade is sold to China.
China's iron ore imports mainly come from Australia, Brazil, India, South Africa, Peru and Canada. Among them, Australia, Brazil, and India are the major suppliers. In 2003, China's iron ore imports from the three countries reached 58.13 million tons, 38.4 million tons and 32.2 million tons, respectively.
There are Japanese joint ventures in several major iron ore exporting countries. Take Nippon Steel as an example, it holds a 25.4% stake in the Nibrasco mine belonging to Vale, and owns 10.5% and 28.2% of the shares in Rio Tinto's two mines respectively.
Throughout the Australian mining area, the names of Japanese companies such as Nippon Steel, Mitsui, Sumitomo, and Itochu can be seen everywhere. They are gradually controlling the upstream industry of the steel industry. Although they cannot independently price iron ore, they can still exert a considerable degree of influence on the formation of prices. Of course, they cannot exclude the possibility that they and the iron ore giants will benefit from the increase in price.
In contrast, Chinese companies have not gained substantial control over the global steel industry chain.
After the 2005 crisis, Chinese companies took the initiative to actively study the â€œNippon Steel Modelâ€ and established joint ventures with iron ore giants in an attempt to reduce possible losses in price fluctuations. However, the joint venture boom represented by large steel plants has not been able to secure the iron ore pricing power that the domestic steel industry aspires to.
When the iron ore price negotiations began in 2006, Baosteel, with the â€œfull authorityâ€ of the Chinese Steel Associationâ€™s Shang Fangbao, had a true first time in the global iron ore buyer representative camp formed with Arcelor and Nippon Steel. The right to speak. In the face of the iron ore giant's tough price hikes, Baosteel has remained unmoved, and both Nippon Steel and Arcelor have given Baosteel a face, and have never led negotiations.
What can be disappointing is that at the end of the negotiations, the Chinese steel companies had to give in to the iron ore giants once again and accepted the request for an increase of 19%. It can thus be seen that the formation of the world iron ore trade pattern and balance of interests cannot be resolved through several negotiations and joint ventures. In this respect, the practices of Japanese companies are indeed worthy of in-depth study and study.
In addition to controlling the source of iron ore production, Japanese companies also attach great importance to the transport link. For example, the Mitsui Financial Group transported large amounts of iron ore to Chinese steel companies through its subordinate Mitsui, which further increased its control over upstream iron ore resources.
By the end of 2005,
Maanshan Iron and Steel Company signed a 10-year contract with Osaka Merchant Shipping Corporation Mitsui Shipping Co., Ltd. (MOSK) and plans to ship 500,000 tons of iron ore per year from Brazil. Also in 2005, Baosteel signed a long-term transportation contract with Mitsui, a Japanese merchant ship: In 15 years, Mitsui, a merchant ship, will be responsible for transporting 5 million tons of iron ore to Shanghai each year. Although this is only a beginning, the implicit dependencies should still be noticed.
When Chinese steel companies rejoiced for production and sales, the subsidiaries of the Mitsui Financial Group also benefited from the strategic deployment of the Mitsui Financial Group.
The layout of the Mitsui Financial Group in the Chinese steel industry clearly shows the following characteristics:
1. Investment is based on technology leadership.
China's iron and steel industry has a relatively low level of production technology and a relatively low technological content. Taking the plate (band) production heat in 2005 as an example, although the total annual production exceeded 100 million tons, it still focuses on common steel materials.
The new Nippon Steel is spotting the reality that China's steel production must import a large number of high-end products. It has provided production equipment and technology as a precursor to the Chinese steel industry.
A review of large-scale domestic steel mills almost all introduced equipment and technology from Nippon Steel: almost all of Baosteel's production equipment and technology were imported from Nippon Steel; the production equipment and technology of Wugangâ€™s ace silicon steel products came from Nippon Steel; Shandong Laigangâ€™s medium-sized rolling mill industrial equipment and electrical equipment come from Nippon Steel and Toshiba respectively; Taigangâ€™s 1549mm hot-rolling technology is provided by Nippon Steel......
From the perspective of the Mitsui Financial Group, the low technology of Chinese collaborators is undoubtedly a great thing. For Chinese companies and the national economy, this is a very worrying matter. "Whether subjectively or objectively, foreign investors do not have enough incentive to transfer their advanced technology to Chinese enterprises. History has proved this and it will prove it in the future."
2. The shares held by the Mitsui Financial Group's subsidiaries in the joint venture implied the law.
In most of the joint ventures listed in this article, not only does Nippon Steel directly participate in holdings and providing technology, but Mitsui's core Mitsui & Co. also participates in holding 5% to 10% of the shares. This is very noteworthy. Although Mitsui & Co., Ltd. is the world's largest comprehensive trading company, there is actually no steel company in the iron and steel industry.
In addition to investing capital, Mitsui has actually played a more important role in organizing and coordinating all joint ventures with the Mitsui Financial Group and downstream related companies.
3, pays great attention to government public relations.
In China, steel is a highly monopolistic industry. If investors want to enter such industries, they must understand and even anticipate the governmentâ€™s strategic intentions and possible trends, and establish a harmonious relationship with the government of the investment place and even higher-level governments, so that the promotion of investment projects is in line with the wishes of investors. .
The successful completion of the joint venture project between JFE and Guangzhou Iron & Steel Enterprise Group reflects the profound understanding of Japanese companies on China's national conditions. In the government's strategic plan, Nansha, which is located at the heart of Zhusanzhou and connects Guangdong, Hong Kong and Macao, will be built as a worldwide manufacturing center. Within the region will be built steel, shipbuilding, petrochemical, automotive base and high-tech industrial park and transportation, logistics center.
With the great attention and support of the Guangzhou Municipal Government, JFE and the senior management of Guangzhou Iron and Steel Group have repeatedly exchanged visits and participated in negotiations. After a short period of five months, the feasibility study was completed and an agreement was reached. Secretary of the Guangzhou Municipal Party Committee Lin Shusen and Mayor Zhang Guangning presided over the signing ceremony of the project. It is not so much the cooperation between JFE and the Guangzhou Iron and Steel Enterprise Group as it is that the investment behavior of JFE has hit the needs of the Guangzhou government.
4. There are inputs in every link of the steel industry chain, and the degree of correlation is high.
In order to produce automotive steel, the Mitsui Financial Group established a joint venture with Baosteel; to facilitate the circulation of steel products, the Mitsui Financial Group established Shanghai Baojing; for the needs of Toyota Motor and other Japanese automobile manufacturers, the Mitsui Financial Group established Guangzhou Shengxu Auto Parts Company. And Guangzhou Wanbaojing Auto Parts Co., Ltd. and other ancillary supply companies. These companies are interlocking and cooperate with each other.
When Chinese steel companies rejoiced for production and sales, the subsidiaries of the Mitsui Financial Group also benefited from the strategic deployment of the Mitsui Financial Group in China.
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Taizhou Chendi Electromechanical Co., Ltd. , https://www.chinachendi.com