“Big and Small†Cross-Regional Restructuring Mode or Regional Iron and Steel Enterprise Reorganization
The State Council Executive Meeting reviewed and approved in principle the adjustment and revitalization plan for the steel industry on the 14th. To speed up the adjustment and revitalization of China's steel industry, we must focus on controlling the total volume, eliminating backwardness, joint reorganization, technological transformation, and optimizing the layout, and push the steel industry to become stronger and stronger. This means that in the double dilemma of high industrial costs and weak demand, the Chinese steel industry will enter a big era of mergers and acquisitions in 2009.
Since 2008, the three major international iron ore giants and international shipping companies have continuously pushed up the ore price. There are steel roller coaster-type declines that last for several months and steel companies frequently reduce their losses and reduce losses. The establishment of a “strong, strong, and weak†type of large-scale steel aircraft carrier, even if it is not out of the fast-acting recipe for boosting the prosperity of the steel industry, it is also a rational use of resources and out of the old “low-cost, price-sharing†mode. Urgent choices, but how do we reach this end, we are faced with the "path choice" of "intra-region" or "cross-region" formed by the management system of steel enterprises and fiscal and taxation systems.
For the same purpose, different paths need to be taken, perhaps because of the special nature of the current steel industry in China. Experts said that in China's current "tax-sharing system" and the fiscal and taxation system for transfer payments, some local governments and enterprises have become a major obstacle to the cross-regional mergers and acquisitions of iron and steel companies because of concerns about the fiscal revenue that affects the region after mergers and acquisitions. Under this background, in the face of the merger and acquisition market in which the administrative and market forces are intertwined, the iron and steel industry has roughly faced two reorganization paths: the "big and small" cross-regional reorganization model represented by Baosteel and Wuhan Iron and Steel, and Hebei, Shandong Iron and Steel Group and other representatives of the "reorganization of steel companies in the region" model.
According to industry insiders, the first model follows market-oriented operating principles. After mergers and acquisitions, large-scale enterprises can quickly replicate management experience and resource advantages in acquired enterprises, which can quickly release production capacity and increase profits. It is also the mainstream of the integration of the three rounds of steel M&A in the United States, Japan, and Europe in the 20th century. The second model, which is characterized by the promotion of local governments, is easy to coordinate the interest relationships among governments at all levels, and the restructuring process is more efficient.
Since 2008, both models have developed rapidly in China's steel industry. The former includes Baosteel's integration of Guangzhou Steel and Handan Iron & Steel Co., Ltd. in June 2008. In September, Wuhan Iron & Steel Co., Ltd. contributed to the formation of Guangxi Iron and Steel Group, and Ma Steel Group recombined Fei Steel and Hualing Group to reorganize Jiangsu Tin Steel. The latter had March Steel. The integration of Shandong Iron and Steel Group with Laiwu Steel, and the “Taoyuan Sanjieyi†of Tangshan Iron and Steel, Handan Steel and Chengde Vanadium and Titanium in December. In addition, it is said that Jiangxi and other provinces are also considering to promote the reorganization of provincial steel companies.
Since the restructuring of cross-regional iron and steel companies involves the adjustment of complex interests among governments, enterprises, and employees among various local governments, according to the status quo of the steel industry, perhaps the current status of the two paths is not contradictory for a period of time, and it is difficult to say whether or not inferior. However, long-term development and market-oriented "big and small" models may gradually become dominant and will become mainstream. Experts said that the reorganization within the region has a certain defensive color, which has reduced the space for traditional large-scale steel enterprises to further carry out large-scale mergers and acquisitions. In particular, small-scale reorganization within the region cannot effectively increase the degree of concentration. Instead, it will cause market separatism.
At present, it seems that in the market and experts, it is more likely to overcome the administrative difficulties and move more across regional M&As. Luo Bingsheng, executive vice president of the China Iron and Steel Association, said that only the coordination and balance mechanism for the effective interests of M&A and restructuring of enterprises across all regions and provinces and cities can accelerate the merger and reorganization of steel companies. The vice general manager of Baosteel Group, Jia Baojun, also suggested that a market-based merger and reorganization model should be encouraged, and that the government should issue relevant general plans and specific guidance to encourage steel companies to implement cross-regional joint reorganization.
Perhaps as the experts of various parties say, after clarifying the policy and government factors and returning the merger and acquisition procedures and power back to the market, the centralized process of China's steel industry will converge in a convenient and efficient capital market, through mergers and acquisitions and mutual holding of shares. Such forms of multi-equity transactions form a highly efficient cooperation model with property rights as the link. At that time, some key issues that have plagued the industry for many years, such as the investment heat and capacity of the Chinese steel industry, the fluctuating production of steel prices, frequent setbacks in iron ore negotiations, and difficult industrial technology upgrades, may also be accompanied by a rise in concentration. New solution.
The State Council Executive Meeting reviewed and approved in principle the adjustment and revitalization plan for the steel industry on the 14th. To speed up the adjustment and revitalization of China's steel industry, we must focus on controlling the total volume, eliminating backwardness, joint reorganization, technological transformation, and optimizing the layout, and push the steel industry to become stronger and stronger. This means that in the double dilemma of high industrial costs and weak demand, the Chinese steel industry will enter a big era of mergers and acquisitions in 2009.
Since 2008, the three major international iron ore giants and international shipping companies have continuously pushed up the ore price. There are steel roller coaster-type declines that last for several months and steel companies frequently reduce their losses and reduce losses. The establishment of a “strong, strong, and weak†type of large-scale steel aircraft carrier, even if it is not out of the fast-acting recipe for boosting the prosperity of the steel industry, it is also a rational use of resources and out of the old “low-cost, price-sharing†mode. Urgent choices, but how do we reach this end, we are faced with the "path choice" of "intra-region" or "cross-region" formed by the management system of steel enterprises and fiscal and taxation systems.
For the same purpose, different paths need to be taken, perhaps because of the special nature of the current steel industry in China. Experts said that in China's current "tax-sharing system" and the fiscal and taxation system for transfer payments, some local governments and enterprises have become a major obstacle to the cross-regional mergers and acquisitions of iron and steel companies because of concerns about the fiscal revenue that affects the region after mergers and acquisitions. Under this background, in the face of the merger and acquisition market in which the administrative and market forces are intertwined, the iron and steel industry has roughly faced two reorganization paths: the "big and small" cross-regional reorganization model represented by Baosteel and Wuhan Iron and Steel, and Hebei, Shandong Iron and Steel Group and other representatives of the "reorganization of steel companies in the region" model.
According to industry insiders, the first model follows market-oriented operating principles. After mergers and acquisitions, large-scale enterprises can quickly replicate management experience and resource advantages in acquired enterprises, which can quickly release production capacity and increase profits. It is also the mainstream of the integration of the three rounds of steel M&A in the United States, Japan, and Europe in the 20th century. The second model, which is characterized by the promotion of local governments, is easy to coordinate the interest relationships among governments at all levels, and the restructuring process is more efficient.
Since 2008, both models have developed rapidly in China's steel industry. The former includes Baosteel's integration of Guangzhou Steel and Handan Iron & Steel Co., Ltd. in June 2008. In September, Wuhan Iron & Steel Co., Ltd. contributed to the formation of Guangxi Iron and Steel Group, and Ma Steel Group recombined Fei Steel and Hualing Group to reorganize Jiangsu Tin Steel. The latter had March Steel. The integration of Shandong Iron and Steel Group with Laiwu Steel, and the “Taoyuan Sanjieyi†of Tangshan Iron and Steel, Handan Steel and Chengde Vanadium and Titanium in December. In addition, it is said that Jiangxi and other provinces are also considering to promote the reorganization of provincial steel companies.
Since the restructuring of cross-regional iron and steel companies involves the adjustment of complex interests among governments, enterprises, and employees among various local governments, according to the status quo of the steel industry, perhaps the current status of the two paths is not contradictory for a period of time, and it is difficult to say whether or not inferior. However, long-term development and market-oriented "big and small" models may gradually become dominant and will become mainstream. Experts said that the reorganization within the region has a certain defensive color, which has reduced the space for traditional large-scale steel enterprises to further carry out large-scale mergers and acquisitions. In particular, small-scale reorganization within the region cannot effectively increase the degree of concentration. Instead, it will cause market separatism.
At present, it seems that in the market and experts, it is more likely to overcome the administrative difficulties and move more across regional M&As. Luo Bingsheng, executive vice president of the China Iron and Steel Association, said that only the coordination and balance mechanism for the effective interests of M&A and restructuring of enterprises across all regions and provinces and cities can accelerate the merger and reorganization of steel companies. The vice general manager of Baosteel Group, Jia Baojun, also suggested that a market-based merger and reorganization model should be encouraged, and that the government should issue relevant general plans and specific guidance to encourage steel companies to implement cross-regional joint reorganization.
Perhaps as the experts of various parties say, after clarifying the policy and government factors and returning the merger and acquisition procedures and power back to the market, the centralized process of China's steel industry will converge in a convenient and efficient capital market, through mergers and acquisitions and mutual holding of shares. Such forms of multi-equity transactions form a highly efficient cooperation model with property rights as the link. At that time, some key issues that have plagued the industry for many years, such as the investment heat and capacity of the Chinese steel industry, the fluctuating production of steel prices, frequent setbacks in iron ore negotiations, and difficult industrial technology upgrades, may also be accompanied by a rise in concentration. New solution.
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