Mixed-ownership reforms strengthen steel giant Baowu
State-owned China Baowu Steel Group's general manager said the nation's largest steelmaker has benefited from mixed ownership reforms, and will continue to introduce private and foreign investors into all of its subsidiaries.
"Over the past few years, Baowu has greatly enhanced its competitiveness through mixed ownership reform. This is the direction we are going to stick with," said Chen Derong, general manager of Baowu Group.
"Mixed ownership is the key to enhancing Baowu's vitality, competitiveness and capability for risk control."
As one of the nation's 10 State-owned enterprises to pilot mixed ownership reform, Baowu has increased its total non-State investment to 1.73 billion yuan ($275 million) since 2015.
Currently, nearly half of Baowu's subsidiaries have adopted mixed ownership structures, with the 249 firms' registered capital totaling 117.3 billion yuan.
The group reported more than 460 billion yuan in revenue last year, with its profits doubling to 14 billion yuan from a year earlier.
"Such a result was realized on the backdrop of the ownership reform," Chen said.
"Mixed ownership is just like steel making. Raw iron, nickel or chromium have little value individually, but once they are mixed together, the alloy will acquire special characteristics such as being stainless or very strong."
According to Chen, by bringing different investors and parties together, the enterprise will acquire new strengths, and will be able to operate and develop more healthily on the global stage.
Last June, Baowu opened up subscriptions of its wholly owned online steel transaction platform Ouyeel Co Ltd to partners and employees, raising 1 billion yuan.
By opening its shares to more institutions and individuals, Ouyeel is now further diversifying its business scope, optimizing its management and introducing more high-quality resources.
"It is difficult to strike a balance among all parties' interests, but this also strengthens the company's ability to solve all kinds of problems," said Jin Wenhai, senior vice-president of Ouyeel, who is also one of the employees selected to become a shareholder.
"Our goal is to make Ouyeel a fully market-oriented firm, and it does not matter if Baowu owns the largest stake," Chen said, adding that similar rules will apply to its other subsidiaries.
China's steel industry is currently undergoing restructuring and upgrades in terms of regional supply and demand, product structure, as well as steel manufacturing techniques, said Yu Hong, general manager of Four Rivers Investment Management Co Ltd.
The company is a fund that launched last year aiming to push forward the steel industry's restructuring and upgrade.
Baowu's Hwabao Investment Co Ltd and US-China Green Fund each hold a 25 percent stake in Four Rivers while WL Ross & Co holds 26 percent and China Merchants Finance Holdings Co Ltd 24 percent.
