Post on 19-Dec-2015
By
Ai Baojun
By
Ai Baojun
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOE reform
SOE reform review
Baosteel in transition
Contents
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOE reform --Economic development
0
20000
40000
60000
80000
100000
120000
1978 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
GDP
90
95
100
105
110
115
120
GROWTH
GDPgrowth
From:China Statistics Abstract 2002(0.1bn yuan)
1.China achieved sustainable,rapid economic growth
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
•GDP 9.4%•Capital investment 16.6%•Fiscal revenue 12.3%•Fiscal expenditure 13.03%
•GDP 9.4%•Capital investment 16.6%•Fiscal revenue 12.3%•Fiscal expenditure 13.03%
Average annual growth
between 1979 and 2001
The macro-background of SOE reform -Economic development
Tertiary industry contribution to GDP increased from 23.7% in 1978 to 33.6% in 2001, and imbalance in economic development partially corrected
Tertiary industry contribution to GDP increased from 23.7% in 1978 to 33.6% in 2001, and imbalance in economic development partially corrected
From:China Statistics Abstract 2002
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
0% 20% 40% 60% 80% 100%
1978
1980
1985
1990
1995
1997
1999
2000
2001
First industry sector
Second industry sector
Tertiary industry sector
2.Economic growth quality improved notably
3.People’s living standard greatly improved
From:China Statistics Abstract 2002,(Unit : yuan)
•Average GDP per capita increased from 379 yuan(US$45)in 1978 to 7543 yuan(US$912)in 2001•Per capita net income increased by 3 times in urban household and by 4 times in rural household•The balance of individual deposits increased by 349 times•Average consumption expenditure per capita increased from 184 yuan(US$23)to 3608 yuan(US$430)。
•Average GDP per capita increased from 379 yuan(US$45)in 1978 to 7543 yuan(US$912)in 2001•Per capita net income increased by 3 times in urban household and by 4 times in rural household•The balance of individual deposits increased by 349 times•Average consumption expenditure per capita increased from 184 yuan(US$23)to 3608 yuan(US$430)。
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD The macro-background of SOE reform
– Economic development
0
1000
2000
3000
4000
5000
6000
7000
8000
1978 1980 1985 1990 1995 1997 1999 2000 2001
Per capi ta GDP
Personal expendi ture
Bal ance of i ndi vi dual deposi t
Unit:1bn yuan
4.Effective macro-economic policy propelled rapid economic growth
Under the situation of global economic downturn and more and more fierce competition worldwide,Chinese government focused on domestic market ,adopted effective policy of aggregate supply and demand and structural adjustment,resulting in sustainable economic growth.
Under the situation of global economic downturn and more and more fierce competition worldwide,Chinese government focused on domestic market ,adopted effective policy of aggregate supply and demand and structural adjustment,resulting in sustainable economic growth.
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOEs reform ---- Economic development
Boost domestic effective demand:•51 billion Yuan treasury bonds issued within 4 years to improve infrastructure ,such as road ,power station and telecommunication.
•7 interest rate cuts ; increase money supply and consumption credit.
Boost domestic effective demand:•51 billion Yuan treasury bonds issued within 4 years to improve infrastructure ,such as road ,power station and telecommunication.
•7 interest rate cuts ; increase money supply and consumption credit.
Enhance effective supply :
•Adjust industry policy
Adjust ownership structure
•Standardize corporate governance
Enhance effective supply :
•Adjust industry policy
Adjust ownership structure
•Standardize corporate governance
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOE reform ---- System transforming
Reform fields :•Planning system•Investment system•Fiscal system•Reform of government institutes,education system,housing system.•Enterprise system reform
Reform fields :•Planning system•Investment system•Fiscal system•Reform of government institutes,education system,housing system.•Enterprise system reform
Reform track :•From 1978,starting with the farm land contracting out system.•In 1984,reform goal to establish a socialist planned economy was set.•In 1993,reform goal to set up socialist market economy system was put forward.•In 1997,clarified the socialist market economy system as “Give first place to state-ownership ,while multiple ownerships coexist
Reform track :•From 1978,starting with the farm land contracting out system.•In 1984,reform goal to establish a socialist planned economy was set.•In 1993,reform goal to set up socialist market economy system was put forward.•In 1997,clarified the socialist market economy system as “Give first place to state-ownership ,while multiple ownerships coexist
Basic framework of a socialist market economy has been established.The progressive reform is adapted to Chinese domestic conditions ,and notable results were achieved in establishing the economic system with Chinese characteristics
1. Gradually promote economic reform
From:China Statistics Abstract 2002
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOE reform ---System transforming
2.Reform result--- Non-state owned sector developed rapidly
Employment structure change
31. 91
78. 32
0
20
40
60
80
100
1978 1980 1985 1990 1995 1997 1999 2000 2001
Non-state owned
State-owned
In 2001,non-state owned enterprises represented 71.8% of a total of 169 thousand enterprises, providing jobs of 50% of the workforce ,and also serving as a major source of employment of the laid-off workers from SOEs.
In 2001,non-state owned enterprises represented 71.8% of a total of 169 thousand enterprises, providing jobs of 50% of the workforce ,and also serving as a major source of employment of the laid-off workers from SOEs.
From:China Statistics Abstract 2002
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOE reform --System transforming
2.Reform result—Non-state owned sector developed rapidly
Ownership structure of enterprises 2001
0 20 40 60 80 100 120
Tax
Assets
Total loss
Total profit
Sales income
SOE
Stock company
Foreign invested
¼ of GDP comes from non-state owned sector,which is becoming the important propelling force of Chinese economic growth and urbanization.
¼ of GDP comes from non-state owned sector,which is becoming the important propelling force of Chinese economic growth and urbanization.
From:China Statistics Abstract 2002. (Unit:0.1 bn USD)
Chinese government adopted the policy of opening to the world,and cut tariff and non-tariff barriers sharply.Total amount of imports and exports has increased 25 times and the annual average imports and exports increases were 14.46% and 15.46% respectively within the past 23 years.
Chinese government adopted the policy of opening to the world,and cut tariff and non-tariff barriers sharply.Total amount of imports and exports has increased 25 times and the annual average imports and exports increases were 14.46% and 15.46% respectively within the past 23 years.
0 1000 2000 3000 4000 5000 6000
1978
1980
1985
1990
1995
1997
1999
2000
2001
0
1000
2000
3000
4000
5000
60001 2 3 4 5 6 7 8 9
I mport
ExportTotal
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
The macro-background of SOE reform ---The policy of opening to the world1.Foreign trade volume increases
sharply
From:China Statistics Abstract 2002.(Unit: 0.1bn USD)
Foreign direct investment(FDI)and international loans increased notably;foreign exchange reserve increased sharply。
Foreign direct investment(FDI)and international loans increased notably;foreign exchange reserve increased sharply。
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD The macro-background of SOE reform
--The policy of opening to the world2.International capitals influx
100
468. 8
2121. 65
0
500
1000
1500
2000
2500
1979-1982
1985 1990 1995 1997 1999 2000 2001
Loan
FDI
Forei gn exchange reserve
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD The macro-background of SOE
reform --Problems
1.Government faces challenges after WTO entryChina needs to accelerate its government function transformation process,laws and regulations suitable to a fully-opened economy need to be improved.
2.Reforms of investment system and financial system have a long way to go
The micro-economy vigor and efficiency have room to be improved ,and investment from private sector is to be further activated 。
3.Population increase and employment pressure The natural population growth and the rehiring of laid-off employees is putting increasing pressure on employment.
4.Inharmonious development between economy and environment
Economic growth has some negative influence on ecological environment.
The macro-background of SOE reform
SOE reform review
Baosteel in progress
Contents
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
SOE reform review----- Four phases
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Goal:making SOEs be independent business entities with sole responsibility for profits or losses.
Goal:making SOEs be independent business entities with sole responsibility for profits or losses.
Initial Phase1978-1984
Initial Phase1978-1984
Full-implementationPhase1984-1992
Full-implementationPhase1984-1992
Regime innovationPhase1992-2001
Regime innovationPhase1992-2001
Core competence Building phase2001--
Core competence Building phase2001--Aiming at
promoting enterprise vigor; adopted decentralization and profit sharingpolicy
Aiming at promoting enterprise vigor; adopted decentralization and profit sharingpolicy
Aiming at establishing modern enterprise management system with clear ownership, definite rights and duties, and independent enterprise operation
Aiming at establishing modern enterprise management system with clear ownership, definite rights and duties, and independent enterprise operation
Aiming at cultivating international competitiveness of conglomerates by furthering enterprise system reform .
Aiming at cultivating international competitiveness of conglomerates by furthering enterprise system reform .
SOE reform review ---- I & II Initial and full-implementation phases
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
• By taking the measures of decentralization and profit sharing,profit and tax swap,contracting out system ,charter business and a few enterprises’ share holding system pilot reform,workers were motivated and enterprise vigor were agitated .
•However,effective supervision and incentive system were not implemented in the enterprises
• By taking the measures of decentralization and profit sharing,profit and tax swap,contracting out system ,charter business and a few enterprises’ share holding system pilot reform,workers were motivated and enterprise vigor were agitated .
•However,effective supervision and incentive system were not implemented in the enterprises
Average staff income from 1978 to 1992
2878
2284
644506
2109
1681
0
500
1000
1500
2000
2500
3000
3500
1978 1980 1985 1990 1991 1992
SOECol l ect i ve
State-
From:China Statistics Abstract 2002(Yuan)
SOE reform review---- III Regime innovation phase
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Background
•Adjust the ownership structure
•Keep the control powers of SOEs in sectors crucial to national economic life ,such as national security,military industry,public goods,and social welfare.
Background
•Adjust the ownership structure
•Keep the control powers of SOEs in sectors crucial to national economic life ,such as national security,military industry,public goods,and social welfare.
Reform measures
•Separate functions of government and enterprises;
•Break industry monopoly;
•Assets restructure;
•Encourage M&A,normalize bankruptcy , and carry out layoffs’ reemployment.
Reform measures
•Separate functions of government and enterprises;
•Break industry monopoly;
•Assets restructure;
•Encourage M&A,normalize bankruptcy , and carry out layoffs’ reemployment.
SOE reform review---- IV Core competitiveness building phase
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Edges Disadvantages Measures
Domesticcomparison
•Profit and growth•Technology equipment•Capital strength•Employee quality•New product R&D and its growth•Policy support
•Exports and its growth•System and mechanism•Social responsibility and burden•Concept and culture
•System reform•Mechanism reengineering•Breed cultures•Going-out strategy
Globalcomparison
•Market growth and potential•Entrepreneurship •Labor cost
•Output efficiency•Capital strength•Technology equipment•Intangible assets•Financial service•Government efficiency•Citizen qualifications•Infrastructure
•Core competitiveness•Technological innovation•Marketing ability•Brand and patent•Financial initiatives•Public service•Integrity culture
Conglomerates’ competitiveness
SOE reform review---- Core competitiveness building phase
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Reform measures
•Perfect corporate governance system ;
•Promote management transparency ;
•Change operational system completely;
•Enhance marketing ability ;
•Accelerate the establishment of technological innovation system;
•Foster ability of global operation
•Advocate business integrity ;
Reform measures
•Perfect corporate governance system ;
•Promote management transparency ;
•Change operational system completely;
•Enhance marketing ability ;
•Accelerate the establishment of technological innovation system;
•Foster ability of global operation
•Advocate business integrity ;
Goal
Build a batch of large companies and conglomerates with famous brands, intellectual property, and strong core competitiveness.
Goal
Build a batch of large companies and conglomerates with famous brands, intellectual property, and strong core competitiveness.
The macro-background of SOE reform
SOE reform review
Baosteel in progress
Contents
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Began Began buildingbuilding
Phase3 put Phase3 put into useinto use
Phase1 put Phase1 put into useinto use
Phase2 put into Phase2 put into useuse
Allied with Allied with ShanghaisteelShanghaisteel
Baosteel Baosteel Ltd Ltd foundedfounded
Baosteel Ltd IPOBaosteel Ltd IPO
78.12 85.09 91.06 98.11 00.02 00.07 00.12 01.06 78.12 85.09 91.06 98.11 00.02 00.07 00.12 01.06
Baosteel in progress --Development track
Phase 3 assets Phase 3 assets acquisitionacquisitionWorld-class
production and technology facilities
World-class production and technology facilities •Sedan sheets
CR electric steel
•Appliance steel
•Tin plate(DI)•Pipeline steel Construction steel Shipping container steel
Seamless pipe slab
World-class BF and RH technology
World-class BF and RH technology
The 7th steel makers in the world with annual output of 11.5 mn tons and 19 mn tons of steel in the group.
The 7th steel makers in the world with annual output of 11.5 mn tons and 19 mn tons of steel in the group.
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Provide high-tech and high-value-added products such as CR,HR,and seamless steel tubes
Provide high-tech and high-value-added products such as CR,HR,and seamless steel tubes
Baosteel in progress --Operation performance
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Steel output
0
300
600
900
1200
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Steel output Sales income Total profit EBI DTA ROE EPS
11.51mn tons 29.2bn yuan 3.7bn yuan 8.4bn yuan 9. 74% 0.2yuan
Main performance indexes in 2001
Baosteel in progress --Domestic market position
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Market share of main products
62%
30%
40%
58%
24%28%
24%
0%
20%
40%
60%
80%
Sedan sheets Oi l pi pe Steel f orhousehol del ect r i cs
Pi pel i nesteel
Ti n pl ate Coat i ngpl ate
HR
20002001
Baosteel in progress--Reform practice宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
•Core business of steel Baosteel Ltd. made IPO at Shanghai Bourse; Purchased good assets among group•Core competence Strategic Goal:Build Baosteel into the most competitive steel enterprise•System building Corporate governance,Independent directors, Transparency,Integrity•Internal management ESI(Enterprise system innovation)
•Core business of steel Baosteel Ltd. made IPO at Shanghai Bourse; Purchased good assets among group•Core competence Strategic Goal:Build Baosteel into the most competitive steel enterprise•System building Corporate governance,Independent directors, Transparency,Integrity•Internal management ESI(Enterprise system innovation)
Adapted to regime reform
•Strengthen strategic management: Seek opportunities to expand rapidly in domestic and international markets•Capital input:Invest to improve product quality,upgrade the product structure,and reduce cost•Management innovation:Implement the engineering of Enterprise system innovation(ESI) which orients business processes•Technological innovation strategy:Satisfying customers’ demands continually•Marketing tactics:Customer-oriented,rapid response,and technological service
•Strengthen strategic management: Seek opportunities to expand rapidly in domestic and international markets•Capital input:Invest to improve product quality,upgrade the product structure,and reduce cost•Management innovation:Implement the engineering of Enterprise system innovation(ESI) which orients business processes•Technological innovation strategy:Satisfying customers’ demands continually•Marketing tactics:Customer-oriented,rapid response,and technological service
Management changing measures
Enterprise system structure model of Baosteel
Standardization of applied regulations
Organization design /Change management /Culture building
Perfect and steady operations in pursuit of six sigma
CIS Platform
Production and
distribution core
business process
Corporate Value
Data warehouse/ Data development/ Knowledge management
Strategic analysis and decision making
Science&Technolo
gy managem
ent business process
Procurement
management
business process
Finance managem
ent business process
Logistics managem
ent business process
Human resource managem
ent business process
Strategy manage
mentbusiness process
Baosteel in progress--Management practice
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Baosteel in progress -- Operate globally
Globalization of domestic
marketGlobalization practice
Global investment
Global cooperation
Utilization of global resources
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
•Ranked first in “Top 100 Chinese listed companies 2000” •Listed at the top of National Quality Control Award 2001•Ranked first in “MVA Ranking of Listed companies 2001”•One of top 50 enterprises which are most attractive to graduates in 2001•One of the 10 blue-chip stocks chosen by domestic investors in 2002
•Ranked first in “Top 100 Chinese listed companies 2000” •Listed at the top of National Quality Control Award 2001•Ranked first in “MVA Ranking of Listed companies 2001”•One of top 50 enterprises which are most attractive to graduates in 2001•One of the 10 blue-chip stocks chosen by domestic investors in 2002
•Standard&Poor’s valuation: BBB- positive in 2001•Ranked fourth among world-class steel-makers by WSD(World Steel Dynamics)in 2001 •World Class Organization by International Asia Pacific Quality Award Committee in 2002
•Standard&Poor’s valuation: BBB- positive in 2001•Ranked fourth among world-class steel-makers by WSD(World Steel Dynamics)in 2001 •World Class Organization by International Asia Pacific Quality Award Committee in 2002
Domestic evaluation International evaluation
2002 Posi t i oni ng of Worl d- Cl ass Steel makers
5. 0 5. 0 5. 1 5. 2 5. 35. 9 5. 9 6. 0
6. 3 6. 4 6. 67. 1 7. 4
0
1
2
3
4
5
6
7
8
Baosteel in progress --Outside evaluation
Baosteel in progress-- Outlook宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Utilize competitive edges
• Advantageous geographic location• Fast-growing domestic market• Advanced technology and facilities• Sound cash-earning power• Continually low cost • Excellent executive management team• Excellent personnel team
• Advantageous geographic location• Fast-growing domestic market• Advanced technology and facilities• Sound cash-earning power• Continually low cost • Excellent executive management team• Excellent personnel team
Dig competitive potentials
• Consolidate leading position in steel industry•Promote technological innovation ability•Strengthen process management•Perfect incentive and supervisory mechanism•Accelerate shareholders diversification•Bring up talents of operating internationally •Enterprise culture building
• Consolidate leading position in steel industry•Promote technological innovation ability•Strengthen process management•Perfect incentive and supervisory mechanism•Accelerate shareholders diversification•Bring up talents of operating internationally •Enterprise culture building
To be the most competitive steel enterpriseTo be the most competitive steel enterprise
宝山钢铁股份有限公司宝山钢铁股份有限公司BAOSHAN IRON & STEEL CO., LTDBAOSHAN IRON & STEEL CO., LTD
Thanks!