Merger and reorganization of iron and steel enterprises is the general trend

From the perspective of global merger and reorganization cycle, the inherent law of iron and steel industry and enterprise development demand, it is the general trend to promote the merger and reorganization of iron and steel enterprises in China.

It is noteworthy that there are still some problems in the restructuring of iron and steel enterprises, such as "scale complex", "re-restructuring, light integration". Therefore, the reorganization of steel enterprises should do a good job of "integration, coordination and innovation" and give full play to the effective allocation of resources after reorganization.

The reorganization of iron and steel enterprises should change from single expansion to "enlargement of scale + improvement of quality", from general merger and reorganization to "merger and reorganization + integration and promotion". The number of iron and steel enterprises in China is large, but their concentration has been at a low level, which seriously restricts the high-quality development of China's iron and steel industry. In recent years, large-scale domestic iron and steel enterprises have merged and reorganized one after another, and the concentration of the industry has rebounded, but there is still a big gap with the orderly development of the industry and the requirements of industrial policy. From the point of view of the global merger and reorganization cycle, the inherent law of iron and steel industry and the demand of enterprise development, it is the general trend to promote the merger and reorganization of iron and steel enterprises in China. Recently, the reorganization of Maanshan Iron and Steel Co., Ltd. by Baowu has become a major event in the steel industry. Through this acquisition, China Baowu will indirectly control 45.54% of Ma Gang's shares through Ma Gang Group and become an indirect controlling shareholder of Ma Gang's shares. The actual controller of Ma Gang's shares will also change from Anhui SASAC to State SAC of the State Council. It can be said that the restructuring is of great significance to lead the development of China's iron and steel industry and to build the world's most competitive iron and steel enterprises.

Firstly, it is conducive to the orderly development of the industry. After the reorganization, Baowu will further enhance the market control of the Yangtze River Basin, shape an orderly regional market order, and help to lead the orderly development of the whole industry. Secondly, it is conducive to promoting professional development. The reorganization of the two companies plays an important role in coordinating the market strategy, production line division and specialized production of related steel products. Thirdly, it is conducive to concentrating on innovation and development. Through R&D and talent resources integration, Baowu will further enhance its innovation capability and significantly enhance the innovation and development momentum of China's iron and steel industry. Finally, it is also conducive to enhancing international competitiveness. After the reorganization of Maanshan Iron and Steel Co. in Baowu, China, the total output of crude steel reached 93.45 million tons, which is close to 96.42 million tons of the world's first ArcelorMittal. Obviously, this will accelerate the realization of Baowu's vision of becoming a global steel industry leader, and promote the formation of a world-class steel industry technology innovation, industrial investment and capital operation platform. The restructuring of Maanshan Iron and Steel Co., Ltd. highlights the necessity of M&A and restructuring of iron and steel enterprises. From the national level, industrial policy clearly requires to improve industrial concentration and set up a group of world-class steel enterprise groups with global competitiveness. From the industry level, the large number of iron and steel enterprises and the decentralized market structure are the root causes of disorderly competition such as price war and homogenization. Therefore, in order to reconstruct the market competition pattern, it is urgent to speed up the promotion of mergers and acquisitions. From the enterprise level, merger and reorganization is an important way to optimize the allocation of resources and strengthen enterprises, and also an important means for enterprises to continue to improve their competitiveness at a certain stage of development. From the point of view of competition, merger and reorganization can accelerate the growth of excellent enterprises and reconstruct the market competition pattern. Compared with previous rounds of reorganization, the external situation, internal motivation, strategic requirements and implementation conditions of this round of reorganization are essentially different. Therefore, we should promote the merger and reorganization of iron and steel enterprises in the new era with "high quality" thinking, and enhance the international competitiveness of China's iron and steel industry. It is worth noting that there are still some problems in the reorganization of iron and steel enterprises, such as "scale complex" and "emphasis on reorganization, light integration". Therefore, the restructuring of iron and steel enterprises should respect the law of development of iron and steel industry on the basis of scale expansion, change from single scale expansion to "enlarging scale + improving quality", and change from general merger and reorganization to "merger and reorganization + integration and upgrading". The reorganization of steel enterprises should do a good job of "integration, coordination and innovation" and give full play to the effective allocation of various resources after reorganization. More importantly, it is of great significance to reform the system and mechanism, optimize the business model, innovate the management mode and stimulate the subjective initiative of cadres and staff, so as to achieve high-quality restructuring.

Specifically to the operational level, the first is to strengthen internal resource synergy. Taking the reorganization of Baowu and Maanshan Iron and Steel Company as an example, there is a huge space for their collaborative optimization in internal resource integration, and there is a lot of space for their collaboration in asset integration, financing channels, raw material procurement, mineral resources and other fields. Through the internal integration of various resources, on the one hand, we should strengthen the coordination of procurement, production, R&D and sales, broaden various business channels and improve market competitiveness. On the other hand, the optimal combination scheme can be chosen to avoid unnecessary overlapping business and reduce operating costs.

Second, we should expand the integration of external resources. Integration after reorganization is crucial, and external resources are often easily ignored. For example, external policy resources, market and customer resources, financial resources, information resources and so on.

Third, we need to coordinate the international development layout. For example, both Baowu and Maanshan Iron and Steel Company of China have established overseas purchasing and marketing networks and service systems. After restructuring, they should tap synergistic potential in international service system and service capability, comprehensively enhance international influence and competitiveness, and rationally plan global steel layout.

Fourth, the innovation of system and mechanism should be realized. The innovation of system and mechanism is the key to the success of mergers and acquisitions of iron and steel enterprises in the new era, far better than the optimal combination of products, technologies and production lines.