Going Global Case Study

Shanghai Baosteel Group Corporation

OR

Abstract:
Shanghai Baosteel Group Corporation or Baosteel was set up by the Chinese government near the Shanghai port in 1978, when Deng Xiaoping initiated the transformation of the Chinese economy from a rigid centrally planned economy to a market-oriented economy. Besides iron and steel, the group also forayed into trade, finance, information, engineering technology, transport, chemicals, real estate and services. Baosteel had 45 wholly owned subsidiaries with its markets spread over Brazil, France, Germany, Hong Kong, Japan, Russia, Singapore, South Africa and the US. By 1999, Baosteel had become China's largest steel manufacturer. With China's accession to the World Trade Organisation (WTO) in 2001 and the subsequent opening up of the Chinese steel industry to foreign players, Baosteel had to face tough competition in the domestic as well as foreign markets. Despite competition, by 2003, Baosteel increased its production capacity to 20 million tons with total employee strength of 100,000. However, Baosteel was soon witnessing several problems like increased shipping rates and rises in the price of iron ore in China, due to excess demand and growing domestic competition.

Pedagogical Objectives:

• To analyse the challenges faced by a typical government-owned organisation like Baosteel, when a closed economy like China is opened to foreign players
• To discuss the competitive strategies of Baosteel in the light of changes in the business environment.

Contents:

• Chinese Steel Industry- A Landscape
• The Growth of Baosteel
• Challenges in the 21st Century

Keywords : Shanghai; Baosteel; Nippon; Arcelor; Global steel industry; China; Nucor; Companhia Vale do Rio Doce (CVRD); Rio Tinto; Posco; Shougang Group; Gerdau; Iron; Growth Strategies Case Study; Dofasco; Mitsui OSK Lines Ltd (MOL)