Steelmaker bets big on diversification

China's steel production capacity has in recent times far exceeded demand, thereby creating a glut. The government has been encouraging the industry to become more concentrated through integration.

Domestic steel companies have been making efforts to survive competition and bolster their weak economic performance by reducing raw material costs and producing high value-added products.

Some companies have also enhanced their upstream businesses by acquiring overseas mining resources in an effort to reduce iron ore costs.

However, many of them did not taste success due to factors such as political risks, unexpected higher exploration costs, management shortages and lack of operational experience in foreign countries. Tangsteel, however, chose a different path by making both its services and products better, especially in its marketing strategies.

"There are products that were particularly designed and developed for a foreign client from the Middle East," said Yang Bianjiang, a technician at the company. "We produce certain kinds of steel sheets with individualized requirements to meet their needs."

It doesn't matter how advanced our company's facilities are. But it does matter who is using them, said Yu.

He believes that in such a gloomy economic situation market competition is not only between steel products, but also in the way companies do their business.

"Getting orders was never a problem for us in the past. Buyers often came to us," said Sun. "But things have changed fundamentally."

The company has sent about 100 technicians to the market to further improve its services for potential buyers.

"They are better equipped to explain our products," said Sun. "The market information they collect is valuable to the company as well. The production lines should know where the products go and how they are used."

"China's steel industry should learn more from the manufacturing companies to establish the brand and service," said Yu of Hebei Iron and Steel Group. "Our strategy is to sell steel like household electronic appliances with full services."

dujuan@chinadaily.com.cn

 

 

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