Innovation is especially important for the transformation and development of steel companies

Under the “new normal”, the key to the innovation drive of the steel industry lies in advancing technological innovation as the core, including comprehensive innovations in institutional mechanisms, business models, and management, making innovation a powerful engine for the transformation and development of traditional industries. The steel industry has entered a period of low profit since 2008. At present, China's steel industry is facing a serious overcapacity. How does WISCO deal with difficulties? What have you achieved? What are the plans and measures for the next step? With these questions, the reporter recently interviewed representatives from the entire country, Deng Ganglin, chairman of the Wuhan Iron and Steel Group and the party committee.

Reporter: Under the "new normal" of economic development, what do you think steel companies should do to meet this challenge? What achievements have WISCO made in its own development?

Deng Qilin: China's steel industry has experienced extensive development and is now in a state of serious overcapacity. The current market competition is very fierce, and the benefits continue to decline. This outcome is also inevitable. WISCO also accepted this test in the same way as other steel companies in the country. In the face of this market “winter,” Wuhan Iron & Steel has also taken many measures.

According to the requirements of the Central Government and the government, it is necessary to further implement the national steel industry policy and industrial revitalization plan, eliminate backward production capacity, reduce the total production of steel, increase the pace of mergers and reorganizations, structural adjustment, and industrial upgrading, and truly make China a major steel country. To a strong steel country.

In the face of the “cold winter” of steel, we still adhered to the main business of steel and adjusted the product structure to ensure quality and meet the needs of the market. We must create certain benefits, including economic and social benefits, so that our internal employees have a process of continuous improvement. WISCO is an old company with a history of more than 50 years. It is the first large steel company established after the founding of New China. It will have many difficulties in the face of the challenges of the “winter” of the market and the transformation process. However, over the years, we have taken many measures in accordance with the policies of the central government and the government and specific requirements. For example, in the iron and steel industry, we have adopted the "Wugang headquarters no longer add a ton of steel production capacity" measures. Second, how related industries are stronger, better and bigger, not only serving Wuhan Iron and Steel, but also going to the market and truly achieving independent business and self-financing. In the past, we were attached to steel and eat steel rice. Now that the steel industry is in a difficult situation, we only have our own strength. For example, sending fast food and beverages to the furnace, which is a history of several decades, has never been sold and serviced outside of WISCO. In recent years, these units have sent fast foods to high-speed rails and sent sodas to supermarkets. People in Hubei can also drink them. We have come to the market and have gained benefits. Enterprises can realize their own profits and losses, allow employees to find a new way of business development, and form a complementary role with the main business. Third, the main steel industry itself is facing a situation of serious overcapacity and declining market prices. This requires us to strengthen industrial restructuring, develop and produce varieties with market demand as soon as possible, and ensure quality. In addition, changes are made in the sales model and business model. In terms of company management system and mechanism, we carried out reforms and deepening in accordance with the requirements of the Central Government, and carried out reforms in accordance with marketization and deregulation. There are many levels here to adapt to the needs of the market. Production, supply, sales, and research form a whole and serve the market. In recent years, we have done a lot of reform work, the effect is still quite obvious.

Reporter: What comparative achievements have been made by Wuhan Iron and Steel in 2014?

Deng Qilin: In 2014, we fully completed all the indicators issued by the SASAC, including political and economic aspects. In innovation, we have also done a lot, such as silicon steel is a very important product variety of Wuhan Iron and Steel, the most important is HiB steel. On the whole, WISCO's silicon steel level is in the world-class level. Ten years ago, China's silicon steel HiB steel was 100% imported. Since 2006, we have recaptured more than 30% of our market share from Japan and Germany. We will gradually replace 100% of our products with domestic ones in the future. This is very favorable for us to deal with the "cold winter" of steel. In addition, we also have a lot of scientific research and independent innovation achievements. Last year, the number of patents reached by Wuhan Iron and Steel reached more than 1,300, a substantial increase over the previous years. This is also an innovation drive put forward by the central government. It is very important for enterprises, especially for the transformation and development of enterprises during the "winter" period.

Reporter: How do you think that steel as a traditional industry can be driven by innovation?

Deng Qilin: The Chinese steel industry has come to the present day. After more than 60 years of development, the annual output from the early years of liberation was only a few hundred thousand tons, and it reached over 800 million tons last year, making an important contribution to China’s economic development. However, the extensive and long-term development has led to a serious excess of production capacity, which finally broke out in recent years. At present, steel, machinery, electrolytic aluminum and other industries have relatively surplus production capacity. If the excess production capacity is not resolved, there will be no way to achieve structural transformation. In particular, the iron and steel industry has a large volume, environmental pressure, and difficulties in adjusting and upgrading the industrial structure. This requires the development of steel companies. Therefore, we must, in accordance with the national industrial policy and the requirements of the Central Government, control the total amount as soon as possible, eliminate backward production capacity, adjust the structure, and achieve real industrial upgrading. At the same time, we must also play a good role in "two hands." One is to use the market hand well, through marketization, to promote the company to strengthen self-discipline, the elimination of the elimination, the adjustment of the adjustment, this process is still relatively long. However, this government hand should also step up efforts to coordinate and promote the adjustment of excess capacity.

Reporter: The “One Belt and One Road” strategy is an important opportunity for the steel industry to alleviate excess production capacity. Do you think that whether Chinese steel companies “go global” can meet international challenges?

Deng Qilin: The “going global” strategy put forward by the Central Committee is very wise. In particular, it puts forward the “One Belt and One Road” development strategy. I think it is also very timely and correct. It has important practical significance internationally, politically, and economically. And far-reaching historical significance. Therefore, we should strive to promote and do something. Regarding the issue of “going global” for steel companies, I feel that Chinese steel companies have eliminated backwardness in the transition period and digested excess production capacity. Some production capacity can be transferred abroad. For example, in Southeast Asia and ASEAN, Indonesia and other countries have a large demand for steel, and many countries in Africa. Their steel production capacity is very low and they also need steel. As far as I know, their prices are still relatively good, so we have relocated surplus production equipment to do something on the “One Belt and One Road”, and we can also find a very good outlet for excess steel production capacity. All aspects are favorable.

Reporter: 2015 is the year of the Twelfth Five-Year Plan ending. China will formally enter the “Four Comprehensive” era. Do you think that the steel industry should be changed under the overall environment of deepening reforms?

Deng Qilin: The Central Government constantly proposes to shift from a high-speed economy to a medium-high speed. This is very sensible. It will improve the quality of the economy and ease the pressure on environmental protection. It will better adjust the structure and achieve better and faster development. It is very favorable and very correct. I would like to suggest that in the current period of restructuring and restructuring of China's economy, steel is a basic industry. It has a large volume, a large environmental impact, a large resource footprint, and a large impact on downstream industries. Therefore, it should be the first to make adjustments and reduce it to a supply and demand as soon as possible. Balanced state.

There are hundreds of thousands of iron and steel companies in China that should be integrated into several large steel companies, which is also very beneficial to the steel industry out of its predicament. Through adjusting the structure, controlling the total amount, and finally improving their own quality level, scientific and technological level and product level, to achieve world-class level.

Reporter: A new round of state-owned enterprise reforms has begun. Do you think that reform of state-owned enterprises should be changed? Will WISCO try to mix ownership reforms?

Deng Qilin: With regard to the mixed ownership reform, we are also seriously studying and understanding. The State-owned Assets Supervision and Administration Commission of the State Council is also studying and piloting. I believe that after the pilot experience is formed and specific regulations are issued, we will also work hard to promote it. I think this is very correct. Enterprises need to establish a diversified mechanism system. Engaging in a model and an oligopoly is both detrimental to the use of resources and the development of enterprises. Mixed ownership is very significant for our central SOEs and SOEs. This is a very important aspect of solving marketization.

Reporter: Would you please talk about the planning and layout of Wuhan Iron and Steel's "Thirteenth Five-Year Plan"? Please tell us about the coastal layout of WISCO.

Deng Qilin: Our goal is to make the iron and steel industry be refined, superior, and strong, and make it a world-class level. In addition, it is to do a good job in the related industries and go to the market, and truly enable Wuhan Iron and Steel to pass structural adjustments, deepen reforms, and govern enterprises in accordance with the law to reach the level of world-class companies. I think there is a lot of work to do. We have a tentative framework and are studying it further. We can introduce it in the second half of this year.

The new coastal layout of WISCO is an iron and steel base in Fangchenggang, Guangxi, which is under construction. This is a consideration of WISCO from the perspective of development. Because Wuhan Iron and Steel is located in the middle reaches of the Yangtze River, which used to be a golden waterway and all nine provinces. To date, our imported ore amounts to several ten million tons each year. We must transport them from the seashore. The shipping cost is more than 100 yuan per ton and imports are one year. 10 million tons is more than ten million yuan, 20 million tons is two to three billion yuan. When the steel industry faces a "winter", it is very uneconomical. The layout at the seaside is very advantageous, for example, logistics, some countries in Europe are setting up steel plants along the coast, and building steel plants in big cities is not suitable. This project was approved by the National Development and Reform Commission in 2012. We must also work hard to establish a standard for world-class companies and meet first-rate standards in technology, products, energy conservation, environmental protection, and management. This is what we are looking forward to, and it is also what the Central Government requires. We will build it well. It is expected that the first production line will be put into operation in June of this year.