Product details

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.

Abstract

Shanghai Baosteel was China's largest steel company. In the year 2006, the company planned to increase its steel production capacity from the existing 30 million tons to 80 million tons by 2012. This expansion strategy was adapted to gain greater control over the Chinese, as well as the global steel industry and to increase bargaining power with the raw material suppliers. To execute this plan, the company resorted to inorganic expansion strategies such as mergers, acquisitions and strategic co-operation, with both domestic as well as foreign steel companies. In January 2007, Baosteel paid 3 billion renminbi for Xinjiang Ba Yi Iron and Steel industry. The move had been welcomed in China as consolidation was the need of the hour in the fragmented Chinese steel industry. However, the cost involved in such acquisitions seemed to be quite high compared to the small capacity addition. Moreover, the acquisitions and mergers implied more capacity addition by the steel giant, which could add to the anguish of the Chinese steel industry already suffering from overcapacity. In such circumstances it remained to be seen whether the aggressive inorganic expansion strategy used by Baosteel could deliver the expected results.
Location:
Industry:
Other setting(s):
2007

About

Abstract

Shanghai Baosteel was China's largest steel company. In the year 2006, the company planned to increase its steel production capacity from the existing 30 million tons to 80 million tons by 2012. This expansion strategy was adapted to gain greater control over the Chinese, as well as the global steel industry and to increase bargaining power with the raw material suppliers. To execute this plan, the company resorted to inorganic expansion strategies such as mergers, acquisitions and strategic co-operation, with both domestic as well as foreign steel companies. In January 2007, Baosteel paid 3 billion renminbi for Xinjiang Ba Yi Iron and Steel industry. The move had been welcomed in China as consolidation was the need of the hour in the fragmented Chinese steel industry. However, the cost involved in such acquisitions seemed to be quite high compared to the small capacity addition. Moreover, the acquisitions and mergers implied more capacity addition by the steel giant, which could add to the anguish of the Chinese steel industry already suffering from overcapacity. In such circumstances it remained to be seen whether the aggressive inorganic expansion strategy used by Baosteel could deliver the expected results.

Settings

Location:
Industry:
Other setting(s):
2007

Related