At 14:00 on April 7, 2015, Dai Zhihao, general manager of Baoshan Iron and Steel Co., Ltd., was interviewed by the reporter.
Reporter: China's economic growth rate has been declining in the past two years, and this year is expected to be 7%. With the decline in macroeconomic growth, many people predict that the peak of China's steel consumption will come early in the past two years. How do you view current steel demand? How will Baosteel adjust its adjustment to adapt to the “new normal†of the economy?
[Dai Zhihao] First of all, I don't quite agree with the view that China's economic downturn or hard landing. I think that as the world's second largest economy, we are entering a new normal. The growth of 6% and 7% is actually a very high number. I think even a small economy with a 6%-7% growth is a high-speed growth rate.
But when it comes to steel, the situation may be slightly different. In 2014, China's steel industry has entered the winter, and this winter may last for 3-5 years. The entire Chinese steel industry is in a state of oversupply. I think the emergence of this problem is not a decline in demand, demand is still, basically stable. The main problem is that the supply side is growing too fast. In the past few years, due to various reasons, the steel production capacity has been invested too much, resulting in oversupply. This is my personal opinion on this issue.
In the face of such a steel industry in the winter, the supply of production exceeds demand, and Baosteel shares the same challenges as all its peers. However, in this process, from the perspective of Baosteel, on the one hand, we believe that China's economy is undergoing transformation, and its transformation has shifted from high-speed growth to a medium-speed growth. On the other hand, there has been a shift from an investment-led type to a consumption-driven type. Baosteel Co., Ltd. is a manufacturer of high-end flat sheet, which is not the same as some domestic manufacturers producing long products, so we are more related to consumption growth.
With the transformation of China's economy, the investment ratio of many low-end and long-staple manufacturers will decline in the past, and more transformational pressures will be faced in the future. For Baosteel, a manufacturer with high-end sheet consumption, if the Chinese economy is driven by consumption. More, if the ratio is larger, the opportunity will be bigger for us. Because Baosteel has a large share in the automotive panel market, there is a large share in the home appliance market, which are closely related to consumption.
So where is the peak consumption of Chinese steel? different people have different ideas. Baosteel shares include my personal view that the peak of China's steel consumption is probably now. But with so much consumption, the structure inside will change. In the future, there will be fewer and fewer long products, more and more plates, fewer and fewer low ends, and more and more high-end. We are also trying to change in this direction. In fact, we have great advantages in this market. Because of this, China's steel industry has faced great challenges in the past one or two years, but Baosteel still maintains stable profits.
For example, in 2014, we used about 3% of the steel output of the whole industry to contribute about 27% of the profits of the whole industry. This also fully shows that our direction and the direction of China's economic transformation are convergent. Another direction of our own transformation is the strategy of “one body and two wingsâ€. The so-called "one body" is the main business of steel, the so-called "two wings", a piece of information technology related to Baoxin software based on cloud computing and big data business. This is the direction of Baosteel's future development and transformation. We are treasures. The controlling shareholder of the software.
The other is a cloud-based e-commerce platform, which we call internal transformation from manufacturing to service. Through such a transformation, we believe that the future B2B model represented by China's steel third-party trading platform will be within 3-5 years, and it will have an explosive growth or a turning point like the previous B2C. We also believe that In this turning point, we will have a greater chance.
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