Bloomberg Businessweek - USA (2019-10-07)

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Underthesecircumstances,Baosteelwas
establishedwithalargegovernmentinvest-
ment.Fromitsinception,thecompanywas
committedtoproducingqualitysteel.Limade
afamousremark:“Baosteelwasnotsetup
toproducemediocreproducts,otherwiseit
wouldnothaveneededaninvestmentof
billionyuan[$17.4billionat1978exchange
rate].”

Seizingopportunities
Inthe1980s,expansionofindustrialproduc-
tionandrisingdemandforautomobilesand
householdelectricalappliancessuchasrefrig-
eratorsfueledsurgingdemandforqualitysteel.

Baosteelsetitssightsonproducingsheet

metalforautomobiles,whichwastechnically

challengingforChinesecompaniesatthe

time,Lusaid,becauseautosheetsneeded

tobeflaw-freeandofhighstrengthandad-

equateplasticity,whichwerehardtoachieve

atthesametime,andthecarboncontentin

steelhadtobeloweredfrom0.1%tobelow

0.01%.

Lustartedresearchintoautosheetsin1989,

afterreceivingamaster’sdegreefromwhatis

nowtheUniversityofScienceandTechnology

Beijing.

In1990,thefirsthigh-gradeautomobilesheet

wasrolledoutofBaosteel.Today,oneoutof

everytwoautomobilesproducedinChina

ismadewithBaowu’ssteel,whichishigh-

strengthandlightweight,makingvehicles

moreenergy-efficient.

Baowudescribesitselfasahi-techenterprise

withtheironandsteelbusinessasitsmain

valuecarrier.Thegrouphasapproximately

1,300researchanddevelopmentpersonnel.

Inadditiontoitsresearchcentersandinnova-

tionincubatorplatforms,italsopartnerswith

universitiesandresearchinstitutes.

Bytheendof2018,Baowuowned12,

patents,including5,105inventionpatents,

LuKebin,SeniorManagerattheScientific

andTechnologicalInnovationDepartmentat

Baowu,said.Since2000,thegrouphaswon

scoresofnationalscienceandtechnology

awards.

“Today,steelmakingisnolongersweatyand

smoky,”saidBaowuChairmanChenDerong.

“Baowupursuesgreen,qualityandsmart

development.”

OnJuly22,Chenamazedanaudienceby

demonstratinghowtosmeltsteelremotely

simplybypushingabutton.Whenhepressed

akeyonaniPadscreen,anoxygenfurnace

located3,000metersawaywasputinto

motion,anoxygenlanceslowlydroppedand

themoltensteelinthefurnacebegantoflow.

Withthehelpof5Gtechnology,theworkof

thefurnacecanbemonitoredon-screenin

realtime.

Today,alotofthehardworkisdonebyrobots.

AccordingtoBaowu’s2018corporatesocial

responsibility(CSR)report,ithasanarsenal

ofmorethan480robotsandover100self-

drivingvehicles,alongwithsomeunmanned

workshopsandahugeunmannedwarehouse.

Automationhasslashedcostsandimproved

workefficiency.Citingasmarthot-rolling

workshopasanexample,LuKebinsaidsmart

productionhascutenergyconsumptionthere

by5%andcostsby20%,whileincreasing

productivityby20%.

Theinternet,BigDataandartificialintelligence

areusedtobuildBaowu’sonlinesalesandser-

viceplatform,Ouyeel.Baowu’smanagement Comments to [email protected]

model has been adjusted to better suit smart

production, with the hierarchical organizational

structure becoming more leveled.

In addition to making production safer and

more effi cient, pollutant emissions and

waste discharge have been reduced. In

2018, Baowu’s per-unit energy consumption

decreased by 2.3 percent from the previous

year, carbon dioxide emissions were down by

3.5 percent and nitrogen oxides were down

by 2.9 percent, according to its CSR report.

Future­oriented

Baowu has grown stronger and smarter,

banking on opportunities availed by China’s

development, but its voyage has not been all

smooth sailing. The biggest bump came in

2015, when the international steel industry

suffered from severe overcapacity.

In 1996, the country’s total steel output ex-

ceeded 100 million tons, making it the biggest

producer in the world. Since then, both its steel

production and consumption have remained

the largest in the world, said Sun, adding that

the country currently produces about 50% of

the world’s total steel.

China’s steel industry expanded at a rate of

around 20% annually during the period from

2001–07. In 2015, sluggish demand in major

steel consumption regions resulted in a glut

in the world market. That year, WISCO suf-

fered the biggest losses among Chinese steel

enterprises, and Baosteel saw the largest dent

in profi t in its history.

In 2015, China launched supply-side reform—

readjusting its industrial structure, optimizing

production factor allocation and improving the

quality of economic growth—and the steel

industry began to cut its overcapacity.

Against this backdrop, WISCO was merged

into Baosteel to form Baowu. Since the 2016

merger, the group has reduced its steelmaking

capacity and workforce and optimized its busi-

ness structure, Sun said.

The group’s business portfolio was diversifi ed

to feature steel manufacturing as the base

along with the coordinated development of

fi ve other business modules: new materials,

logistics, industrial services, urban services and

industrial fi nancing.

Envisioning the future, Sun said Baowu will

produce more quality products, promote

greener and smarter development, further

lower costs through

technology innovation

and become bigger and

more profi table. ■

(Reporting from

Shanghai)

A smart workshop of the China Baowu Steel Group in
Shanghai.

LIU JIMING