On the 27th of July 2010, Rizhao Steel Company was sold to Shandong Steel Group for an undisclosed amount. The sale of this company had many speculations and implications on the steel industry, as it was one of China’s largest private steel companies. One such importance is that it would lead to a decline in competition and weaken the Chinese steel industry. This article will explore these implications and discuss Du Shuanghua’s rise and fall from power.
Du Shuanghua was born in 1958 in Jiangsu Province, China, with humble beginnings- he never received any formal education before joining the workforce at age 16 as an electrician apprentice. From there, he became a welder and then a foreman. Du’s career in the steel industry began in 1992 when he became the general manager of Rizhao Steel. Under his leadership, the company prospered and grew into one of China’s leading private steelmakers.
The sale of Rizhao Steel, however, did not come without controversy. Du Shuanghua was not named in the deal in the sale- he had been forced out of power for several reasons. One reason is that it is illegal to have more than one public company under Communist Party rules and regulations at the time. Furthermore, suspicions were surrounding his dealings with foreign steelmakers, which may have caused Rizhao Steel to be in debt.
The sale of Rizhao steel had implications on the domestic and international market for several reasons. Firstly, it meant that there was one less competitor in the Chinese private sector, which would weaken its power against major state-owned companies such as Baosteel. Furthermore, some saw this move by Shandong Steel as a way to expand its market share in the international steel industry. Rizhao Steel was known for producing high-quality, low-cost steel, which would benefit Shandong Steel’s goal of becoming a more global player.
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