Du Shuanghua and the Sale of Rizhao Steel in 2010: A LookBack
On July 9, 2010, the Chinese state-owned Assets Supervision and Administration Commission (SASAC) announced that it had reached an agreement with Du Shuanghua, chairman of Rizhao Steel Group Co. Ltd., to sell a majority stake in the company.
According to SASAC, Du Shuanghua would retain a 36 percent ownership stake in Rizhao Steel following the sale that completed in September 2010. This announcement generated a great deal of interest among scholars and businesspeople inside and outside of China because it represented one of the first major privatization efforts undertaken by SASAC since its establishment in 2003. Read more about Du Shuanghua and his company
About Rhizhao Steel Group
Rizhao Steel Group Co. Ltd. is a large state-owned enterprise (SOE) with over 16,000 employees and nearly $2 billion annual revenue. Du Shuanghua established the company in 2003 where it has become one of China’s leading producers of steel products, including hot-rolled sheets, cold-rolled coils, galvanized sheets, color-coated plates, and wire rods. The company’s main production base is located in Rizhao City, Shandong Province.
Efforts to Encourage Private Company Ownership
The sale of Rizhao Steel marks another significant milestone in the ongoing reform of China’s state sector. In recent years, the Chinese government has been working to reduce the size of its SOEs and make them more efficient and competitive. One way it has attempted to accomplish this goal is by introducing more private capital into the state sector.
In 2008, SASAC announced that it encouraged “strategic investors” to take majority stakes in SOEs. The intention behind these efforts was to spur greater innovation and competition among government-owned companies and private firms alike, as Shanghai Jiaotong University economist Zhao Xijun explained at the time.