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Three steel giants in Shanghai, Beijing and Wuhan Tuesday signed a letter of intent for strategic cooperation, the first of its kind in China, to increase their competitiveness on the international market.
The three steel giants are the Shanghai-based Baoshan Iron and Steel Group Co., the most advanced iron and steel producer in China; the Wuhan Iron and Steel Group Co.; and the Capital Iron and Steel Co.
Xie Qihua, general manager of the Baoshan Iron and Steel Group Co., told reporters that the move aims to prepare the companies for the increased international competition on the Chinese iron and steel market after China's anticipated entry into the World Trade Organization (WTO).
Leading managers of the three companies say their areas of cooperation at this stage will include joint purchase of a large quantity of raw materials such as iron ore, restructuring of transportation to lower purchase and transportation costs, joint research and development, and marketing.
The three companies may form a conditional alliance on the capital market and each of them owns shares in the other two companies.
Other areas of cooperation under discussion include management and operation.
Sources with the Wuhan Iron and Steel Group Co. say they do not exclude the possibility of merging with the Baoshan company.
The Baoshan company posted a sales volume of 70.5 billion yuan (US$8.53 billion) last year, about twice as much as the Capital company.
(Xinhua 03/20/2001)
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