Shaghai ; Baosteel ; Nippon ; Arcelor ; Global steel industry ; China ; Nucor ; Companhia Vale do Rio Doce (CVRD) ; Rio Tinto ; Posco ; Shougang Group ; Gerdau ; Iron ; Dofasco ; Mitsui OSK Lines Ltd (MOL)

Shanghai Baosteel Group Corporation or Baosteel was set up by the Chinese government near the Shanghai port in 1978, when Deng Xiaoping initiated the transformation of the Chinese economy from a rigid centrally-planned economy to a market-oriented economy. Besides iron and steel, the group also forayed into trade, finance, information, engineering technology, transport, chemicals, real estate and services. Baosteel had 45 wholly-owned subsidiaries with its markets spread over Brazil, France, Germany, Hong Kong, Japan, Russia, Singapore, South Africa and the US. By 1999, Baosteel had become China's largest steel manufacturer. With China's accession to the World Trade Organisation (WTO) in 2001 and the subsequent opening up of the Chinese steel industry to foreign players, Baosteel had to face tough competition in the domestic market as well as in the foreign markets. Despite competition, by 2003 Baosteel increased its production capacity to 20 million tons with a total employee strength of 100,000. However, Baosteel was soon witnessing several problems like increased shipping rates and rises in the price of iron ore in China, due to excess demand and growing domestic competition. The case study would help readers in understanding the challenges that Shanghai Baosteel Group Corporation faced and the measures taken up by the company to overcome the challenges.