Shagang: forging a path to success

Although he is soft-spoken and mild-mannered, there is no doubt about Shen's strong resolution and sharp business acumen.

The chairman says that much of his business gift came from his tough childhood days.

Born in 1946 into a poor family in Zhangjiagang, life was never easy for Shen. His father passed away when he was very young. At 22, he started to work at a cotton factory, the predecessor of Shagang Group, to earn money to support his family.

Plagued by a lack of food and clothing, Shen soon realized that hard work and a clear focus were essential for survival.

In 1975, Shagang Group was founded on the basis of a cotton factory and Shen's efforts and excellent performance soon paid off when he was selected as the factory leader in 1984.

Though steel demand was at its peak, it was not easy for small companies like Shagang to make a mark initially with big companies like Baosteel dominating the sector, Shen says.

"I realized that developing core technologies, doing M&As and constant research was the only way we could catch up with the bigger peers."

Under his leadership, the group introduced advanced equipment and also boosted facilities with international expansion.

One high profile example of this strategy was Shagang's acquisition of Thyssenkrupp's Hoesch steel mill in Dortmund, Germany. In 2001, after intense negotiations, Shagang purchased all the facilities of Hoesch for 220 million yuan.

The deal helped increase Shagang's steel production capacity to 10 million metric tons and also diversified its product mix. The group's technical innovation has also improved following the deal, Shen says.

"It was important for us to have core technologies in our endeavor to be one of the best steelmakers in the world," Shen says.

Every year, about 2 percent of the company's revenue goes toward research and development of new technologies, he says.

In 2006, the company spent 500 million yuan to set up the Institute of Research of Iron and Steel in Jiangsu province.

Ma Han, deputy director of the institute, says that Shen always provides the best facilities for research. "There is no difference between working here and a cash and talent-rich State-owned research institute, especially in terms of the resources," says Ma, who has a PhD from Tsinghua University on chemical materials.

By his own account, Shen admits that he is a workaholic. An early riser, he often works from 7 am to 11 pm, and sometimes he stands at the gate of Shagang's headquarters to welcome his employees personally. "I want to make my employees feel that I am always with them," he says.

Another transformation Shagang is making is construction of a steel logistics park in Zhangjiagang, which is critical in helping reduce transport costs and integrating steel-related industries nationwide.

"The park represents another transformation process for our group and a milestone in the domestic steel logistics industry," Shen says.

The company will invest 30 billion yuan in the Jiulong Steel Logistics Park, a key part of the group's 2010-20 development plan.

Although the exercise is not that easy, Shen says he loves the challenges associated with it. "I know this is also a challenge, since such a large-scale investment in steel logistics industry is unprecedented," he says.

"Someone has to take the first steps and I think Shagang group is the right company to do it."

Since work on the steel logistics park began in 2010, business there has grown rapidly. Last year companies in the park brought in revenue of 30 billion yuan, a figure expected to reach 40 billion yuan this year.

An optimistic Shen even goes to the extent of admitting that in the long run he expects the steel logistics industry to surpass the steel industry in terms of returns.

Companies in the park are expected to reach sales of 250 billion yuan in five to eight years, making it roughly the size of another Shagang Group, Shen says. "We are always making miracles. This is definitely an eyecatching miracle in the history of steel industry development across the world."

huhaiyan@chinadaily.com.cn