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23rd Sep 2018

Interview

'China is not like what you read in the media'

  • A stainless steel dragon in Nottingham. (Photo: Adam Clarke)

Europe and China need each other as business partners, but they also need to improve their understanding of each other, a Chinese business leader has told this website.

“Once communication is in place, it will enhance the understanding of each other”, said He Ruying, vice-president of Baosteel Stainless Steel.

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“As one of the largest Chinese steel companies, we really cherish the European market, and we're really hoping to have a long-term strategy here in Europe”, he said, through an interpreter.

He was attending a hearing of a European Commission anti-dumping investigation, on Wednesday 11 February.

Dumping is selling a product at a price that is below the cost of production to increase market share.

The EU, like many other regions and nations, has anti-dumping rules in place. The European Commission investigates claims of dumping, the majority of which now involves Chinese companies.

Eurofer, the Brussels-based association of the European steel industry, accuses Chinese and Taiwanese steel producers of dumping. It claims Chinese steel producers are “flooding the markets” with stainless steel products.

Eurofer filed a complaint to the European Commission in May 2014.

Misunderstandings

But the Chinese state-owned company is innocent, He Ruying said. “We have orders first, then we produce. We don't overproduce”.

The vice-president said there is a common “misunderstanding” in Europe that the Chinese government firmly controls its companies.

“It's not like what you read in the media. The market is so competitive. The domestic Chinese steel market is very competitive.”

Baosteel reported a ¥10.2 billion profit, and ¥303.6 billion in sales revenue in 2013. It has about 130,000 employees and is one of the largest steel companies in the world. Last year, it ranked 211 in Fortune's Global 500 list, which ranks the world's corporations measured by revenue.

According to the World Steel Association, the Baosteel Group produced 43.9 million tonnes of steel in 2013. Only three other companies produced more steel that year. (The world's largest steel producer, Luxembourg-based ArcelorMittal, produced 96.1 million tonnes.)

“We are criticised from Europe that we might have subsidies from the government, helping to sell, but actually the reality is that in the domestic market, we hundred percent rely on ourselves.”

He noted that a company in China also needs to make a profit, and that Baosteel would not sell its products for a price that is lower than the cost of production.

“You have to take your own profit margin. That's the key. If you cannot taken care of it, you are out of the market directly”, He said according to his interpreter.

“When a negotiation is way too hard, … when we cannot cover our costs, we say no.”

Whether or not other Chinese steel companies were guilty of dumping, He would not say. “I believe that there might be some statistics or data floating around, but we don't have an official source of data, so at the moment we can only talk about Baosteel.”

Respect

He was also careful in his answer when asked whether he believed the EU Commission is an objective arbiter in a case that was raised by the European steel industry.

“We respect the Commission. For us, at this moment, we cannot say too much as whether they are objective or whatever. For us it is more that we want to [do] our part well. We coordinate well with the Commission. Of course we can hope that everything is objective.”

“In trade there will always be conflict. … There is cultural difference, mindset, mentality, everything can be very different. Only the communication, only with open communication, for example with Eurofer, we believe this kind of misunderstanding can be – we cannot say hundred percent removed, but it will be better.”

Baosteel Stainless Steel sees itself as a front-company, trying to bridge a gap between China and the EU.

“We want to be a pioneer among all Chinese companies to improve our communication with the Commission. At the moment I don't think there is a lot of Chinese focus on that.

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