The Baosteel Group: A National Champion Among National Champions

Abstract

Compared with many of the Chinese and Indian state-owned enterprises examined in this volume, the institutional and competitive position of the Baosteel Group is somewhat unique. First, Baosteel stands out as one of the major success stories of recent Chinese state-owned enterprise (SOE) reform. It was created by the Chinese government in the early years of the reform period as a national steel champion — a corporation expected to not only pursue profit but also national economic goals. Having benefited from the industrial policy support this status has brought during the intervening three decades, Baosteel has now earned the status as one of China’s most internationally competitive SOEs. However, Baosteel is also unique in that it does not dominate the Chinese steel sector. Accounting for only a small share of Chinese steel production, Baosteel’s position is one of a technological leader within a competitive market structure populated by a large ‘national champions group’ of SOEs. Moreover, Baosteel has also faced special obligations to implement national industrial policies by acting as a technological leader tasked with the role of acquiring and upgrading ailing steelmakers. Understanding Baosteel’s position within the Chinese steel sector as a ‘national champion among national champions’ is critical to explaining its operational characteristics, its special relationship with the Chinese government, and the benefits and costs this has carried for the firm.