In early April, the office of Nippon Steel Corporation (Shanghai), a subsidiary of Japan’s largest steel company, Nippon Steel, suddenly came up with strange faces. They are preparing for an ambitious investment plan. Perhaps in a few months, these mysterious people will no longer have to "report" here.
In Shanghai’s Jiading District, which is less than an hour’s drive from the current office, in a white factory set amidst greenery, Japan’s iron and steel company will invest 1.5 billion yen there to build auto parts processing projects.
The seemingly unconnected move of the steel industry has not attracted much attention from Chinese steel companies. However, in the eyes of many industry experts, this move has extraordinary significance.
Deep penetration
"China's auto market is constantly developing at an alarming rate. We are very optimistic about the future prospects of China's automotive steel market. The movement in the Chinese market is moving forward." Wu, Manager, Japan Railway Corporation (Shanghai), disclosed to reporters As a subsidiary and trading company of Nippon Steel Corporation, Nippon Steel Corporation is making active preparations for entering China's auto parts market, and will establish a new company in East China.
According to reports, this project with a total investment of 1.5 billion yen is expected to start production in March and April next year.
The machining of automotive parts is similar to that of steel machining and belongs to the deep processing of steel (4734, -21.00, -0.44%). Jia Liangqun, chief analyst of my steel network, told reporters that steel companies are involved in the processing of auto parts in order to move from low-value-added links to high-value-added links in the automotive steel value chain, from the supply of steel raw materials to direct intervention in semi-finished products processing. , Earn higher profits.
However, if you want to earn high profits in high-value-added links, it will not be able to do so in a single day. Before the Parts Factory entered China, Nippon Steel Corporation made its preparation and layout in advance. As early as four years ago, Nippon Steel Corporation, together with Nippon Steel, Toyota, and other companies, established a factory in Suzhou that specializes in the production of automotive bolts and nut wire (4402, -7.00, -0.16%), and realized the production of Japanese cars made in China. Localization of parts raw materials production.
It is precisely because of the early layout of raw materials supply that this "new entrant" in the auto parts industry is low-key, but it has its ambitions in this industry.
Manager Wu disclosed to reporters that due to its customer channel and raw material advantages, Nippon Steel Corporation will strengthen the service to customers in the automotive industry through the processing of parts and components in logistics and processing, and actively capture new demands. In addition to Japanese car manufacturers, they will also extend their reach to more corners of the Chinese market.
Nippon Steel first established a raw material production line for parts and components, provided raw material supply for parts and components manufacturers, and trained a large number of customers. Now that the time is ripe, it announces its entry into the spare parts sector. Pan Wenjun, a logistics scholar, believes: “All kinds of measures are hoped to seize the raw material supply channels and intervene in joint development to form an industrial chain advantage, and then compete in the East China region for the auto parts steel market's dominance.â€
In fact, the East China area centered on Shanghai is not the “home field†of Japanese cars, and has always been the site of German “mass†cars and their related supporting companies. With Japan Railway Corporation increasing its capital to set up factories in Shanghai, competition between Japanese steel companies and other companies around the East China auto steel market will become more intense.
Regarding the big move of Japan Railways Corporation, Jin Wenhai, the head of the Baosteel International Trade Plant Management Department of the domestic leading company, said that he would not comment.
Crocodile sneak
Although Nippon Steel International stated that the project was independently invested by Japan Railways Corporation, the headquarters and the Shanghai branch each accounted for 75% and 25%, but the figure of the steel giant Nippon Steel is still faintly visible.
The location of the investment project is quite intriguing. The parts factory will be established in a joint venture located in Jiading District, Shanghai, which provides processing and distribution of various steel parts and components for the household appliance and automotive industries. Nippon Steel is one of its shareholders.
The new actions of Japan Railway Corporation and the shadow of the new Nippon Steel figure behind it have attracted the attention of some steel trade companies.
In the office, Tang Dayong launched a huge map of China to reporters. Among them, Guangzhou and Shanghai were all circled. According to his map on the map, with the great development of China's automobile industry, the automobile plate and parts processing and distribution center established by Japanese steel companies can be said to be located in coastal areas. Tang is a trader specializing in supplying special steel to East China auto parts companies. He must often face the map for research and thinking, and how to match his company’s position in the rapid development of matching the Chinese automobile industry.
He said that Japanese steel companies’ investment in the automotive industry reflects a strong sense of the industrial chain. Behind the Japanese steel companies' entry into the automotive steel value chain, there is a main line running through them: the entire industrial chain operation model for automotive steel. On the side of supply of raw materials, Nippon Steel is continuously expanding its sales of automotive plates in China through cooperation with Baosteel; on the other side, Japanese steel circulation companies such as Mitsui are performing nationwide distribution in the logistics sector, through cooperation with Baosteel. The company's Baojing company set up processing and distribution bases in key domestic cities, and is now opening up a chain of processing steel logistics in the coastal provinces. The current entry into the auto parts processing industry by Japan Railways Corporation means that Japanese steel companies will further expand their presence in the high-end areas of China's automotive steel industry chain.
Just like playing a group game of drums and flowers, these different steel companies cooperated with each other to complete the penetration of upstream and downstream links in China's automotive steel industry.
“The goal of Japanese steel companies is ultimately to grab control over the entire automotive steel industry chain.†Tang Dayong said that the most successful approach of Japanese steel companies is not that several large steel plants live next to each other, and that they jointly take over the Chinese market. Upstream component production and raw material supply, the middle reaches of the vehicle manufacturers to provide raw material supply and downstream processing and distribution of organic links. Enterprises cooperate with each other and divide labor to form a linked and complete industrial value chain, and maximize profit space.
At present, at the base of Japanese cars, Guangzhou, Japanese steel companies have penetrated into all aspects of the automotive steel industry chain, and their layout in East China has been relatively slow.
Industry chain awareness
In the investigation, the reporter found that, in addition to Japanese-funded steel companies, other foreign-funded enterprises are also densely arrayed in China's automotive steel industry chain, and commercial warfare seems to be in the offing.
ThyssenKrupp, Europe’s largest steel group, has established joint ventures in East China, North China and Central China, forming a “product†array to seize the market share of China’s automotive panel and owning six auto parts companies in China.
South Korea’s Pohang also increased its penetration in the industrial chain of the automotive steel market in China. It operates a total of 16 automotive panel processing centers in China.
Faced with the aggressive situation of foreign investment, industry-famous expert Ma Zhongpu told reporters that Chinese steel companies should have a sense of an industrial chain and should speed up the realization of a complete connection between the steel industry chain and the downstream automobile and home appliances and other manufacturing industries. With a solid industrial chain, avoid being in a passive state.
In the 4th National Seminar on Steel Processing and Distribution, Li Shijun, deputy secretary-general of the China Iron and Steel Association, once told reporters that the deep processing of steel and the extension of the industrial chain to the steel industry should be an effective measure to avoid risks in the steel industry of China and break Long-term dependence on scale expansion habits.
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