Michael Haltman

pushing ahead

In 2010 what began as a merger negotiation ended with the sale of one of China’s largest privately-held steel manufacturers, Rizhao Steel Holding Group. This is in stark contrast to other companies whose operations are tightly controlled by the government.

Originally, Du Shuanghua would have retained majority control over the Rizhao Steel portion during the transition’s first phase. It was unfortunate during this time, there was an increase in the Chinese state attempting to absorb privately owned businesses such as Shandong Steel. In a move to prevent what amounted to a hostile takeover, Mr. Shuanghua tried to sell a portion of the company to Kai Yuan Holdings.

However, court documents revealed that Rizhao did not live up to its obligations with Mount Gibson suppliers. The oversight resulted in Mr. Shuanghua paying millions of dollars in fines. The legal issues impacted negotiations with Kai Yuan, and the planned deal fell apart.

Check out this article on FinanceAsia to know more.

While the deal meant that Du Shuanghua had to relinquish control subsequent happenings have been beneficial to the company. Rizhao Steel has changed its focus and has been working to increase productivity and expand its operations. In addition to this, the company’s negotiations have encouraged three suppliers to move to Rizhaos’s home province.

These changes promise to increase the productivity of iron and steel annually by millions of tons. Even as losing status as the majority stakeholder Du Shuangua, still one of China’s richest men. He does maintain that there was something more political rather than monetary over the deal. However, he does remain largely supportive of the changes and welcomes a brighter future for the company he founded.