NPC Representative Li Xiaobo: supply-side reform is more about lifting quality than merely reducing capacity

 

In view of the difficulties encountered by Chinese steel and coal industries, Li Xiaobo, a National People’s Congress deputy and the Chairman of Taiyuan Iron & Steel (Group) Co., Ltd, stated that the “supply-side reform” should be more about quality improvement than merely capacity reduction.

 

Many enterprises in real economy, especially those in steel and coal industries, were trapped in a confining corner at present. However, this confined state also offered good timing to reduce overcapacity. The country should made up its mind to promote the shedding of excess capacity, quality lifting, efficiency improvement and technology upgrading by means of strictly controlling new capacity growth, phasing out outdated capacity and shutting down excess capacity, with aids of market orientation and rule of laws, Li said.

 

“The key for a steel producer to overcome the confinement is to embrace the market, speed up the supply-side reform, widen product spectrum, lift product quality and build a reliable brand”, Li commented, “TISCO has stressed for years the product variety and quality as its sharp weapons to gain the market. Through technological innovation, it has successfully developed a series of products that are unique, leading, and alternative to imported brands, and put them into the national key projects and high-end manufacturing industry.”

 

Steel players should create demands and guide consumption by means of EVI (Early Vender Involvement), to introduce their products into both high-end sectors and consumer’s daily life, Li added. TISCO’s products had been seen in every aspects of society, from the special applications such as railway transportation, hydro power and coal-fired power station, oil and chemical sectors, ship-building and marine engineering sectors, as well as aircrafts, to the daily life applications like white goods, automobiles, kitchen appliances, mobile phones and etc..28 product varieties of the company hold the biggest domestic market share, 35 products replaced foreign brands, and 810,000 tons of high-end stainless steel was exported in last year.

 

Li said considering the requirements of supply-side reform and the market pressure faced by the company, there was sample room for the company to improve despite its achievements and advantages in product quality and variety. The supply-side reform would bring new opportunity to producers who were seeking the optimization in product quality and variety. Inputting best efforts to expand product catalogue, lift quality, and build brand image would be the only way out of the impasse for TISCO and other big industry players.

 

Li suggested a favorable environment should be created to push forward the reform. On one hand, inefficient and low-end capacity should be eliminated through fair market competition; and on the other hand, the weeding out of overcapacity should come with reasonable cutback mechanism as well as policy guide and market supervision. And environmental index, particularly, should become a significant factor to judge whether a capacity would be closed or not.