Merged steel gi­ant to get 2 HQs: re­port

A Chi­nese com­pany will have dual cor­po­rate hubs for the first time, ex­pert says

China Daily (USA) - - BUSINESS - By ZHENG XIN zhengxin@chinadaily.com.cn

China’s Baos­teel Group will have dual head­quar­ters fol­low­ing its merger with smaller ri­val Wuhan Iron and Steel (Group) Corp, ac­cord­ing to Shang­hai-based news­pa­per The Pa­per.

The newly merged steel gi­ant will have head­quar­ters in both Shang­hai and Wuhan in Hubei prov­ince, it said, cit­ing anony­mous sources.

A lead­ing in­dus­try an­a­lyst said it was the very first time a Chi­nese com­pany would have two cor­po­rate hubs.

“Hav­ing two head­quar­ters for the newly merged steel gi­ant will sub­stan­tially boost its ef­fi­ciency in man­age­ment and op­er­a­tion,” said Wang Guo­qing, di­rec­tor of the Lange Steel In­for­ma­tion Cen­ter.

The two State-owned steel­mak­ers will form the largest steel com­pany in China by ca­pac­ity.

De­spite the fact that Baos­teel is tak­ing over Wuhan Iron and Steel Group, the smaller ri­val will re­tain some in­flu­ence fol­low­ing the takeover, Wang added.

An of­fi­cial with the Baos­teel’sPRde­part­ment de­clined to con­firm the re­port on Tues­day. But he saidon­con­di­tion of anonymity that Baos­teel will make of­fi­cial an­nounce­ment on this is­sue soon.

Ac­cord­ing to Wang, the dual head­quar­ter op­er­a­tion is also based on an eval­u­a­tion of the im­pact of large scale cor­po­rate head­quar­ter on lo­cal govern­ment.

“Lo­cal gov­ern­ments pre­fer cor­po­rate head­quar­ters, as they con­trib­ute more tax rev­enue than branch of­fices,” said Wang.

“Wuhan Iron and Steel Group has con­trib­uted sub­stan­tially to the lo­cal govern­ment, and mov­ing its head­quar­ters from Wuhan would have a ma­jor im­pact on Hubei prov­ince fi­nan­cially.”

Wuhan used to be the home to sev­eral other Sta­te­owned en­ter­prises’ head­quar­ters. How­ever, China Changjiang Na­tional Ship­ping Cor­po­ra­tion and Gezhou Dam have since re­lo­cated to other cities.

First an­nounced in June, the plan to com­bine the two State-owned steel firms is part of the Chi­nese govern­ment’s push to con­sol­i­date the vast, frag­mented in­dus­try to get rid of ex­cess ca­pac­ity.

The State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion ap­proved the joint re­struc­tur­ing of the two steel-mak­ers to form the largest steel com­pany in­China by ca­pac­ity in the same month.

Based on 2015 ca­pac­ity, the two com­pa­nies will pro­duce around 60 mil­lion met­ric tons a year, leapfrog­ging He­bei Iron and Steel to the top spot among China’s steel-mak­ers, ac­cord­ing to Reuters. Wang Ying in Shang­hai con­trib­uted to this story.

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