By Zhou Jianqi & Cao Ying, DRC

2018-3-2

Abstract: Shanxi province is known for its traditional industries whereas it has now become difficult for the province to continue the expansionary and extensive development mode in the new era. The Chinese government has launched a strategic move to improve the quality of economic development by reforming the time-honored traditional industries, including the steel industry, to fuel innovations and thereby generate more growth drivers. In enhancing quality and increasing benefit, the steel industry in Shanxi province is imbued with three implications including enhancing the quality of products, improving the innovation-based value and realizing green manufacturing. As a key state-owned steel enterprise in Shanxi province, Taiyuan Iron & Steel Group Co., Ltd (TISCO) has focused on technological innovation for years, steadily deepened the upgrading of product structures, and has achieved initial results.

TISCO is featured by quality-driven and profit-oriented development mode and the added value of special steel products has gained increased improvement propelled by innovation drives. In the course of steel production including stainless steel products and other types of special steel products, TISCO has become a leading stainless steel producer in the world. Different from some other steel enterprises relying on the booming market demand to increase profits, TISCO has abandoned the scale-for-profit mode and begun to support the increment of profits by a large margin through increasing the added value of products.

The specialty of TISCO’s products lies not in the specialty itself but in the mid-to-high-end special steel product manufacturing capability. Chinese state-owned steel enterprises took the lead in updating the products across the board under the guidance of the national policies since the implementation of the 11th Five-Year Plan. During the 12th Five-Year Plan period, the products of the state-owned steel enterprises were mainly used in non-architecture fields such as autos, household appliances and infrastructure facilities, many of which were also used in special manufacturing fields such as aviation, aerospace and nuclear power generation. Some private steel enterprises have also made notable progress in manufacturing the above-mentioned materials of special use and gained some market shares both at home and abroad. By applying the global leading technologies, TISCO is capable of producing stainless steel, composite materials and silicon steel. It has steadily improved the quality of its products, launched the mass production of high-end products in succession and smoothly moved to the mid-to-high end of the manufacturing chain.

By bringing into play the major role of state capital in quality reform, TISCO is generating new internal drivers through optimizing the layout of state capital and has made breakthroughs in high-level and cutting-edge technologies. First, some state-owned steel enterprises have made solid accumulation in terms of technological innovation and begun to establish world-class enterprises. Second, the state capital can ensure stable and long-term input of resources and enable first-class innovations to get good results based on repeated trials. Third, the innovation entities need to be imbued with anticipatory and positive mechanism to make top innovations. In this regard, state-owned steel enterprises boast a broader vision of advanced technological development in the world, enjoy more pooled resources, and can lead the enterprises in relevant fields to make innovations in step with the progress of world-class cutting-edge technologies. TISCO has made great achievements on the quality-for-profit restructuring and boosted the steel industry in Shanxi province to unleash new growth drivers.

The innovation and reform of TISCO is one of the typical cases in Shanxi province in the course of optimizing the layout of state capital in the steel industry, which have laid the foundation for the steel industry to register a high-quality development in the new era. It should be noted that the road of TISCO’s quality-for-profit transformation is not at all plain sailing and the company still has a long way to go. As a key state-owned steel enterprise in Shanxi province, TISCO needs related supporting policies. First, the government needs to make TISCO a pilot enterprise for making innovations and reforms, strive to pool relevant resources to support TISCO to make breakthroughs on cutting-edge technologies and shore up TISCO in reforming traditional mechanisms and injecting impetus into the innovation mechanisms. Second, the government needs to encourage TISCO to deepen the innovation-oriented cooperation with downstream enterprises, further relax restrictions on market access to open up more channels for the new special steel products, formulate new industrial standards and make it easier for the newly-innovated products to enter the market. Third, the innovation environment of Shanxi province needs to be improved to form cohesive force to fuel the innovation-oriented development of industrial enterprises.