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Large firms and catch-up in a transitional economy: the case of Shougang Group in China

journal contribution
posted on 2023-06-07, 04:43 authored by P Nolan, Godfrey Yeung
This study examines the possibility of catch-up of the Chinese steel industry, in particular the Shougang Group, with the leading global steel giants. Shougang is one of the four steel companies that have been selected by the Chinese government to constitute the core of the future Chinese steel industry. The contract system at Shougang, which operated from 1979 to 1995, unleashed an extraordinary entrepreneurial energy in the formerly traditional state-run steel plant. In the post-contract system, Shougang's range of decision-making independence in respect to the purchase of inputs, its production structure and product marketing has increased substantially compared to the contract system, when the government still controlled many of the key decisions. As a result of institutional constraint, the low value-added steel products dominate Shougang's portfolio. To challenge the established giants in the steel industry, Shougang has to divest the loss-making non-core businesses, slowly downsize employment in the core business, raise capital on the stock market and generates the resources for continued upgrading of its steel technology and diversifying its product portfolio.

History

Publication status

  • Published

Journal

Economics of Planning

ISSN

0013-0451

Publisher

Springer Verlag

Issue

01-02

Volume

34

Page range

159-178

Department affiliated with

  • Geography Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2006-09-19

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