Shen Wenrong: From ordinary fitter to steel czar

Securities Times E Company

2024-07-01 17:54The official account of "Company E" under the Securities Times

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01 Shen Wenrong, the founder of Jiangsu Shagang Group, died at the age of 78 due to ineffective medical treatment, and was known as "China's Carnegie" and "Steel Tsar".

02Shagang Group started with 450,000 yuan of self-raised funds in 1975, and now it has been the largest private steel company for many years.

03 Shen Wenrong has made brilliant achievements in the steel industry, and shagang ranks fourth in China and sixth in the world with 40.54 million tons of crude steel output.

04 In addition, Shagang has ranked 348th in the Fortune Global 500 for 15 consecutive years, and has improved nearly 100 places in 15 years.

05 Shen Wenrong's son Shen Bin took over and became the chairman of Shagang Group, and Shagang formed a governance structure with the old professional manager and the second generation.

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Yesterday, Shen Wenrong, founder and chairman of the board of directors of Jiangsu Shagang Group, passed away at the age of 78 due to ineffective medical treatment.

Shen Wenrong has the titles of "China Carnegie", "Steel Tsar", etc., he is a doer in China's steel industry, as a layman in the steel industry, he has a keen sense of smell and judgment, riding the east wind of reform and opening up, becoming the leader of China's steel industry.

Shagang Group set off on the Yangtze River with 450,000 yuan of self-raised funds in 1975, and now it has been the first private steel scale for many years, and Shen Wenrong has single-handedly created this miracle.

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In 2023, shagang will rank fourth in China and sixth in the world with 40.54 million tons of crude steel output, second only to China Baowu, Anshan Iron and Steel Group and Hegang Group, three state-owned enterprises in China, and continue to be the largest private iron and steel enterprise, and at the same time, with a revenue of 42.784 billion US dollars, it has ranked 348th in the Fortune Global 500 for 15 consecutive years, and has increased nearly 100 places in 15 years.

Behind this is the hard work of the founder Shen Wenrong for many years.

In 2019, when Suzhou Radio and Television Station interviewed Shen Wenrong, Shen Wenrong had a lot of medicines on his desk in addition to documents. Shen Wenrong said that it's okay not to eat now, but it's okay not to take medicine.

But this can't stop him from working all the time, he said: People have their own hobbies in their lives, and my hobby is steel. Doing what you like and want to do is not tiring or bitter, you will feel that this work is enjoyment.

Shagang has changed from a workshop under a ginning factory to a Fortune 500 company, and Shen Wenrong's decision-making during the critical period has made great contributions. Shagang has created a miracle in the industry, showing the strong vitality of private enterprises.

When Daegu Village and Huaxi Village made a name for themselves with steel, Shen Wenrong was still unknown, but in the end, Shen Wenrong went further and achieved more.

Xu Kuangdi, the former mayor of Shanghai, once said after the visit: "Do you know how I feel? Like an electric shock. I've only heard of shagang before, and I've never had a chance to look at it. After reading it, I felt that what I heard was worthy of the name. When I was mayor of Shanghai, Baosteel embarked on a 3 million ton project, and it took seven or eight years to mobilize the strength of the whole country before it could be put into production. Now, relying on its own strength, shagang in a county-level city has made 6.5 million tons in just two or three years, which shows that our national strength has been greatly improved! ”

Cross-line

After graduating from secondary school in 1968, Shen Wenrong entered the predecessor of Shagang, Jinfeng ginning and stripping factory, and became an ordinary fitter. At that time, the ginning factory was responsible for the processing and production of 200,000 mu of cotton in Shazhou County. In 1974, Shen Wenrong became the workshop director.

Every year, when the ginning plant carries out mechanical maintenance and technical transformation and upgrading, it will encounter a thorny problem - lack of steel. "At that time, the entire Shazhou County only allocated 4.8 tons of steel a year through state funding." Shen Wenrong recalls that the ginning plant could only allocate 500-600 kilograms of steel per year for technical transformation, which was far from enough.

Rush forward with demand. In 1975, Shazhou County financed a loan of 200,000 yuan, plus the 250,000 yuan saved by the ginning factory, the rolling mill was established, and only one small rolling workshop was owned, and Shen Wenrong became one of the heads of the rolling mill. On June 10 of that year, the company was named Shazhou County Rolling Mill.

The raw materials of the rolling mill are scraps bought from the surrounding Sushan Iron and Steel, Shanghai Iron and Steel, and Jiangxi Steel Mills, which are cut off and re-rolled. In the first year, 1,625 tons of steel were produced, earning 50,000 yuan, and in the second year, 2,027 tons were produced, earning less than 100,000 yuan.

In 1983, the steel mill and ginning factory were separated, and Shen Wenrong became the deputy director of the steel plant. In 1984, at the age of 38, Shen Wenrong became the director of the steel plant.

Shagang relies on large-scale production of steel window materials to find market gaps, meet the needs of the real estate industry, and open up its popularity. At the end of the 80s of the last century, shagang built 4 specialized production lines for window frame steel, with an output of 130,000 tons and a domestic market share of 60%, becoming the first brand of steel window material production in China. "At that time, more than 100 vehicles lined up to pick up goods in the shagang plant area every day." Shen Wenrong recalled the scene at that time.

Introduce

This is just to seize the gap in the market, steel window material will soon be replaced, if you want to develop greatly, you must have the technology to enter the steelmaking link. In 1988, Shen Wenrong decided to make a joint venture with Hong Kong Yongxin Company for 30 million US dollars to introduce an integrated production line of electric furnace steelmaking, continuous casting and continuous rolling with an annual output of 250,000 tons of rebar from the British Bizton Steel Mill.

Leaders and authorities in the metallurgical industry have expressed doubts and advised them to think twice. Shen Wenrong couldn't sleep for more than half a month, even if all the Shagang family funds were smashed into it, there was still a 1/3 funding gap, and he made a military order, "If the introduction of this project fails, use it as an exhibition hall, and I will sell tickets." ”

This allowed Shagang to enter the steelmaking process, no longer a small downstream processing plant, and grasped the initiative.

From 1985 to 1997, shagang implemented more than 100 projects, but did not set foot in plates. In the face of persuasion, Shen Wenrong still felt that rebar was better, and the profit far exceeded that of plate.

In 2001, thyssenkrupp's subsidiary, Hosch Steelworks, lost money for several years and sold its equipment, which was valued at 2 billion euros. Shen Wenrong bought the workshop equipment for 220 million yuan, which is the price of scrap steel.

He mobilized more than 1,000 employees to Germany, spent a year, 25 tons of equipment and 40 tons of detailed assembly documents, and shipped back to China little by little.

In his book China Shakes the World: The Rise of a Hungry Nation, Financial Times reporter James Kynge describes the situation as follows:

Today, only a few twisted piles of scrap metal remain here (at the thyssenkrupp steel mill). I walked over to a man in overalls on the side of the road, who was hoisting a huge piece of metal pipe onto a truck. I asked where the pipe was going, and he straightened up and said, 'China.' ’ "

All equipment is packed in wooden crates, stuffed into containers, and loaded onto ships for shipment. On the flat alluvial plain of the Yangtze River, and in strict accordance with the appearance in Germany, the equipment was reassembled without a single screw. "

With only 15 billion yuan of investment, Shen Wenrong built an iron-making, steel-making, continuous casting, and continuous rolling project with an annual output of 6.5 million tons that requires an investment of at least 45 billion yuan according to industry practice.

In the 80s of the 20th century, there were more than 40 small steel mills in a county in southern Jiangsu, more than 400 in Suzhou, and more than 1,000 in the entire Jiangsu Province, but about 90% of them collapsed. In 1996 and 1997, a large number of them were eliminated.

These steel mills did not seize the opportunity to upgrade and expand their scale, and did not enter the next stage. Shen Wenrong continued to invest in the introduction of European obsolete production capacity and led Shagang to become the winner.

Survive the crisis

In 2008, it was a purgatory for the steel industry, many private steel companies encountered difficulties, transferred equity, Shagang Group frequently rumored to be acquired, Shen Wenrong denied these rumors, saying that an overseas company had an acquisition plan, but because the bid was too low was rejected.

Shen Wenrong's self-confidence comes from the ability to control costs, he believes that Shagang still has an advantage in the industry, "10 out of 10 companies have fallen, and I have no choice but to fall; If two out of 10 don't fall, I'm among them. ”

In April and May 2008, steel prices rose all the way and the market was hot, and Shen Wenrong realized that excess profits would not last. Since May, shagang has cleared its inventory on a large scale to return billions of yuan before the outbreak of the financial crisis. When the crisis came, Shen Wenrong decisively put forward the "three guarantees" to ensure the normal development of production, the normal progress of construction projects, and the normal realization of annual benefit targets.

In January 2009, shagang carried out technical transformation of the original large coil production line and added bar production facilities with an annual production capacity of 1.2 million tons, mainly producing rebar that sells well in the market. This technical transformation project took only two and a half months and was successfully put into operation on March 24.

With the help of "4 trillion investment stimulus", shagang took the lead in attacking again, attacking 25 million tons of production capacity.

Shagang Group was listed in the Fortune Global 500 list for the first time in 2009, and is also the only "grassroots" private enterprise in Chinese mainland to be selected.

Around 2008, shagang maintained a steady pace of acquisitions, and in 2006, shagang acquired Jiangsu Huaigang Special Steel; In 2007, Shagang acquired Henan Anyang Yongxing Iron and Steel; In 2008, Shagang successively acquired Jiangsu Xinrui Special Steel and Jiangsu Yonggang Group; In 2010, Shagang acquired Wuxi Xixing Iron and Steel.

In April 2011, Huaigang Special Steel, a subsidiary of Shagang, acquired the equity of *ST Zhangtong, and changed its name to Shagang (002075) by backdoor listing of Huaigang Special Steel.

In 2017, Shagang acquired Northeast Special Steel Group, which entered the bankruptcy reorganization procedure, and became the actual controller of Fushun Special Steel (600399). It has two listed companies.

Shagang has also suffered setbacks in the capital market, and in 2016, Shagang wanted to acquire GS Company, but the acquisition was ultimately rejected. In 2022, the major shareholder of Nanjing Iron and Steel Co., Ltd. (600282) held by Fosun was sold, and Shagang paid 8 billion yuan in sincerity money, which was finally won by CITIC Group.

Succession

On the issue of succession, Shen Wenrong once said: "Shagang is not a family business, no matter what kind of ownership of the enterprise, we must hire the best people, who has the ability to build the enterprise into a century-old factory, who has more mass base." ”

Shen Wenrong believes that it is impossible for his children to take over. He said before that they can come to Shagang to work, they can be the team leader and squad leader, but it can't be his position.

However, Shen Wenrong quietly changed his mind. In June 2016, Shen Wenrong's son Shen Bin, who was born in 1979, took over and became the chairman of Shagang Group.

Shen Wenrong went to the United Kingdom to study in 2001, and after graduating in 2004, he first worked in a foreign trade company as a financial officer, and then went to a shipping company in Hong Kong to do finance, and in 2006, he entered Shagang and participated in the preparation of the Hong Kong branch, and was also engaged in financial work.

In an interview with Xinhuanet in 2019, Shen Wenrong expressed his position on the topic of succession, saying, "Now that our new young team has been formed, this generation should surpass us and do better." ”

According to the enterprise investigation, the major shareholder of Shagang Group is Shen Wenrong, holding 29.3237% of the shares, and the second shareholder is Zhangjiagang Free Trade Zone Xinghengde Trading Co., Ltd., holding 29.1005%.

From the perspective of senior management, this is a family business: the chairman is Shen Qian, and the director and general manager is Gong Yan. After the penetration of the second shareholder, it is an offshore company, Hengde International Co., Ltd., registered in the British Virgin Islands, established in 2006.

The three shareholders of Shagang Group are Zhangjiagang Free Trade Zone Runyuan Stainless Steel Trading Co., Ltd., with a shareholding ratio of 17.6698%. Shen Wenrong holds 50.01% of the equity of Zhangjiagang Runyuan, and Xingheng, the second shareholder of Shagang Group, Zhangjiagang Free Trade Zone, holds 48.2741% of Zhangjiagang Runyuan.

The four shareholders of Shagang Group are Ningbo Meishan Bonded Port Jincheng Shazhou Equity Investment Co., Ltd., with a shareholding ratio of 7.144%, Shen Wenrong holds 70.5263% of the shares of the four shareholders, and Gong Sheng holds 7.3684% of the shares.

From these shareholder structures, it can be seen that Shagang Group is a typical private enterprise, with Shen Wenrong holding the vast majority of the shares, and Gong Sheng and other executives holding a small part of the shares.

This shareholding ratio structure determines that Shen Bin's succession can remain stable. Shagang has formed a governance structure that matches the old professional managers and the second generation.

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