Shen Wenrong, The New Richest Man In Mainland China

Shen Wenrong archives Shen Wenrong, who graduated from Jinfeng cotton processing machinery school in Sha Chau County in 1968, entered the Jinhua Fengzhen cotton ginning and stripping factory in Sha Zhou county. He was promoted to deputy factory director in 1974 and was preparing to build the rolling workshop of the ginning mill. In 1984, he was the factory manager of the Shashi iron and steel factory, who was independent of the ginning factory and led the factory to open the market with window frame steel products. "Jiangsu"

In 1986, the county was changed to Zhangjiagang, and the iron and steel factory in Shagang county was renamed the Zhangjiagang iron and steel plant. In 1992, the shagang group was formed in Jiangsu. Shen Wenrong became the general manager and Secretary of the Party committee.

In February 1993, he was elected chairman of the Zhangjiagang Municipal Committee of CPPCC, and became deputy secretary of Zhangjiagang Municipal Committee in December 1997.

In 2001, shagang group was pformed into a joint-stock enterprise. The Zhangjiagang municipal government held 25% stake, Shagang employee stock ownership 30%, management share 45%, and Shen Wenrong held 17.28%.

In 2004, the Zhangjiagang municipal government pferred part of its shares to Shen Wenrong, Shen's shares rose to 29.8%, becoming the largest shareholder of Shagang.

Shagang Group has become the largest production base of EAF steel and excellent steel, the largest enterprise group in Jiangsu province and the largest private iron and steel enterprise in the country.

In 2008, 18 million 770 thousand tons of iron making, 23 million 300 thousand tons of steel and 20 million 570 thousand tons of rolled material were completed, and sales income was 145 billion 200 million yuan and profits and taxes were 14 billion 800 million yuan. The crude steel output ranks tenth in the world, and Shen Wenrong, who owns 29.8% stake in Sha Steel Group, has become the first wealthy Chinese manufacturing veteran in the past 7 years.

In the iron and steel industry, where the survival environment of private enterprises is not ideal, shagang group can rapidly grow into the third largest iron and steel enterprise in the country. On the one hand, it benefited from the iron and steel czar Shen Wenrong's strong personality and led to the extraordinary growth of Shagang, and on the other hand, the continuous merger and acquisition from Shagang.

However, because it has not been listed, Shagang can only adopt cash merger and acquisition, which has brought a higher debt ratio than the state-owned enterprises.

At present, Shagang intends to sell its assets through ST Zhang copper, but because of its huge assets, seeking IPO will remain its ultimate goal.

In 2008, with the bursting of the valuation bubble of finance, real estate and technology, a large number of new wealth owners who had been in the capital market were greatly reduced by their fortunes, so that their positions on the "500 rich list" fell or even disappeared. The traditional industries, especially those that had not yet been listed, were less affected by their low valuation, and their controllers' wealth had shrunk or even appreciated.

Shen Wenrong, who owns the 29.8% stake in Sha Steel Group, is the first to win this year's "500 rich list" with a fortune of 20 billion yuan.

However, Shen Wenrong has enough courage to become the richest man.

In the past 25 years, Shagang, led by Shen Wenrong, has emerged from thousands of similar enterprises in South of Jiangsu from the obscure local rolling mill. It has become the largest private steel group in the country, which can be matched with Baosteel and Anshan Iron and steel company.

Data show that in 2008, Shagang completed 18 million 770 thousand tons of iron making, 23 million 300 thousand tons of steelmaking and 20 million 570 thousand tons of rolled material, crude steel output ranks tenth in the global steel enterprises, and sales income reached 145 billion 200 million yuan, and profits and taxes 14 billion 800 million yuan.

In fact, the survival and development environment of private iron and steel enterprises in China is not ideal.

As a market which is not completely competitive, the iron and steel industry always has the game between state assets and private capital. The inclination of the state to the state-owned steel enterprises is to some extent inhibit the growth space of the private iron and steel enterprises.

Some studies believe that before the iron incident, state-owned steel and private iron and steel were highly evenly distributed. After that, private steel was forced to remain silent for several years. State owned steel industry expanded its capacity through mergers and acquisitions through the booming business cycle and smooth financing channels.

Then, how can we survive the Shagang in this context?

The "iron and steel czar" is the Shen Wenrong of iron and steel Czar, which is known as the iron and steel czar by Shagang. After graduating from technical secondary school in 1968, it became the predecessor of Shagang, a fitter of the Jinfeng Zha Hua velvet factory in shashang County, Jiangsu province. After that, it was promoted continuously. In 1983, when the iron and steel factory was officially separated from the mother plant flower factory, it became deputy factory director of the iron and steel factory and Fuzheng in July.

From then on, Shen Wenrong became indissoluble with iron and steel. Even later, he became chairman of the Zhangjiagang Municipal Committee of CPPCC and Deputy Secretary of the municipal Party committee. Shen Wenrong also referred to the development of official career as sideline, and the office has been in Shagang.

In the next 25 years, Shen Wenrong's strong personality was constantly integrated into Shagang and precipitated into a powerful gene in Shagang.

The development history of Shagang can be described by barbarism, which reflects the strong genes of Shen Wenrong and Shagang.

In 1984, Shen Wenrong, who came to power on the stage, made a major decision: shrink the product line, take the window frame steel which the big business ignored and small businesses could not go up on the scale as the leading product at that time.

By 1988, Shagang has built 4 specialized production lines for window frame steel, 130 thousand tons of window frame steel products, and 60% of the domestic market share.

By the end of 1988, when Shagang had accumulated more than 100 million yuan of funds, Shen Wenrong had smashed all his home assets, and bought a short production line of 75 tons of ultra-high power electric furnace steelmaking, continuous casting and continuous rolling from the United Kingdom to produce thread steel.

Shen Wenrong said in a drastic way: "the equipment can't be run if it is bought, and it should be put in an exhibition hall there. I sell tickets at the door, 5 cents each, so that my colleagues can learn from Shen Wenrong's lesson."

Shen Wenrong and Shagang were lucky. Soon after the project was put into operation in 1992, it coincided with Deng Xiaoping's southern talk. China has ushered in the climax of infrastructure construction. In less than 3 years, 300 million yuan of investment has been recovered.

In 2002, Shagang bought its subsidiary company, Thyssen, Krupp from the largest Steel Corp in Europe, 220 million yuan, and moved the world's most spectacular plant to China as a whole. It is a feat of Shagang and the capacity of Shagang jumped to 10 million tons in 2002.

This paction has become the most important watershed in the history of Shagang.

However, the brutal growth of Shagang is also without risk.

In March 2004, the new plant of iron and steel was investigated and dealt with by the State Council for the reasons of illegal land occupation. It became a landmark event of macroeconomic regulation and control at that time.

Statistics show that the new iron plant which covers an area of nearly 10000 mu has a planned capacity of 8 million 400 thousand tons, with a total investment of 10 billion 590 million yuan and a total investment of 4 billion yuan at the time of investigation and treatment.

Little known is that when iron fell, Shagang, another private steel star, was once in danger.

At that time, Shagang was trying to promote the reconstruction project of the steel mill which was relocated from overseas. The project occupies an area of 1000 mu and has invested up to 15 billion yuan before and after the project, so as to build a 6 million 500 thousand ton hot coil production line.

However, until the end of 2003, the project was approved only by the former State Council Economic and Trade Commission, and has not been approved by the national development and Reform Commission.

At the beginning of 2004, the NDRC went to Sha Gang to conduct a new round of macroeconomic regulation and control. Fortunately, the approval procedures for Shagang were more complete than those of iron, and the economic strength was far above the iron base. In addition, the construction speed of Shagang was astonishing. It was basically completed in March 2004 and finally escaped.

The fate of Rizhao Iron and steel controlled by Du Shuanghua, which is inevitably controlled by state-owned enterprises, is another risk of private iron and steel enterprises.

Rizhao steel, founded in 2003, has grown rapidly on the basis of Shandong's Rizhao Port, the largest iron ore terminal in the country, and its capacity has reached 7 million 750 thousand tons in 2007.

However, Du Shuanghua's own power is hard to block the Shandong provincial government's determination to integrate the local steel industry. In November 2008, Rizhao Iron and steel signed a reorganization letter of intent with the state-owned Shandong iron and steel group.

In 2007, news of Baosteel's purchase of Shagang was also heard. Shen Wenrong told reporters at the time that Shagang and Baosteel, WISCO and Angang had all discussed cooperation through financing constraints, but so far Shagang has remained stubborn and independent.

The other side of the strong gene is Shagang's high enthusiasm for work and the management method of "barbarians".

In the eyes of peers, Shen Wenrong has "iron like strong character". He works at least 10 hours a day, and does not feel tired.

At 6:40 every morning, as long as there is no business trip, Shen Wenrong will insist on waiting for the staff at the gate of the factory, and arrange work for the relevant personnel face to face.

The enthusiasm of this workaholic also infected tens of thousands of his employees.

It is reported that there is a tight production atmosphere in Shagang. Workers work in three shifts. The administrative staff work at 7 in the morning and leave at 5:30 in the afternoon, and there is no rest at weekends.

Outside Shen Wenrong, there are 19 vice presidents in Shagang. The huge top management team has to meet on time every afternoon at 4:30 p.m., 3 hours in a row.

In addition to Shen Wenrong, all executives are crowded into an office by seven or eight people. According to shagang's statement, this saves office costs and works efficiently, and allows for prompt communication and decision-making.

It is Shen Wenrong and Shagang's unspeakable strong gene that contributed to the barbaric growth of Shagang and provided an internal driving force for a series of acquisition activities, which created the "speed of Shagang" in the industry.

In the four merger and acquisition, Shen Wenrong took over Shagang. At the beginning of Shagang, the annual output of Shagang was less than 10 thousand tons. Only seven or eight varieties, such as small round steel, small thread steel and small angle steel, were among the many small steel mills in South of Jiangsu.

25 years later, Shagang became the largest steel enterprise in Jiangsu, and became the top three iron and Steel Group in the world and the world's top ten.

The study found that apart from Shougang Group's own strong genes seized a number of opportunities for development, epitaxial M & A is another factor to promote the scale of Shagang.

The iron and steel industry plan promulgated by the NDRC in 2005 is the direct promoter of Shagang's extensive merger and acquisition. According to the plan, the NDRC will no longer approve the construction plan of the new projects in principle, encourage the existing enterprises to merge and restructure, and improve the industrial concentration.

For this reason, Shagang has formulated a M & a strategy for "first close to the far ahead, easy for the first time, hard for the first time", and within the first two years, the capacity increased from 15 million tons to 25 million tons.

The acquisition of Jiangsu Huaisteel is the first step in the extensive growth of Sha Steel.

In June 2006, Shagang Group acquired two stake in Jiangsu Huaisteel group for 90.5% times.

Statistics show that Jiangsu Huaisteel is the largest iron and steel enterprise in Northern Jiangsu, and the annual production capacity of excellent steel is over 2 million tons.

After reorganization, the Jiangsu Huaisteel group has been upgraded to 3 million tons through technical pformation and become the special steel production base of Shagang Group.

In September 2007, Shagang bought another 80% stake in Henan Yongxing steel.

Yongxing iron and steel is the largest private iron and steel enterprise in Henan province. In 1993, it built a factory with about 1 million tons of iron and steel production capacity, and the technical renovation project being launched will reach 2 million 500 thousand tons.

The most recent acquisition of the company was the purchase of Jiangsu's 25% stake in Yong Gang, from the end of 2007, from the Zhangjiagang Yong Feng Village Committee of Nanfeng Town, Jiangsu.

Jiangsu Yong steel has nearly 10 billion yuan of total assets, annual production capacity of steel up to 5 million tons.

From the perspective of production capacity, the weight of the acquisition of Shagang is no less than that of Baoshan Iron and Steel Co., which acquired the Bayi Iron and steel company. The latter was only acquired 3 million tons when it was acquired, and it could reach about 5000000 tons after the technical pformation.

In fact, Shagang also made an uncommon acquisition in 2007, that is, to acquire 51% of Changzhou Xinrui steel, which has an annual output of about 300 thousand tons of steel.

Its 300 thousand ton capacity is not in the view of Shagang, but the old iron factory of xinruitai steel has 1 million 200 thousand tons of capacity, which clearly shows the meaning of drunken steel in Shagang.

In fact, Shagang's 25 million tonnes of production capacity has been included in the 2007 steel production of Xinrui steel and iron old factory.

Besides, in 2007, before the Spring Festival, Shagang also sent a takeover intention to Linggang group (600231), located in Lingyuan, Liaoning. However, due to geo economic relations, Lingang shares finally ended up in Anshan Iron and Steel Group, a local state-owned enterprise in Liaoning.

Through the above acquisition, the new steel production capacity of Shagang Group is 3 million tons, 2 million 500 thousand tons and 5 million tons respectively, making its capacity reach 25 million tons, second only to Baosteel, Anshan Iron and steel company and newly listed Hebei iron and steel group.

Shen Wenrong once said: "as long as there is Mittal 1/2 loose international financing conditions in Sha Steel, I only buy in China, the annual output will be 1 billion tons."

This shows his boldness.

The growth of the company depends on whether it can be listed or not. However, the growth path of epitaxial growth also brings great pressure to the capital chain of Sha Steel.

Because Shagang has not yet been listed, therefore, in all the acquisition activities, Shagang can only use cash as a means of payment, rather than using the commonly used way of stock exchange.

Statistics show that Shagang has accumulated more than 5 billion yuan in cash for the purchase of Jiangsu Huaisteel, Yongxing iron and steel, Jiangsu Yong steel and Xinrui steel.

The disadvantages of cash acquisition are obvious.

On the one hand, for the Shagang which has not yet been listed, the cash for acquisition can only come from self accumulation and bank credit, which makes Shagang's debt ratio.