But why does Jiang Feng think this acquisition plan is unreliable?

This has to start with the background of these two steel companies.

For this Pearl Steel, as China's number one steel company, on the surface, it is a state-owned enterprise and a pearl among state-owned enterprises. The government is unlikely to allow it to be acquired by Jiang Feng. Of course, this is on the surface. If this is true, Jiang Feng believes that he can easily deal with the government, because this acquisition plan is related to the manufacturing of aircraft carriers and other advanced ships, and the government may let it go after comprehensive consideration.

But Mingzhu Steel is just a state-owned enterprise on the surface, but in fact it is not a state-owned enterprise in its bones. It has a strong Japanese descent.

At that time, Mitsui Products, Japan's largest comprehensive trading company, had already realized that the Chinese market would drive the spot price of iron ore, thus creating a community of interests such as the new Nippon Steel, Mitsui Products, Merchant Ship Mitsui, Shanghai Baosteel, and Brazilian Vale.

Mitsui's penetration in Pearl Steel can be traced back to the beginning of the establishment of Pearl Steel. As early as 1977, during the construction of Pearl Steel, the largest steel company in Japan, introduced technical equipment from Japan's largest steel company, Nippon Steel. Mitsui Products owned 20% of the equity of Nippon Steel. At the same time, Toshiba and Ishikawa Shiba Homomo Heavy Industry, the backbone companies of Mitsui Consortium, cooperated with Nippon Steel to become equipment suppliers of Pearl Steel. However, since then, Pearl Steel could only choose to import iron ore from Australia and Brazil.

As early as the 1940s and 1950s, Mitsui Products began to collect information widely overseas, purchase iron ore, and further invest in mines by signing long-term contracts with foreign countries, and finally take over the board of directors of mining companies. Mitsui Products has accumulated rich experience in iron ore trading, and has formed a community of interests with mining companies through long-term trade contracts, investment, stakeholders, establishment of joint ventures, and participation in operations.

Nippon Railway Corporation and Mitsui Products are a community of interests, and they have a relationship of mutual holdings and joint investments; secondly, Brazilian Vale Corporation and Australian Tax have long been firmly bound, becoming part of Mitsui's global layout.

The most unpleasant thing is that after the Japanese chaebol controlled domestic steel companies, it not only allowed the country to be controlled in the acquisition of iron ore, but even Mingzhu Steel also had Mitsui ancestry in the maritime logistics link. The merchant ship Mitsui transported more than 10 million tons of iron ore for Mingzhu Steel every year.

It can be said that since the day Mingzhu Steel was born, its dependence on Mitsui technology, talents and logistics has been mixed and penetrated into the bone marrow. The main production equipment and core technologies all come from Nippon Steel.

The steel processing base jointly operated by Mitsui Products and Mingzhu Steel Group in China and the production base under construction. Although Mingzhu Steel enjoys the controlling stake in the joint venture due to policy restrictions, Mitsui's power is not limited to this.

Among some companies, although Mingzhu Steel's investment ratio is 51%, the chairman is appointed by Mitsui Materials. And Mingzhu Steel Group guarantees that the loan is also guaranteed by Mitsui Materials.

Mitsui controls Mingzhu Steel in China, Posco iron in South Korea, and Tata family in India. The layout in various places is to graft capital, industry, information, circulation and other aspects through joint ventures with the largest local enterprises, and ultimately control the entire industrial chain. This situation makes Jiang Feng more worried.

Since the 1990s, under the influence of going global strategy, learning the Japanese and Korean model and becoming bigger and stronger Chinese companies have become a mainstream trend, and during this period, the ** research on comprehensive trading companies appeared.

However, with the rapid development of China's economy, the inflation rate in 1994 reached 21.7%. The Chinese government began to turn to the US economic model in 1995, controlling interest rate leverage and monetary policy through macroeconomic management means to implement intervention measures on the economy. The deposit interest rate once rose to about 12%, and savings for more than five years can also receive about 12% of value-preserving interest. In other words, the interest rate for long-term deposits almost reaches 25%, and this high interest rate is probably rare in the world. The result of a series of policies is the return of currency. The disappearance of inflation also causes a rapid brake on economic development.

The abnormal changes in China's macroeconomic situation have not attracted the attention of Japanese companies. As a comprehensive trading company, an important function of Mitsui Products is to assist the affiliated companies of the consortium to enter overseas markets. At this time, since the Chinese market was not truly open, many of Mitsui Consortium's companies are investing in Southeast Asia on a large scale, but the target is still the Chinese market. At the same time, Mitsui Products has led Japanese companies to establish a number of joint ventures in China.

Starting from 1992, Baosteel was the leader to carry out a pilot project on liquidity debt clearance, and then it cleared the triangular bonds of key enterprises in the four industries of coal, electricity, forestry and non-ferrous metals. However, triangular bonds reached 800 billion yuan by 1996. At this time, triangular bonds caused enterprises to blindly expand production, resulting in product surplus, and fostering an economic crisis.

After many large state-owned enterprises adopted the Western accounting system, they were exposed to insolvency and were forcibly cleaned up triangular debts indiscriminately, which eventually led to major blood loss and bankruptcy. Moreover, China's independent industrial system continued to collapse due to the destruction of symbiotic relations between enterprises.

At this time, after the triangular bonds of Mingzhu Steel were cleared, it lost the support from many domestic companies, and formed a split relationship with domestic foreign trade, shipping, finance and other companies, which instead brought opportunities to industrial organizers like Mitsui Products.

It was also at this time that Mingzhu began to fall into the hands of Japanese companies.

Mitsui's penetration into China's steel industry is not just Mingzhu Steel. When the industry restructuring of China's steel stocks was in full swing, foreign capital penetration was everywhere. During the investigation, the reporter found that in China's steel industry chain, Japanese Mitsui was everywhere.

A while ago, Jiang Feng read a report that a reporter interviewed Mr. Kazuo Yamaguchi, executive vice president of Mitsui Products Co., Ltd. in China. According to Yamaguchi, Mitsui began to cooperate with Chinese steel companies very early. In the early stages of cooperation, Chinese steel companies were just executive agencies under the government's plan and did not have a customer demand-oriented concept. Kazuo Yamaguchi said: "Mitsui brought advanced market concepts to Chinese steel companies, and of course we also gained benefits from the big market in China."

China has ranked first in the world for nine consecutive years, and China is also the world's largest steel producer and consumer. However, the reporter found that such a "steel prosperity" seems very inconsistent compared with the actual high-end steel products of China's automobile steel and other aspects.

It is reported that domestic steel companies currently have limited production technology capabilities in automotive steel projects, especially high-end automotive steel used for sedan production, and more than 50% of automotive steel in the market rely on overseas imports. Among them, cold-rolled thin plate technology, especially high-end automotive panels, as "high-tech products", are mastered by one of the few foreign steel giants.

In the face of such a global industrial structure, Chinese steel companies have chosen to produce in joint ventures with foreign companies. The "market for technology" practice that has been popular in many industries has once again appeared in the steel field.

As a result, the Japanese Mitsui Consortium successfully entered the long-coveted Chinese steel industry.

The Mitsui Consortium's Nippon Steel is world-class in terms of automotive panel R&D capabilities. The first step in the joint venture between Mitsui Consortium and Chinese steel production companies is to be completed by Nippon Steel.

On November 9, 2005, Mingzhu Steel, Xinnitrogen and Ascelo Company jointly invested to build Mingzhu Steel Xinnitrogen Automobile Plate Co., Ltd., with a total investment of RMB 6.5 billion and a registered capital of RMB 3 billion. Among them, Mingzhu Steel invested 50%, Xinnitrogen 38%, and Ascelo 12%. The company's annual production scale reached 1.7 million tons of automobile plates, and the main production equipment and core technologies were from Xinnitrogen.

Mingzhu Steel accounts for a considerable share in the national automobile plate market. FAW's trucks, Xiaohongqi sedans, Jetta sedans, Mingzhu Volkswagen's Santana sedans, Shenlong, Jiaozhou Honda, Fengshen Automobile and other vehicles all use Mingzhu Steel's automobile plates in large quantities.

By providing steel plates to Japanese automobile companies such as Toyota and Honda, Nippon Steel has achieved the goal of getting a share of the Chinese market. Japanese steel companies have always had a tradition of providing supporting steel plates for Japanese automobile companies, and of course it is no exception in China, an emerging automobile market. With the influence of Mingzhu Steel, Mitsui's power has spread in China's steel industry.

On the one hand, Mitsui Products relied on its logistics management technology and experience to jointly invest with Chinese companies to establish a steel logistics supply chain; on the other hand, Toyota Motor and other Japanese companies under Mitsui Consortium purchased large quantities of steel joint venture products. Through these two main means, Mitsui Consortium's influence was consolidated and developed.

Through cooperation with Mingzhu Steel, the Mitsui Consortium basically controlled the high-end steel market in East China and South China. In fact, the Mitsui Consortium's goal is far more than that, and the Mitsui Consortium also appeared in the Northeast and Central China regions.

In Northeast China, Ansteel Group, Changchun First Automobile Group and Mitsui Products jointly established Changchun FAW Anjing Steel Processing and Distribution Co., Ltd. of 150 million yuan of investment, Mitsui Products accounted for 25% of the company's shares.

In Jianghan, as early as December 1995, Mitsui Products and Jianghan Iron and Steel Group jointly established Jianghan Xingjing Steel Processing Co., Ltd., mainly engaged in deep steel processing. The products are widely used in many products and industries such as motors, transformers, large generators, and household appliances, with an annual total processing capacity of 50,000 tons.

Mitsui's other major joint ventures in China include: Tongzhou Mingzhu Steel Xinri Steel Co., Ltd., Ningcheng Mingzhu Steel Stainless Steel Co., Ltd., Sujiang Tokyo Cable Company, Beixin Housing Co., Ltd., etc.

Just imagine, how could a company with such strong control in Mitsui Consortium be acquired by Jiang? Because this company was determined to set up a plan in China to grasp the Chinese steel industry. If Jiang was acquired by Jiang, wouldn’t their efforts be wasted?
Chapter completed!