Outgoing chief Xie Qihua has been on a buying spree driven by her ambition to see Baosteel end up as one of a handful of giants left standing
IN 1978, CHINA'S biggest steel producer was a factory in Anshan in the northeast that was built by the Japanese in 1919. As it moved to modernise its industries, Beijing decided to build its first integrated steel complex in Baoshan on the northern outskirts of Shanghai.
That same year, a 35-year-old female engineer joined the Baoshan firm. Construction was due to be completed by 1982, then 1985 and finally 1988. Japanese firms that had their contracts cancelled called it a typical example of duplicitous Chinese business culture.
Less than 20 years later, the Baosteel Group has become the world's sixth-biggest steel producer and Xie Qihua, general manager since 1994 and chairman since 2000, one of the most powerful women in the world and among a few female chief executives in an industry dominated by men.
The group's assets have more than tripled from 39 billion yuan in 2000 to 142 billion at the end of last year and net profit quadrupled from three billion yuan in 2000 to 12.7 billion last year. For the first time, Chinese steelmakers led by Baosteel are this year leading talks with the world's three big iron ore producers to set global prices.
Ms Xie will step down this week as chairman at a meeting of Baosteel shareholders and will leave to her successor, Xu Lejiang, her target of making the company one of the top three in the world by 2010 and list it through a global offering.
Mr Xu, 47, joined Baoshan in 1982 after graduating from Jiangxi Metallurgy College and has held top posts since 1998.
Ms Xie will retain her post as a company director and head of the China Iron and Steel Association, with a two-year term running until next year. Beijing may appoint her to a senior post to oversee the consolidation of China's giant but overweight steel sector.
It is hard to find a Chinese executive who has left such a legacy.
In her last six months, Ms Xie has been engaged in an acquisition spree, setting up strategic partnerships with three major domestic producers - Magang Group, parent of Maanshan Steel, Ba Yi Iron and Steel of Xinjiang and Taiyuan Iron and Steel.
She is applying to build a new plant with a capacity of 10 million tonnes in Zhanjiang, Guangdong, and invest about US$200 million in a joint-venture mill in Brazil with iron ore producer Companhia Vale do Rio Doce.
Driving this ambition is the industry's global consolidation in which Ms Xie wants Baosteel to be one of the giants left standing in the end. The world's No1 and No2 producers, Mittal Steel and Arcelor, have bought major stakes in Chinese plants and are looking for more. Ba Yi was approached by Mittal.
China is the world's biggest producer with 352 million tonnes last year, 32 per cent of global output, exceeding the combined output of the United States, Japan, South Korea and Russia and has a production capacity of 420 million tonnes.
'China's industry lacks concentrated production facilities and is hampered by inefficient industrial structures, a lack of technical innovation and too many low-production firms,' Ms Xie said. 'It is better that we concentrate production than the foreigners buy our companies.'
Born in June 1943 in Shanghai, Ms Xie graduated from the civil engineering faculty of Qinghua University in 1966 and went to work as a technician at Shaanxi Steel before joining Baoshan in 1978.
It was the biggest industrial project of the post-Mao era, designed as a replica of the Nippon Steel facility at Kimitsu, then the world's most advanced and a symbol of Sino-Japanese co-operation.
But Beijing's ambitions were larger than its foreign exchange and contracts with Japanese suppliers were cancelled. After repeated delays, the project was completed in 1988, six years behind schedule. It became the favourite son of the government. While other mills were burdened by outmoded and inefficient equipment and tens of thousands of employees, Baosteel had cutting-edge technology, a lean workforce and the ability to make speciality steels.
Its status gave it privileged access to government finance and helped it become a supplier to major clients such as Shanghai Auto Industry Corp, General Motors, Volkswagen, First Auto Works and the 4,200-km East-West natural gas pipeline, for which it supplied more than 60 per cent of the steel.
Its clients worldwide include Whirlpool, Electrolux, Siemens, Sony and Caterpillar. It has more than 33 per cent of China's car and home appliance markets for steel and 30 per cent of the oil and gas sector.
As China's most efficient and cost-effective steel producer, Baosteel was best placed to take advantage of the surge in demand of the past 15 years and with the addition of a trading firm in 1996, set up offices in 10 countries worldwide and started exporting, especially to South Korea.
The biggest challenges for Ms Xie were the Asian financial crisis of the late 1990s, which badly hurt exports which caused a sharp fall in revenue and government-arranged mergers with two money-losing Shanghai steel firms. One of them, Shanghai Metallurgical Group, had 120,000 workers, 12 times as many as Baosteel.
Ms Xie had to integrate the two new firms and cut the workforce from 176,000 to 90,000. In December 2000, a listing vehicle under the parent issued shares on the Shanghai stock market, raising 7.7 billion yuan, then China's largest initial public offering. It used the money to make acquisitions and invest in new technology and production facilities, an expansion programme at home and abroad that is continuing.
In October last year, Forbes magazine picked Ms Xie as one of two Chinese among the top 50 businesswomen in the world last year. The other was Ma Xuezheng, chief financial officer of computer maker Lenovo.
Last year, Fortune ranked Baosteel 309th among the world's 500 biggest firms.
Since Ms Xie never talks about her personal life, little is known about it.
Xie Qihua was born in Shanghai in June 1943.
She is a graduate of civil engineering from Qinghua University and started work as a technician at the Shaanxi Steel Co after graduation in 1966.
She joined Baoshan Steel's technical division when the company was set up in 1978 and was made general manager of the Baoshan Steel Group some 16 years later.
In 2003, she was appointed chairwoman and general manager of the group as well as chairwoman of Baoshan Iron and Steel.
After 28 years with Baosteel, Ms Xie will step down as chairwoman of Baoshan Iron and Steel on May 17.
She is expected to retain her post as a company director.