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Economic Daily: Building Materials Industry Creates New National Business Card



On August 26, China National Building Materials Group Co., Ltd. and China Sinoma Group Co., Ltd. held reorganization meeting in Beijing, and the New China National Building Materials Group Co., Ltd. was formally established. The assets of new reorganized Group totaled more than 550 billion yuan. CNBM had become China's largest comprehensive building materials industry group and also the world leader in the field of building materials. After the reorganization, the cement clinker design capacity of new group will reach 530 million tons, commercial concrete production capacity of 430 million cubic meters, gypsum board production capacity of nearly 2 billion square meters, glass fiber production capacity of 1.78 million tons, wind power blade capacity of 16GW, which are ranked No.1 in the world.

Build the world-class enterprise

Xiao Yaqing, Director of the State-owned Assets Supervision and Administration Commission of the State Council, said that the reorganization of CNBM and Sinoma is conducive to solving the problems of decentralization and duplication of resources in the process of enterprise development and beneficial to promote the optimal allocation of resources at a higher level. It is helpful to draw on each other's strengths, share brand, channel, R&D and other resources, reduce the homogenization of development and repeated investment, and further enhance the scale of strength, improve the global market competitiveness; conducive to address the overcapacity in building materials, enhance industry concentration, integrate superior resources and innovation achievements towards high-end development; improve overseas building materials equipment, engineering, manufacturing, warehousing, logistics service system and build new brand for China's building materials production capacity and equipment in the process of implementing "Going Global" strategy.

After the new group is formed, the scale is bigger and the strength is stronger Xiao Yaqing said that from the new Group should aim at the market, plan the future, clarify the new strategy and new position, put forward the task, key areas, main direction and important initiative of enterprise development in the next period from the perspective of global vision and industry leader.

"The reorganization of the two groups is of great significant and also a milestone event in the development history of China's building materials industry." Song Zhiping, chairman of the new group, said that the strategic vision of the new Group was committed to becoming a world-class comprehensive building material industry group, and the strategic positioning was committed to becoming the industry leader in integration, innovator in industrial upgrading and a pioneer in the international capacity cooperation. The headquarter for new group will strive to become a national strategic industry development platform, optimize the operating mode and control structure, improve the competitiveness of enterprises, economic and risk control ability.

Accelerate the pace of cutting production capacity in the industry

At present, the state is vigorously promoting the structural reform of the supply side, and the capacities of cement, flat glass, and steel, coal, metallurgy, shipbuilding, nonferrous metals in the current building materials industry are facing a serious excess capacity, severe challenges in the structural problems, which are the priorities in the supply-side structural reform.

In the context of supply-side structural reform and "cutting production capacity", the strategic reorganization of the two groups means that the pace of cutting production capacity of the traditional building materials industry such as the cement industry will be greatly accelerated. The reorganization of two groups is conducive to improving the concentration of the industry, promoting the transformation and upgrading of traditional building materials industry to the high-end development, and play the leading role in the supply-side structural reform of state-owned enterprises.

Xiao Yaqing said that the reorganization of two Groups should on the one hand enhance the industry concentration, address the overcapacity in the building materials industry by the means of staggering peak production, improving standards and reduction replacement, solve the problems of decentralization, redundant projects and other issue in the process of enterprise development, and achieve optimal allocation of resource in the higher level and enhance the core competitiveness. On the other hand, the new Company should give full play to the advantages of resources and integration of innovative achievements, enhance the development of cement, glass and other traditional building materials products to the high-end, focus on innovating some key basic technologies that impede the development of industry, expand effective and high-end supply, promote the transformation and upgrading of industry  and fully play the central enterprises' role in driving the supply-side structural reform.

He also said that the new Group should practice the policy of making the SOEs become leaner and healthier and improve quality and efficiency. The new group should take the reorganization as an opportunity to vigorously reduce the management level, actively and safely deal with "zombie enterprises" and inefficient and invalid assets, strengthen lean management, pay close attention to cost control, and continuously improve the profitability.

Integration and development are arduous tasks

Xiao Yaqing stressed that today's reorganization meeting indicates the initial results of reorganization of the two companies, but the future internal integration and reform and development tasks were still arduous. It is reported that the listed companies of two Groups have more than a dozen, featuring going public in numerous places and large market value, so the operation for internal integration is difficult. In the face of complex business structures and wide range of platforms, the integration of two Group's organization structure, internal resources and external markets is arduous.

"The new group should complete the restructuring task and also do a good job in production and management, as well as maintain stable growth of key indicators and ensure the completion of stable growth target", Song Zhiping said. He said that the new group would work in an orderly way to implement the re-organization, and provide dividends of reorganization. The new Group will focus on the main enterprises and set the goal of listing the large company on the basis of optimization of resource allocation, and integration of similar business resources, adhere to the principle of avoiding competition in the same industry, regulating related transactions, and implement specialized reorganization, focus on building six business platforms, such as industry platform, international production cooperation platform, new materials, new energy, new housing platform, national materials research institute platform, national material resources development platform, financial operation platform.

The new group will also increase the intensity of state-owned enterprise reform. "In the SASAC reform pilot, we are the pioneer of carrying out merger and reorganization, implementing the board of directors and developing mixed ownership economy. Song Zhiping said that we should take this pilot as an opportunity to boldly explore, took proactive steps to become the pioneer and paving stone that can grasp the initiative in the reform of state-owned enterprises." We must deepen the reform of state-owned enterprises and inject development of power into the enterprise. "

In accordance with the SASAC's plan, the number of central enterprises during the year is expected to be reduced to 100. In the next period, we must intensify our efforts to reorganize the central enterprises. But the amount of reduction does not necessarily represent the improvement of quality. How to really achieve the effect of "1 +1> 2" effect, the tasks are arduous. Li Jin, chief researcher of the China Enterprise Research Institute, said that the central enterprises should enhance  institutional reform and deep-level property rights reform, improve the quality and increase the quantity except  the establishment of brand, thus better promoting resource integration and adjusting the industry.

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