In the current complex economic situation, the reform of state-owned enterprises faces difficulties. At this critical historical juncture, the practices of the front line appear particularly important.
In 2012, MCC had a huge deficit of RMB 7.36 billion. With interest, the liability was more than 170 billion, and the receivables and stock reached up to 210 billion. Many banks refused to extend credit to MCC, and the capital chain was on the verge of breaking. However, MCC realized a profit of RMB 6.86 billion in 2015, with an increase of 13.8%. Its annual profit growth was 24.8%. In 2016, MCC was awarded 2015 Class A enterprise of business performance evaluation and 'Outstanding Science & Technology Innovation Enterprise' of business performance evaluation in the term from 2013 to 2015 among central enterprises, and MCC ranked 290th in the 'Global 500'.
In the last three years, great changes have taken place in MCC. It has not only changed its deficit into profit but also strengthened its controlling power, influence, competitiveness and anti-risk capability, making it more suited to the new normal of economic development and actually becoming the 'national team of metallurgical construction, the main force of infrastructure construction and the pacesetter of emerging industries'. How did MCC achieve all of this?
Optimize the top-level design and plan future development
In 2012, influenced by certain factors including the global economic slowdown, profound adjustments in the iron and steel industry and the previous blind merging and reorganization, MCC hit bottom with heavy burdens and poor management. It was listed by SASAC as a special supervision enterprise involved with high debt for three successive years, and a D-class enterprise of SASAC’s business performance evaluation for two successive years. The deficit in 2012 reached up to RMB 7.36 billion, ranking third among central enterprises for losses, and posing a difficult development future.
At that crucial time, the new leader of MCC Guo Wenqing proposed at the '9-5' working conference in 2012 to 'command the overall situation with correct strategies, and solve the difficulties with innovative ideas', pointing out that, 'MCC cannot be knocked down by dangers and risks, nor by accumulated unsettled difficulties'. This strategic thinking was for the enterprise itself and the livelihoods of its 300,000 employees. Guided by this strategic thinking, MCC carried out a series of measures including 'unloading the burdens', 'controlling the risks' and 'filling the gaps', acted promptly, focused on quickly creating the conditions in which to 'unload the burden' and 'hold on to the work', and finally made remarkable achievements. MCC subsequently struggled through its most difficult and dangerous period.
In 2013, MCC gradually escaped from hardships and entered a new historical turning point of steady development. It put forward the precise development vision of 'Focusing on the main business and building a glorious MCC', and made the important decision to 'return to the main course'. With the development plan of 'One Step in One Year and One Leap in Three Years', MCC focused on businesses which they had the ability to engage in and in which they were most capable, familiar and adept. Centering on the core metallurgical construction business and focusing on the main business, MCC conducted a moderate diversification to lay and consolidate the foundation with down-to-earth efforts. This development vision solved the key problems of 'Which banners will MCC hold, which roads will it follow and which directions will it head in' in the critical period. Entering 2014, faced with the situation that research & design enterprises had fallen into real estate troubles and metallurgical engineering technology lacked innovative breakthroughs, MCC required all its research & design enterprises to quit the real estate business, and proposed the new goal of 'undertaking the national responsibility of leading China Metallurgy to a higher level of development with its dominant core technology, continual innovation ability and irreplaceable metallurgical industry chain integration advantages, standing at the world's standard high point and the commanding heights of metallurgical industry development'.
In 2015, faced with the economic new normal of rapid change, structural optimization and energy conversion, and in light of the fact that the business orientation of the original four parts could not reflect the enterprise's actual situation and the demands of the extensive adjustment, great revolution and huge promotion in the iron and steel industry, MCC clearly determined to 'build a upgraded business system with four parts and eight major principal industries, reconstruct the new advantages of a ‘glorious MCC’ and endeavor to be the world's strongest, largest and best national team in metallurgical construction'. MCC acted as the strong support of the magnificent edifice of 'Focusing on the main business and building a glorious MCC', and highlighted the supporting role of the ‘eight major principal industries’. At the 2015 mid-year work conference, in the process of implementing the upgraded business system with ‘four parts and eight major principal industries', MCC clarified the first and second echelons of subsidiary design enterprises, as well as the corresponding subsidiary construction enterprises, based on the 8 parts and 19 business units of ferrous metallurgy, forming the basic formation and core of the metallurgical construction national team and ensuring that MCC had sufficient power to undertake its main business effectively, as well as its transformation and development.
In 2016, standing at the new heights of building a world-class enterprise group and undertaking greater national responsibilities and missions, MCC timely proposed the new strategic orientation of becoming the 'national team of metallurgical construction, the main force of infrastructure construction and the pacesetter of emerging industries, taking the path of high-tech construction in the long term', and closely focused on this new strategic orientation to make its overall planning, consistently promote its transformation, upgrading, innovation and development, and push the construction of a glorious MCC to its highest level in history.
From 'Returning to the main course' to 'Focusing on the main business and building a glorious MCC', from 'Building an upgraded business system' to becoming the 'national team of metallurgical construction, the main force of infrastructure construction and the pacesetter of emerging industries, taking the path of high-tech construction in the long term', MCC had different goals for different development stages. The strategic layout was gradually carried forward, the practice and logic advanced step by step, and the business performance rose year by year.
Solving development problems and raising the sails of reform high
Great visions inspire us to advance bravely, and beautiful insights arouse our feelings. After clearing its top-level design and magnificent blueprints, MCC immediately set about solving the restrictions on its development. With the '9-5' conference of 2015 as the watershed, it carried out the development course of escaping troubles and striving to help itself.
As for the three enterprises of MCC Hengtong, MCC Paper and Huludao Nonferrous which had huge losses, MCC resolutely adopted the stripping policy. Based on the different industrial characteristics of each enterprise, MCC made specific disposal programs to duly and quickly handle affairs and stop the 'bleeding'. In March 2013, following the completion of merging into HKCTS in 2012, MCC Paper merged into MCC Chengtong by way of state-owned internal resource integration, and MCC thereby achieved the important step of the 'focus on the main force' development strategy. On December 31st, 2013, Huludao Nonferrous commenced bankruptcy reorganization proceedings and began to make profit in the form of Zinc Industry which used to be a mixed ownership company after being reorganized. So far, MCC has mainly unloaded its 'three burdens', escaped from the shackles that restrict the development of enterprises, and removed the obstacles that influence its efficiency promotion and capital chain security.
As for the problems of the previous great losses of subsidiary enterprises, MCC enhanced strategic control to ensure business concentration; for example, in the real estate development business, MCC clearly regarded the professional real estate development subsidiary enterprise the MCC Real Estate Group as the main course and brand, and required other design subsidiary enterprises outside this region to quit the real estate business; the subsidiary construction enterprises focused on building houses, and gradually quit the existing real estate business. The subordinate equipment manufacturing business all quit except for one with core technology for each enterprise. MCC also enhanced its process management and effectively solved the deficit; for example, it made a general program for handling money-losing enterprises, and defined the deficit responsibility of each subsidiary enterprise. By carrying out the responsibility system, enhancing the salary evaluation system, interviewing the main leaders of money-losing enterprises, making solutions according to different sorts of problem and different enterprises, as well as several other measures, the deficit management work achieved positive results. The deficit decreased from RMB 6.884 billion in 2013 to RMB 3.461 billion in 2015.
As for the problem of high capital occupancy in receivables and stocks and the low operational efficiency of assets, MCC resolved the current problems, eliminated the root causes and carried out a strong policy to clear up its debts. First, MCC stopped the capital occupancy at the source and strictly controlled advance funds except for normal contract payments and fixed-asset investments. Second, MCC enhanced its internal control and carried out a capital execution check-up system. At the same time, it enhanced its benchmarking management in the industry and capital budget implementation notification. Third, MCC carefully assessed and controlled its operation projects, and strengthened the process control and dynamic supervision of key units and key projects, especially government-invested projects, private projects and the clearing up of receivables which had accumulated for more than three years. Fourth, MCC strengthened its project financing innovation and optimized its fundraising pattern and fund operation pattern. In the last three years, MCC's external investment amount has decreased from nearly RMB 20 billion to just above 1 billion, and all its investments have been put into deepening enterprise reform and technical innovation.
At the same time, by reflecting on the reasons behind the 'three burdens' and other major risks, MCC continued to reinforce its risk management and internal control, established an accountability system for major defects in internal control and improved its operating mechanism, creating a sustainable and effective internal control and risk management system suitable for strategic goals, and strengthened the effective links between risk management and internal control to ensure lawful and compliant business operations, property safety, and truthful and integral financial reports and other information. Under the general arrangements and promotion of MCC's leading group headed by Guo Wenqing, certain reform problems that had gone unsolved for many years concerning deep interest adjustments were settled. A new positive and united pattern and outlook opened up.
Making efforts to expand the market in a bold and inexorable way
Facing keen and comprehensive competition, to address the serious problem of 'scattered, weak and small' projects and the unreasonable allocation of regional resources, and under the conditions of the initial relief of difficult issues and historical issues, MCC promptly adjusted its operating strategy of putting two thirds of its energy into the development of subsidiaries and sparing no efforts to expand the market, and enhanced the design and operation of 'big environment, big customers, big projects'; moreover, the main leaders were required to focus on the market and explore new markets with capable staff, and the headquarters, subsidiaries, and regional companies were required to gather their strength to seek new markets so as to obtain the improvement of quantity and quality. The recent years have been a stage on which MCC showed its biggest efforts in market expansion, fullest vitality of market development, most remarkable achievements, an average growth of 25.1% of newly-signed contracts in three years, a great increase in contracted and stored 'high-tech, new, comprehensive and large-size' projects, 131 newly-signed domestic contracts worth about RMB 500 million and a total contract amount of RMB 160.6 billion, with a year-on-year growth rate of 27.2%.
As to the main business of steel metallurgy, MCC raised the new strategic positioning of 'being the world's biggest, strongest and best national team in metallurgical construction and operation services', aiming to be the first in the world, striving for the leading core technology and irreplaceable whole metallurgical industry chain integration advantages, focusing on building high-end advantages, and bearing the state responsibility of leading China's metallurgy development towards a higher level over 3-5 years. At present, MCC has formed its whole metallurgical industry chain integration advantages on the basis of core technology and equipment manufacturing, with technological design as the core and project management and construction as the means, and it possesses the world-class core technologies of 8 parts and 19 technology units of ferrous metallurgy. At the same time, based on its strength as the 'national team' of metallurgical engineering technology, MCC is trying to be the 'leader' of China’s steel industry in overseas markets as well as international steel capacity and equipment manufacturing cooperation, continuously expanding the international influence and control force of central enterprises.
In the morning of September 25th, 2015, the world’s largest steel project under construction, the No. 1 blast furnace of the Baosteel Zhanjiang Steel Base, was successfully ignited and put into production; this stood as a miracle of the world’s steel industry created by 14 MCC units with over 20,000 construction workers within only two years, fully manifesting the strength of MCC’s whole metallurgical industry chain integration advantages as a 'national team' in core technology, equipment, project construction and so on. on November 27th, the new No. 1 coke oven of the Formosa Ha Tinh Steel Coking Project in Vietnam was successfully ignited and put into production, becoming MCC’s first top-charging coking technology with a large 7m volume to be successfully exported overseas. Upon completion, it will be a benchmark and demonstration project of steel construction and operation in Southeast Asian countries and even the whole world. The 3.5 Million t/a Steel Project of the Malaysia-China Kuantan Industrial Park (MCKIP), designed by MCC and soon to be constructed, deepens the innovation and exploration of capacity cooperation between China and Malaysia’s Maritime Silk Road construction in the 21st century, producing an extensive demonstrative effect for the implementation of the 'One Belt and One Road' strategy.
Based on its core competitive advantage of ferrous metallurgy, MCC makes great achievements within the reasonable 'combat radius', expanding civil engineering, municipal transportation infrastructure, sports facilities, energy conservation, environmental protection, characteristic culture industry and other non-metallurgy fields, as well as strategic emerging industries, with outstanding records and large projects, as well as influential, symbolic and branded projects with high technical contents, casting the net where there are fish, herding the flock where there is grass, and searching for new market opportunities in the most dynamic areas. With the constant increase of 'high-tech, comprehensive and large' and non-metallurgical engineering projects, MCC shows its powerful development momentum, laying a solid foundation for its sustainable development.
Over the last three years, MCC has conducted layout and expansion focusing on three national strategies and four regions, with 12 domestic regional companies and 25 overseas important countries and regions, endeavoring to strengthen deep connections with local governments and well-known enterprises; it has also successively signed over 20 strategic cooperation agreements with multiple governments and enterprises including Guizhou, Shenzhen, and Fuzhou, as well as the Binhai New Area of Tianjin and the Beijing Capital Group, relating to comprehensive cooperation in such fields as municipal transportation, infrastructure, high-end housing construction, real estate development, underground pipe galleries and environmental protection, thereby boosting the rapid completion of a batch of key projects which have had a significant impact on the industry. Its urban underground pipe gallery field enjoys satisfactory business development, and was evaluated by the Ministry of Housing and Urban-Rural Development (MOHURD) and the National Development and Reform Commission (NDRC) as 'the greatest total distance and single score'. MCC’s non-metallurgy business has accounted for 83% in 2015, up from 49.3% in 2012, with the continuous improvement of its business structure and the accelerated formation of new growth poles and competitive advantages.
Cultivating innovation advantages and rising steeply against adversity
As an innovative state-owned enterprise, MCC possesses 53,000 engineering technicians, 17 national-level innovation platforms and major laboratories, 54 national technology prizes, and 16,241 valid patterns, ranking fourth among state-owned enterprises and putting the Group in the first tier of technical innovation. On July 20th, 2016, the State Council SASAC website published the results of the performance evaluation of responsible persons of state-owned enterprises during 2013-2015, in which the MCC Group was named 'Excellent Enterprise of Technical Innovation' during 2013-2015, with its rank jumping up 15 places compared with the previous evaluation, placing it firmly in the vanguard rank of state-owned enterprises engaged in metallurgy and construction.
In recent years, according to the requirements of the 13th Five Year Plan, supply-side structural reform and its own development requirements, MCC has closely followed the country's future trend of transformative development, accelerated the implementation of the innovation-driven strategy, and made such top-level plans as the design plan of becoming 'the world's strongest, largest and best national team of metallurgical construction and operation services', the design plan of 'advanced fabrication, 3D printing and Internet+', the equipment manufacturing operation service plan, and the mining and non-ferrous metal metallurgy design plan currently in process; MCC has also established the CMCC Pipe Gallery Technology Research Institute, CMCC Sponge City Technology Research Institute, CMCC Beautiful Village and Smart City Technology Research Institute, CMCC Theme Park Technology Research Institute, CMCC Health and Pension Industry Technology Research Institute, and CMCC Water Environment Technology Research Institute, seizing the opportunities and expanding the market of strategic emerging industries so as to make technological innovation the new power and pillar behind MCC becoming the 'national team of metallurgical construction, the main force of infrastructure construction and the pacesetter of emerging industries'. At present, MCC is accelerating the realization of the design, development and productization of patterns for the integration of technology, management and equipment, thereby increasing its scale and integrating technology with equipment to make it go farther and faster.
Meanwhile, MCC pays great attention to the major and key fields that affect its enterprise development, and aggressively conducts resource integration and mode innovation, achieving the continuous improvement of its vitality, competitiveness and development ability. On the one hand, MCC highlights market development, project management and other major operation controls, establishes professional platforms in mining resources, centralized purchasing and unlisted assets, and increases the matching rate of business development to elevate the traditional basic management of the Headquarters to the effective control center; on the other hand, MCC greatly enhances its recourse professionalization, region optimization and integration, creates such professional branded companies as MCC Transportation, MCC Real Estate, MCC Pipe Gallery and so on, and makes the regionalized integration of 17 subsidiaries including the Chengdu Surveying Geotechnical Research Institute, MCC5, MCC Chengdu Surverying Geotechnical Research Institue, CCTEC, CFMCC, Wuhan Research Institution of Metallurgical Construction, CTMCC, MCC20 in Shanghai, Tianjin and Guangdong, etc., in order to form a scale and synergy effect and continuously improve MCC’s regional market share, brand influence and competitiveness.
Sail with the tide of the trend on the vast and boundless ocean. Forged in the fires of adversity, the thriving MCC Group will keep its mission and responsibility firmly in mind, prioritize loyalty to the Party and the responsibility of a central enterprise, expect excellent performance from its staff in the works of reformation and development with no efforts spared, and continuously write the new chapter of 'Focusing on the main business and building a glorious MCC', making more contributions to the transformation and upgrading of the China Minmetals Corporation through better performance and development quality.