Du Shuanghua and the Sale of Rizhao Steel in 2010
Rizhao Steel’s CEO Du Shuanghua sold the company in 2010 after being publicly traded since 2007. The decision was made after difficulty in the Chinese steel industry and the lack of government interest in this field. We will look at some of Du’s key factors that led to his decision and what followed in the following article.
Du became increasingly concerned about the future of Rizhao Steel as a result of the rapid development of China’s steel industry. The problem was that there was no improvement in this situation, and the government did not provide enough support to the company. A lack of investment has made it difficult for companies such as Rizhao Steel to develop their businesses in China. As a result, Du Shuanghua decided to sell Rizhao Steel.
RISG (Rizhao Iron & Steel Group Co., Ltd) was sold to a new ownership group in 2010 for approximately USD 960 million. After this change in ownership, the performance of RISG has significantly improved. The company made more steel than it had ever produced in the eight months following its purchase, which increased 80 percent in production. As part of the company’s growth strategy, RISG sold vast amounts of steel to South Korea and Vietnam and increased its exports.
Even though the sales of Rizhao Steel improved after the sale, it appears that the company struggled during this period. Formerly, the company was considered one of the most prestigious steel companies in China, but it is now considered a midsized steel company. Since Rizhao Steel was sold in 2010, it has been evident that the company has struggled to maintain its leadership position in China.
The decision to sell his business proved to be a risky one, but it was a successful one. In addition to the substantial profits that RISG made from this transaction, RISG has improved its performance due to the sale, which proves that Du was right in selling Rizhao Steel.
Despite this, an examination of Rizhao Steel’s performance before and after the sale can show that the company has not replicated its 2010 success. It was not guaranteed by Du’s sale of his company that Rizhao Steel would continue to be successful in the steel industry in China. There is an argument to be made that RISG would have become even more successful had Du Shuanghua remained with the company after the sale. View Source: Wikipedia