Gain or Loss: Acquisition of Xuzhou Conch Cement----Visiting Conch Group Deputy General Managers Yu Biao and Guo Jingbin (Part I)


Updated Fri, 18 Aug 2006 00:00:00 GMT

1st July, 2006, there held a ceremony for the biggest acquisition in China cement sector in Xuzhou City Jiangsu Province, which means that China National Building Material Co., Ltd. and Anhui Conch Group has set up the strategic cooperation partnership.


Anhui Conch Group is the largest cement enterprise in China, with more than 60 million tons of annual production capacity, while China National Building Material Co., Ltd. is the new emerging force and the largest state-owned enterprise in cement manufacture, with the annual capacity of 13 million tons.


In China, there are four 10000T/D production lines, while Xuzhou Conch owns one. After the transfer, will the Conch change its strategic deployment, and what’s Conch’s consideration to cooperate with CNBM? With these questions, the CEO of CementChina Net, Mr. Shao Jun attended the ceremony and visited two deputy general managers Mr. Yu Biao and Mr. Guo Jingbin, who were directly appointed by Conch President Mr. Guo Wensan.


Xuzhou Conch: strategic cooperation and deployment


Mr. Shao Jun (S for short below): We all know that Conch is the largest cement company in China, and this time, Conch sell the Xuzhou Conch to CNBM, could you talk about the cooperation with CNBM, and what’s Conch’s next cooperating plan?


Mr. Yu Biao (Y for short below): according to the analysis of cement companies and cement industry, we think CNBM is company with large potential. We cooperate with them for several reasons. First is to have complementary advantages and sustainable development. It is not only good for both of our two companies, but also good for the whole industry, if we can cooperate in different fields. Second is to avoid aggressive competition on the base of equal competition. In line with market economy rules, we should help each other and create a better situation for development. Third is to create more opportunities to drive the regional economy for the social factor. It is only the regional economy was promoted that the company could be in a nice developmental environment.


Mr. Guo Jingbin (G for short below): the cooperation also means that the large groups in China cement sector have gone to maturity not like the other sectors such as household electric appliance industry, in which there emerged irrational competition that causes the loss in industry. In another word, it is a progress in cement sector, and a model for other companies to promote the healthy development. Actually, it also contains a complex of Conch ----National Complex. We all know that in cement sector, the foreign investments grow very fast because of the nice future of China cement industry. We hope the China cement industry could be built by our national enterprises but not foreign companies.


S: dose the transfer of shares in Xuzhou Conch mean Conch abandons the market of north of Changjiang River, and focuses on the regions of East China and South China?


Y: it maybe others’ imagination. The sell dose not mean Conch will withdraw from the market of north of Changjiang River from now on.


It is a large market in north of Changjiang River. Now, Conch Cement still has a large share in north and central Jiangsu Province and north of Anhui Province. We will cement and expand the market, if it contributes to our company. However, we focus on East and South China regions recently.


Three ways of financing


S: in 2005, merger, acquisition and reconstitution emerged in cement sector like a rising wind and scudding clouds. World giants break into China market, and Conch also invited foreign capitals. As the pioneer of acquisition and reconstitution in cement sector, what’s the Conch’s original intention?


Y: considering the factors of rapid, healthy and sustainable development, Conch invites the foreign capitals. We all know, to comply with the macro control policies, one of which is that no new cement projects in future three years, the potential cement companies face a problem that credit is not available. Therefore, Conch has to apply three channels of financing to support its development. First is domestic banks and financial agencies, second is international banks and financial agencies, and the last one is domestic and international capital market.


After the invitation of foreign capitals, Conch gains enough capitals; what’s more, Conch acquires the foreign capital management experience.


                                                                                 to be continued......