Highlights
- Chinese state-owned rare earth enterprises are undergoing significant modernization and reform to remain competitive against Western market disruption.
- Baogang Group has completed 77% of its reform tasks, focusing on:
- Technological innovation
- Management efficiency
- Corporate culture transformation
- Key reform strategies include:
- Improving enterprise systems
- Strengthening procurement management
- Promoting a more dynamic, entrepreneurial workplace culture
China’s rare earth magnet sector is on the move, feeling the heat of the West making moves to disrupt the rare earth element (REE) supply chain. And importantly responding to the top down edicts for change, promulgated by Beijing and carried out in the provinces.
According to a news release by Baotou Iron and Steel Group, Baotou Steel (opens in a new tab) (Baogang Group) 2024 is a critical year for transformative reform of state-owned enterprises, and various reform tasks have entered a critical period.
As all the major players are part of state-owned entities and thus subject to the reform mandates, the team at Baogang Group acknowledge in their media entry:
“The more difficult the period, the more we must strengthen our confidence and dare to bite the hard nut.” The effort is led by the firm’s Group Management Department.
They tout in the firm’s press release that they have “thoroughly studied and implemented the spirit of the Third Plenary Session of the 20th Central Committee of the Party, implemented the spirit of Sun Shaocheng, Secretary of the Autonomous Region Party Committee, who visited Baotou Steel for his investigation, established a solution-oriented thinking in accordance with the deployment requirements of the company’s Party Committee, and deepened the efficiency-centered deepening of state-owned assets and state-owned enterprises Reform and decisively complete the year-round tasks.”
So, to bite the hard nut of reform and change, demands from above: from the top of Chinese society. Meaning edicts for transformative reform associated with the Resolution of the Central Committee of the Communist Party of China on Further Deepening Reform Comprehensively to Advance Chinese Modernization (opens in a new tab). With more power than any leader since Chairman Mao Zedon, Xi Jinping delivered explanatory remarks on the draft version of the Resolution and continues to remind through the command channels of the need for urgent reform on multiple fronts, including competitiveness and innovation.
How does this edict get carried out in Baogang Group?
The Group Management Department in the state-owned company takes the initiative to act as an expert consultant, coordinating efforts with various departments and units to promote the reform process based on the needs of corporate development
As the leading department in the company's reform, the. Up to now, the company has completed 77% of the reform tasks of the action to deepen and improve the reform of state-owned enterprises according to the company’s press release (opens in a new tab).
So, what comes next?
In the next step of reform, the Group Management Department announces it will seize the reform policy window period and provide suggestions for the company to achieve benefits from its main business, innovation, and management.
Fully promoting the deepening and upgrading of the reform of state-owned enterprises, focus on improving the modern enterprise system with Chinese characteristics (meaning to some extent mimic western enterprise disruption while adhering to Party edicts and Chinese norms, mores, and customs), observe and strengthen the leadership of the party, and improve the decision-making mechanism of each governance entity with the construction of the board of directors as the core.
Seeking a more superior quality-driven culture the company cited the establishment of the concept of "correcting mistakes means reform", while strengthening procurement management, increase inspections, audits, and special inspections to rectify problems found, draw inferences from one example, establish a long-term mechanism, and ensure that the procurement smart platform will be online before the end of the year.
In many ways these companies have been relentless money making machines but they are showing their age, wear, and stagnation in need of significant changes to remain competitive with a West that is now awake and coming for this market.
Other areas of improvement include the improvement of the firm’s assessment and evaluation system, especially work with the Science and Technology Innovation Department and the Organization Department (Personnel Department) to promote innovation in the science and technology system and mechanism, to implement multiple measures simultaneously and achieve "one enterprise, one policy".
Yes, the Chinese rare earth giant enterprise is upgrading, readying for a charge by the West to disrupt the industry
One insider shared with Rare Earth Exchanges that these Chinese state-owned enterprises are modernizing infrastructure, finding efficiencies and disruptive improvements to better prepare for what they believe will be lower prices in the years ahead.
Highest on the list of reforms are scientific and technological innovation for example, which includes internal workplace culture, where the company seeks more dynamic, entrepreneurial employees and officers.
Daniel
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