Rising Status of Private-owned Enterprises in the Nonferrous Industry

According to the “Ranking List of Top 500 Private-owned Enterprises in China 2010” published by All-China Federation of Industry and Commerce, there are a total of 30 enterprises whose main business is nonferrous metal or whose nonferrous business accounts for 40%above in their total business volume, seven more than the figure in 2009, up by 30.43%.This is a remarkable performance indicating the robust growth momentum of nonferrous private-owned enterprises, and the number of large enterprises is increasing.

In recent years, private-owned enterprises played a very conspicuous role in driving forward the development of nonferrous industry.Private-owned enterprises can be seen in a wide range of industrial activities ranging from prospecting, dressing, smelting, to processing,metal recycling. The contribution made by private-owned enterprises to nonferrous industry has surpassed that of enterprises in other forms of ownership. In 2010, the income from main business of private-holding enterprises above designated size in the nonferrous metal industry accounts for 52% of the income from main business of enterprises above designated size in the industry, which is above the half mark, far exceeding the sum of state-owned holding enterprises and collectively-owned holding enterprises, which is 36%; its profit contribution is naturally larger. In 2010, the profit earned by private-holding enterprises above designated size in the nonferrous metal industry accounts for 53% of the total profit of enterprises above designated size in the industry, the sum of the profit earned by state-owned holding enterprises and collectively-owned holding enterprises is only 34%.

The contribution made by nonferrous privateowned enterprises does not stop at product output, business income and profit, they also played very important role in breaking up industry monopoly, promoting marketization progress, developing new thinking and new models, adopting flexible and diversified operation models, implementing refined management, reducing operation cost, technology innovation, energy-saving and emission reduction. Based on analysis of the nonferrous enterprises incorporated into the Top 500 Privateowned Enterprises in China 2010, it is possible to catch a glimpse of some basic features in the growth of private-owned enterprises.

In 2010, the threshold for the Top 500 privateowned enterprises rose to 5.06 billion yuan, up by 1.4 billion yuan compared with that in 2009.Nevertheless, nonferrous private-owned enterprises showed strong performance, the number of enterprises included in the list increased, and most of the enterprises showed two digit growth rate in business income, which powerfully safeguards the status of nonferrous sector,a small sector in the national economy, in the Top 500 Private-owned Enterprises in China ranking list, and also reflects the speed and standard of nonferrous private-owned enterprises today.

Judging from the increased number of enterprises in the ranking list, leading enterprises in nonferrous private-owned enterprises have picked up growth rate, their scale is expanding,and their strength is growing; the gap between large private-owned enterprises and small enterprises is widening. Such trend results from market competition which brings changes to industry structure, making it develop toward the direction to facilitate the increase in industry concentration degree.

The growth rates in business income of the five enterprises ranking among top 70 in the ranking list of Top 500 Private-owned Enterprises in China 2010 are respectively: 40.97% for Hailiang Group Co., Ltd at 13th, 49.1% for East Hope Group Co., Ltd at 19th, 44.56% for Ningbo Jintian Investment Holdings Co., Ltd at 36th, 9.63% of Sichuan Hongda (Group) Co.,Ltd at 51st, 11.64% for Shaanxi Dongling Industry & Trade Group Co., Ltd at 63rd.

The five fastest growing nonferrous enterprises included in the ranking list of Top 500 Private-owned Enterprises in China 2010 are: Tongling Jingda Copper Materials (Group) Co., Ltd which rose from 429th in 2009 to 281st in 2010, up by 148 notches; Shandong Jinsheng Nonferrous Group Co., Ltd which rose from 499th in 2009 to 382nd in 2010, up by 117 notches; Jiangsu Jinhui Group Co., Ltd which rose from 208th in 2009 to 109th in 2010, up by 99 notches; Changzhou Shengzhou Copper Industry Co., Ltd which rose from 471st in 2009 to 394th in 2010, up by 77; Quanwei(Tongling) Copper Technology Co., Ltd which rose from 118th in 2009 to 101st in 2010, up by 17 notches. These five companies are all copper smelting or copper processing enterprises.The reason of their fast growth is strong demand on the copper market, huge increase in price, and accordingly fast growth in production in 2010.

The 11 new enterprises in the ranking list are:China Metal Recycling (Holdings) Limited,Dongying Fangyuan Nonferrous Metals Co.,Ltd, Liaoning Zhongwang Group Co., Ltd,Luoyang Zijin Yinhui Gold Smelting Co., Ltd,Shandong Innovation Metal Technology Co.,Ltd, Zhenxiong Copper Group Co., Ltd, Linzhou Linfeng Aluminum & Electricity Co.,Ltd, Jiangsu Haida Technology Group Co., Ltd,Jiyuan Wanyang Smelting (Group) Co., Ltd,Jiuxing Holding Group Co., Ltd, Fuyang Yongzheng Waste Material Co., Ltd.

The business scope of nonferrous enterprises included in the ranking list of Top 500 Privateowned Enterprises in China 2010 covers major nonferrous metal varieties of copper, aluminum, lead-zinc, and precious metals; specifically speaking, 16 companies are involved in copper business, 10 are involved in aluminum business, three are involved in lead-zinc business, and one is involved in precious metal business. Judging from industrial chain, there are more downstream enterprises than upstream enterprises; specifically speaking, 11 companies are involved in copper processing business, and seven are involved in aluminum processing business. All enterprises on the ranking list enjoy considerable advantage in their respective sectors in terms of production scale,technology standard, R&D ability and brand influence. Adopting diversified operation models is another feature of most of the enterprises on the ranking list, some enterprises operate multiple product varieties in a number of business sectors, specifically speaking, the steel and iron business scale of Shaanxi Dongling Industry & Trade Group Co., Ltd, China Metal Recycling (Holding) Limited, and Jiangsu Jiangnan Industry Group Co., Ltd is larger than their nonferrous metal business scale; Fuyang Yongzheng Waste Material Co., Ltd only has one third of its business dedicated to nonferrous metal business in its recycling and processing of waste resources and scrap materials business.

The distribution regions of nonferrous enterprises included in the ranking list of Top 500 Private-owned Enterprises in China 2010 are mainly concentrated in East China, which is the region with most highly developed economy and most active development of private-owned enterprises, accounting for 73.3% of the total number. Other regions simply are incomparable. Among the 30 nonferrous enterprises on the list, 22 are from Jiangsu, Zhejiang, Anhui,Shandong and Shanghai in East China, three are from Henan which is the biggest province in nonferrous industry, two are from Liaoning,one each is from Sichuan and Chongqing, one is from Shaanxi.

East China region is the locomotive of China’s economic development where nonferrous private-owned enterprises have showed robust growth, especially in Yangtze River Delta Region where a large number of nonferrous private-owned enterprises are concentrated,densely dotted with copper processing enterprises, making it one of the pillars of local economy. The copper processing enterprises from the Yangtze River Delta Region being included in this time’s ranking list of Top 500 Private-owned enterprises in China 2010 are none other than those outstanding ones from the local area. These enterprises have developed unique advantages in technology and product in copper processing sector, and are able to occupy the market with unrivalled strengths.

The number and output of aluminum processing enterprises in the Yangtze River Delta Region both fall behind those of Pearl River Delta Region, another of China’s economically developed regions; but there are more enterprises with large scale and high technology contents in the Yangtze River Delta Region, which is fully supported by the fact that this time three aluminum processing enterprises from Yangtze River Delta Region are included in the list of Top 500 Private-owned Enterprises in China 2010. These three enterprises are: Zhejiang Dongliang New Material Co., Ltd, Hangzhou Dingsheng Industries Group Co., Ltd, and Jiangsu Haida Technology Group Co., Ltd.

Assembling nearly 100 private-owned enterprises engaged in the production of aluminum profiles, the Pearl River Delta Region is China’s largest aluminum processing base; in 2010 the aluminum profiles manufactured by this region accounts for 24.5% of national total production, ranking top in the nation. However,in recent years no enterprise from this region has been included in the ranking list of “Top 500 Private-owned Enterprises in China”,which reflects the development status of aluminum processing industry in this region. There are two key reasons: Firstly, despite the large number of enterprises, the majority of them are in small and intermediate size, the industry concentration degree is low; secondly, most products from this region are aluminum profiles for civilian use, which is characterized by single model, homogenous variety, large production, and low added-value. As a result, market competition is fierce, prices are consequently low. Over the past ten years, the overall pattern in the Pearl River Delta Region has experienced no significant change, it still keeps its status of large number of enterprises, loose distribution, large production, but low technology standard.

The Northeast region is the cradle of China’s nonferrous metal industry; in the recent several years, it was still in the stage of rejuvenation;despite its foundation in nonferrous metal industry, state-owned nonferrous enterprises are still struggling along, nonferrous private-owned enterprises instead have inherited the tradition to display emerging growth momentum in the rejuvenation progress. In this time’s ranking list of Top 500 Private-owned Enterprises in China 2010, Liaoning Zhongwang Group Co.,Ltd and Jiuxing Holding Group Co., Ltd are the bellwethers of Liaoning’s nonferrous privateowned enterprises. The former is an aluminum processing enterprise; the latter is a copper processing enterprise. At present, Liaoning Zhongwang Group Co., Ltd has become the world’s second biggest and Asia’s biggest manufacturer of industrial use aluminum profile. Both joined the rankling list of Top 500 Private-owned Enterprises in 2008, but in 2009 they were not included in the list, this time marks their second listing. Their ranking also changed greatly, in 2008 Zhongwang Group ranked 77th in the Top 500, but this time it only ranked 201st. Jiuxing Holding ranked 282nd in the precious time, this time it ranked 480th, in 2010 its business income growth is 14%. Although these two enterprises are not steady enough in growth, and both are new market players, they are still the hopeful promising stars of the Northeast region to rejuvenate the nonferrous industry.

As a big province in nonferrous metal industry,Henan also has quite a large number of nonferrous private-owned enterprises, but there are few large companies, which mainly focus on lead and zinc business. State-owned and collective nonferrous enterprises occupy dominant position, there are also many enterprises invested by out-of-town nonferrous enterprises in Henan, such as East Hope Group Co., Ltd listed in the Top 500 Private-owned Enterprises in China, and Hangzhou Jinjiang Group Co.,Ltd. The three enterprises which are listed in the Top 500 Private-owned Enterprises in China 2010, namely Luoyang Zijin Yinhui Gold Smelting Co., Ltd, Linzhou Linfeng Aluminum & Electricity Co., Ltd, and Jiyuan Wanyang Smelting (Group) Co., Ltd respectively are engaged in smelting of precious metal, aluminum smelting and processing, and lead-zinc businesses. All three are joined the Top 500 ranking list for the first time. There are not many nonferrous private-owned enterprises from Henan which are able to keep their position in the Top 500 ranking list, each year different companies will appear on the list.

The West and Southwest regions are also developed regions in nonferrous industry, but there are not many large nonferrous privateowned enterprises. However, the three enterprises included in the ranking list are frequent members of the Top 500 Private-owned Enterprises in China. Sichuan Hongda (Group) Co.,Ltd, and Shaanxi Dongling Industry & Trade Group Co., Ltd are large lead-zinc manufacturers in China, their production capacities and outputs both rank Top 10 in the lead and zinc industry. Chongqing Bosai Mining (Group)Co., Ltd is engaged in the production of aluminum oxide and electrolytic aluminum, it is a medium-sized enterprise in the aluminum industry. Under the impact of product price hike,in 2010 its ranking in the Top 500 Privateowned Enterprises in China 2010 dropped by 58 notches compared with that in the precious year. A considerable amount of investment in nonferrous metal industry in the West and Southwest comes from East China, Central China and Southeast China regions, this also restricts the development of local enterprises.

The biggest bright spot in the ranking list of nonferrous enterprises in this time’s Top 500 Private-owned Enterprises in China is the increase in the number of metal recycling enterprises; specifically, the number doubled from three in 2009 to six in 2010. This shows that private-owned recycling metal enterprises are growing in size.

By opening up a second battleground in the industry, the recycling metal material industry has very bright future. In China over 95% of recycling metal enterprises are private-owned,a decade ago this sector was often neglected,and was dominated by individual and small enterprises. With the fast growth of metal consumption level, the market experienced shortage of raw materials and the advent of the peak period in the phase-out of metal usage cycle, in recent two years, there was an evident acceleration in the growth of the recycling metal sector.According to relevant data, in 2010 the output of recycling nonferrous metal is 7.75 million tonnes, up by 22.4% on YOY basis; wherein,recycled copper is 2.4 million tonnes, up by 20% on YOY basis, recycled aluminum is 4 million tonnes, up by 29%, recycled lead is 1.35 million tonnes, up by 9.7%. The fast growth of the industry also inevitably enables enterprises with abundant capital, advanced technology, and large market share to stand out and become the pacesetter in industry growth.The six enterprises included in this time’s ranking list of Top 500 Private-owned Enterprises in China 2010 are the representatives of the staunch force in the recycling metal industry.

As the largest metal recycling enterprise in China, China Metal Recycling (Holdings) Limited is a company listed on the Hong Kong Stock Exchange. In 2010, its performance includes sales of 1.57 million tonnes of black metal, up by 179% on YOY basis, and sales of 360,000 tonnes of nonferrous metal, up by 79%on YOY basis, its business income grows by 148.3% on YOY basis. With such superior performance, it joined the list of Top 500 Privateowned Enterprises in China 2010 for the first time, ranking 82nd.

Dongying Fangyuan Nonferrous Metals Co.,Ltd is a manufacturer of copper cathode by using renewable resources and raw material resources, its smelting technology occupies leading position in the domestic industry; in 2010 it expanded production capacity to fulfill mass production. As a result, its copper cathode output leapfrogged to 6th in the domestic market,which naturally enables it to become the 105th enterprise on the ranking list of Top 500 Private-owned Enterprises in China.

Fuyang area is one of the key waste material recycling bases in China, with nearly 200 waste material recycling enterprises; among them about ten enterprises boast considerable capacity and scale in waste copper recycling and processing business, Fuyang Yongzheng Waste Material Co., Ltd , is just one of such enterprises. In 2010, with the increase in copper price, it luckily joined the ranking list of Top 500 Private-owned Enterprises in China. The other three enterprises namely Fuyang Shenneng Solid Waste Recycling Co., Ltd, Changzhou Shengzhou Copper Industry Co., Ltd, and Shandong Jinsheng Nonferrous Group Co., Ltd are all previous members in the ranking list of Top 500 Private-owned Enterprises in China,all of them are also engaged in the production of recycled copper business.