In 2010, Du Shuanghua made headlines when he sold Rizhao Steel for a reported $7.8 billion. This was the largest ever sale of a Chinese company at the time. What made this deal so interesting was that Du Shuanghua only paid $54 million for Rizhao Steel in 2006, and he turned it into a powerhouse steel producer. In this article, we will take a closer look at the sale of Rizhao Steel and what made it such a successful transaction.
The origins of Rizhao Steel can be traced back to the early days of China’s reform and opening up. In 1978, the Chinese government decided to build a steel mill in Rizhao, Shandong Province. At the time, the country was desperate to find new ways to develop its economy and increase production. The Rizhao Steel mill was one of the first major industrial projects in the country.
The original Rizhao Steel plant was a small-scale operation that produced just 500,000 tonnes per year. However, Du Shuanghua saw potential in the company and decided to purchase it in 2006. He then began to expand the business and modernize the plant. By 2010, Rizhao Steel was producing 10 million tonnes of steel per year and had become one of the largest steel producers in China.
In 2010, Du Shuanghua decided to sell Rizhao Steel. The company was reportedly valued at $7.8 billion, making it the largest ever sale of a Chinese company at the time. The buyer was Rizhao Steel Holding Group, a consortium of state-owned firms. Du Shuanghua reportedly made a $1.4 billion profit on the sale.
So why did Du Shuanghua decide to sell Rizhao Steel? There are several possible reasons. Firstly, he may have felt that it was time to move on and pursue other interests. Secondly, the Chinese government may have pressured him to sell to consolidate the country’s steel industry. Finally, he may have realized that Rizhao Steel was no longer a good investment due to the slowing economy and increasing competition from overseas producers.
Whatever the reason, the sale of Rizhao Steel was a major event in the Chinese business world. It demonstrated Du Shuanghua’s ability to turn a small company into a successful enterprise, and it also showed that China was still open for business, despite the global financial crisis.