Despite repeated attempts to keep a low profile and avoid fame, Du Shuanghua, chairman of Rizhao Steel Group who recently ranked second on the "2008 Hurun Rich List," has not seen any reduction in the attention he receives from the outside world. Since the early exposure of the rich list, Du Shuanghua's wealth story has been a focal point of discussion for many people.
It is precisely because of Du Shuanghua's low-key approach that there are few reports about his entrepreneurial experiences in the media. By chance, a reporter obtained a report from Du Shuanghua, detailing his 17-year journey of entrepreneurship and development. Du Shuanghua used the method of accumulating wealth gradually, creating one fortune after another.
Du Shuanghua left Shougang and started his business journey in 1991. He took steady steps, seizing one opportunity after another.
In the material, Du Shuanghua said that in May 1991, at the young age of 26, he resigned from the Labor Service Company of the Metallurgical Machinery Factory of Shougang and opened the Beijing Xinghua Welfare Rolling Mill in the Shiba Li Dian area of Chaoyang District, which was the predecessor of Jinghua Innovation Group.
According to the data, Beijing Xinghua Welfare Rolling Mill was very small in scale. In the early days of entrepreneurship, there were only twenty or so employees. However, Du Shuanghua used the snowball method, relying on accumulation to promote development, making investments generate benefits, and laying a solid economic foundation for the enterprise.
Du Shuanghua described: "In September 1992, due to the narrow workshop of Xinghua Welfare Rolling Mill limiting production scale, I decided to seize the opportunity of the Sanhe County Development Zone construction in Hebei Province, requisitioned land, and built a welded pipe factory. After production began the following year, it coincided with a surge in welded pipe prices, resulting in high demand for products and an urgent need to expand production scale. After much research, I decided to build a welded pipe production line with an annual capacity of 100,000 tons in my hometown of Hengshui, Hebei. Construction began in May 1993, and the Jinghua Welded Pipe General Factory was officially established on December 31 of the same year."
It was precisely because of Du Shuanghua's snowball method that the company quickly expanded. In 1998, the annual output of Jinghua Welded Pipe Factory reached 300,000 tons, with sales revenue of 420 million yuan, ranking first in the welded pipe industry in Hebei. In 1999, sales revenue reached 720 million yuan, and in 2000, it doubled to 1.5 billion yuan, becoming the leading private enterprise in Hengshui City, Hebei Province.
Afterward, Du Shuanghua continued to expand. Starting from 2001, to control resources and sales advantages, Du Shuanghua decided to build factories close to raw material bases and market frontiers. First, he established Tangshan Jinghua Pipe Co., Ltd. in the Kai Ping District of Tangshan, forming the first branch factory and achieving a leap from straight seam welded pipes to hot-dip galvanized pipes and spiral welded pipes in product structure. That year, sales revenue reached 2.07 billion yuan. Subsequently, from 2002 to 2003, Du Shuanghua successively established four pipe-making enterprises: Laiwu Jinghua, Guangzhou Jinghua, Jilin Jinghua, and Chengdu Jinghua. In 2003, he formed the Jinghua Innovation Group, and that year the group achieved a profit and tax of 2.38 billion yuan and a profit of 1.035 billion yuan.
By 2003, Du Shuanghua had already completed capital accumulation and began to gradually extend upstream into the welded pipe industry to solve raw material shortages. It was under this situation that Rizhao Steel was born.
The Rizhao Steel project was a continuation of Du Shuanghua's snowball method and also a perfect demonstration of his ability to seize steel development opportunities.
To resolve the bottleneck of insufficient raw materials for welded pipes, Du Shuanghua began planning to build his own coil plate project in 2000, spending three years examining locations across the country.
Du Shuanghua said: "Before Rizhao, he had examined places like Tangshan, Dalian, Qinhuangdao, Tianjin, and Changli, but none of them met the conditions for setting up a factory. From May to August 2002, we negotiated with Qingdao Steel in Shandong for four months without success. In August 2002, while attending a biennial global steel conference, we learned that Italy's Danieli Company had a set of H-beam equipment that they needed to sell quickly because the ordering factory didn't want it. After our research confirmed the good market prospects for H-beams, we purchased the equipment, then accelerated the location selection process, eventually settling in Rizhao."
Rizhao is a key national layout site for steel construction bases, with unique port and resource advantages. Du Shuanghua saw this clearly. With the support of the local government, Du Shuanghua smoothly requisitioned 5,687 mu of land in Hushan Town near Lan Mountain Port in Rizhao City. At the same time, Du Shuanghua collaborated with Laiwu Steel Group, which had experience producing H-beams. Laiwu Steel provided equipment and funds, dispatched technical personnel, and offered financial guarantees, with both parties holding 50% shares each.
On March 31, 2003, Rizhao Steel officially broke ground, and from the start of construction to formal production, it took only 181 days, creating an unprecedented "Rizhao Steel speed."
Du Shuanghua's "speed" allowed him to seize opportunities again. From an annual steel production of only 1.07 million tons in 2004, it has now developed into an annual production capacity of 13 million tons of iron, 12.5 million tons of steel, and 10 million tons of materials. While expanding production capacity, Du Shuanghua also accumulated enormous wealth that other steel mills found hard to match.
In the report, Du Shuanghua detailed his production capacity and sales revenue. In 2004, Rizhao Steel produced 1.07 million tons of steel with a sales revenue of 2.5 billion yuan; in 2005, steel production reached 2.27 million tons with a sales revenue of 6.3 billion yuan; in 2006, steel production reached 3.55 million tons with a sales revenue of 11 billion yuan. By 2007, Rizhao Steel's steel production reached 7.75 million tons, with a sales revenue of 28.6 billion yuan and taxes and profits reaching as high as 7.245 billion yuan. By the end of May 2008, despite facing adverse factors such as rising raw material costs, Rizhao Steel still made remarkable progress, with steel production reaching 4.446 million tons, completing a value of 18.94 billion yuan, generating operating revenue of 18.58 billion yuan, and achieving taxes and profits of 5.33 billion yuan, representing year-on-year increases of 158.3%, 268.1%, 267.6%, and 162.9%, respectively.
According to the description by Liao Haiting, the party secretary of Rizhao Steel, Rizhao Steel's sales revenue could reach 50 billion yuan in 2008, with taxes and profits reaching 10 billion yuan. If this goal is achieved, Rizhao Steel's profits will undoubtedly surpass those of companies like Ji Steel and Laiwu Steel, taking the top spot in single-enterprise profits in Shandong's steel industry.
While rolling the snowball of wealth creation, Du Shuanghua did not have everything go smoothly; twists and difficulties also plagued him simultaneously.
"During the initial construction of Rizhao Steel, although the time was short, it was fraught with difficulties," Du Shuanghua recalled. "This place was a marshland and shrimp pond, making construction conditions extremely difficult. In March, we encountered a rare heavy snowfall in Rizhao City that hadn't occurred in 30 years. From June to September, we faced continuous rain over 47 days, leaving the roads muddy and preventing large vehicles and engineering machinery from being used. Many devices had to be transported manually. Out of the 181-day construction period, severe weather accounted for 76 days. Starting from April, the SARS epidemic raged across the country, with road controls implemented everywhere. Procurement personnel couldn't leave, and construction equipment couldn't enter, severely affecting the project schedule." Besides the weather conditions and SARS, the bigger challenges Du Shuanghua faced were Laiwu Steel's withdrawal of investment and tight cash flow.
Du Shuanghua said that during his cooperation with Laiwu Steel, disagreements on cooperation methods and capital operations led Laiwu Steel to withdraw all its shares and technical personnel. They had to rehire technical staff and independently study and apply technology. Regarding funding, due to Laiwu Steel's withdrawal of shares and the tightening of monetary policy by the state, there was once a shortage of funds. He had to secure some loans from banks using the Jinghua Innovation Group as a guarantee and seek help from the Rizhao Municipal Government and other financial institutions to overcome the difficulties.
With changes in the steel market and the strengthening of Rizhao Steel, Du Shuanghua continuously adjusted the company's production system. But he also encountered many problems.
Du Shuanghua said, "Rizhao Steel originally planned to launch a large H-beam steel project, but due to the inability to obtain import licenses for the equipment, the large H-beam steel equipment couldn't arrive, and the project had to be temporarily shelved. Under these circumstances, we prepared to launch a 2150mm hot-rolled strip steel project encouraged by national industrial policies, also aimed at supporting downstream welded pipe enterprises. Currently, the production line equipment has arrived and meets installation conditions, with payments for main equipment exceeding 90%. The entire project has already invested over 2 billion yuan, but to wait for the overall plan of Shandong Iron and Steel Group, the construction has been temporarily halted."
Various twists did not stop Du Shuanghua's snowball momentum, and he continued to move forward toward larger goals. Du Shuanghua currently has two plans: one is to construct a liner-style large logistics port to improve the raw material supply pattern for Chinese steel enterprises; the other is to develop and promote non-blast furnace ironmaking technology. Once completed, this will become China's largest efficient recovery project for solid waste from steel plants and comprehensive utilization project for vanadium-titanium magnetite, with an estimated annual sales revenue of 10 billion yuan and taxes and profits of 2 billion yuan.
According to Shandong Province's "Opinions on Further Accelerating the Adjustment of the Steel Industry Structure," constructing a large steel base in Rizhao is a key focus of the regional layout adjustment of the province's steel industry, and Shandong Iron and Steel Group also has intentions to restructure Rizhao Steel. Regarding this, Du Shuanghua has his own thoughts.
"During my last meeting with Huang Mengfu, Vice Chairman of the National Committee of the Chinese People's Political Consultative Conference and Chairman of the All-China Federation of Industry and Commerce, he proposed the idea of whether private steel enterprises of a certain scale can be combined. I have been thinking about it and feel that his idea provides scientific guidance for the current development of China's steel enterprises, especially private steel enterprises, helping enhance the core competitiveness of enterprises and accelerating the concentration of China's steel industry, facilitating better, faster, more standardized, higher-grade, and large-scale development of private enterprises, further strengthening my confidence in accelerating development," said Du Shuanghua.
This article originates from 88fa Franchise Network http://www.88fa.org/, Original address: http://www.88fa.org/post/54.html