Baosteel Group's International Development Strategy

Within 21st centenary, the economy of china and her steel industry experienced complicated innovation and sound development. Meanwhile, the competition forced Chinese steel industry to face the more fierce international challenge. In July, 2007, Baosteel was listed in Number 6 within world steel industry and 307 of fortune 500 with the annual sales of 22.6632 billion US dollars. This was the fourth times that Baosteel came into the fortune 500.As one of the largest state-owned companies in China, Baosteel's competition key capability and the mass production level was formed by hard effort within the twenty years. On the world stage, the goal of realizing two world number one initiated Baosteel more focused on international strategy of raw material import and finished goods export.With the annual sales increased and the manufacture scale enlarged, the fluctuation in price of ironstone and finished goods in world market became the more sensitive factor for the development of Baosteel. Compared with the other several huge international competitors, Baosteel does still have gap to fit in. In order to deal with the embarrass situation, Baosteel should keep up with them. Otherwise, Baosteel will be in the crisis for survival. Therefore, international strategy becomes so urgent for Baosteel to consider about his development.With the establishment of Baosteel in the very beginning, Baosteel has formed matured import-export model and constructed international market channel. The reputation has been established in the customer.As the time goes on, Baosteel is facing to many pressures, such as, the raw material supply, marketing, supply chain, the labor cost and capital return ratio. The initial goal of Baosteel's internationalization is to solve the problems of over manufacturing capacity in domestic market and raw material supply problems. But with the internationalization process, Baosteel found there are still opportunities in the developed country's market because of their product portfolio. Except for the developed market, BRICS four countries of Brazil, Russia, India and China, together with VISTA five countries of Vietnam, Indonesia, South Africa, Turkey and Argentina, which have robust development potential. The demand of steel in these countries is increasing dramatically. Although the demand is huge, the barriers in politics, culture and exchange rate are still very obvious.In spite of the advantage in some aspects, Baosteel is still inferior position in corporation system, decision making system and capital recruitment. Using SWOT and Port's five forces model, we could get to know the Baosteel's opportunities and challenges as well as the advantages and inferior positions. Based on it, we could choose the best strategy we should pursue.