Chinese steel in India

PUNE: Chinese steel companies are entering India directly. Jiangyin Xing Cheng Special Steel Works Co Ltd (JYXC), the US $ 1.2 billion largest Chinese speciality steel manufacturer, has set up its India liaision office in Pune and it expects Bao Steel, the largest steel maker, to follow shortly.
JYXC, a joint venture between the Hong Kong-based Citic Pacific Ltd, the majority stake holder, and JYXC, has been exporting 3,000 tons of special steel to India for the past year.With the opening of its India office, JYXC expects to get 10-20 per cent of its international business from this market.
"We began exports to India after customs duties on steel were lowered. We can offer world class products at competitive prices and we are sure it will be a very profitable trade for both parties," said Yinhua Zhang, director, JYXC and general manager (export-import).
He noted that they were first off the block, of all Chinese steel makers, to set up an office here. JYXC has the capacity to manufacture 2 million tons of special steel and 2 million tons of special steel materials. Of this, it exported 1.8 lakh ton special steel in 04. It is located in the Economic District of Jiangyin city, south of the Yangtse river.
In keeping with the Chinese system, JYXC conducted a two-year market study of the Indian market. It chose Pune for its liaision office since a large part of its user industry is located here.
The target industries for JYXC are the automotive, including the auto component, bearings, forgings and tubes. All of these sectors are represented in the Pune region.
"We need to be close to our customers, to establish good communications with them," he stated, explaining the selection of Pune over other locations. A contender for locating the liaison office has been Chennai, which, in addition to being a sea port, is more accessible from China, via sea.
Zhang added that the three-member liaison office will be strengthened once the market picks up. While two of the initial three -member team are Chinese, they are looking for local employees preferably those able to speak Chinese. JYXC is open to the idea of a fixed price agreement with Indian companies, which could see Chinese steel makers importing iron ore from India, finishing it and exporting it to Indian companies, Mr Zhang remarked.
Industry observers noted that JYXC's starting a liaison office in India indicated the importance of this market. Moreover, with the proximity to the JNPT port, it would be only a matter of time before the Chinese looked either at a greenfield site or an acquisition. Mr Zhang, however, said they had no intentions now of acquiring a company in India. Tata Motors is a major customer in this region.