Editor's note: This article is selected from Song Zhiping's book "Reform Heart Road", which describes his motivation and effect of restructuring cement in those years, and has been published by China Cement Network. Recently, there has been a call for restructuring and mergers and acquisitions in the cement industry. Reviewing this old article may have the effect of reviewing the old and learning the new, encouraging the industry to promote a new round of restructuring, and solving the persistent problems of the industry.
Song Zhiping: The joint reorganization of my reform mentality to make cement
1. The acquisition of Xuzhou Conch opened the curtain
of cement reorganization. After the listing of China Building Materials, we decided to expand the cement business, but how to do the cement business? Is it to build one factory after another, or to reorganize? When I was the factory director
of Beixin Building Materials, I once attended a building materials industry conference in Changping. At that time, I heard the leaders of two large cement enterprises chatting, basically talking about how large the production line is now, which has increased the production capacity by millions of tons, which rival enterprises should be defeated, and so on. I told them that if I were you, I would buy the other party, because you must have input in the process of fighting the other party. You have losses, and the other party also has losses. Why do you do this? I visited Lafarge in France in
2004, when CNBM planned to buy Hunan Shaofeng Cement and Jiangxi Although Lafarge did not participate in China Building Materials, I was more determined to set up a cement company in the southern region. It's interesting to say that why China Building Materials made cement immediately after it went on the market had something to do with my roadshow. Later, it made Southern Cement, which had something to do with Lafarge's approval of my Southern Cement integration. After the listing of China's building materials, a massive joint reorganization was launched. This cross-provincial and cross-regional "vertical and horizontal integration" has promoted the structural adjustment and healthy development of China's cement industry. In 2006, the market concentration of the cement industry was only about 9%, and the industry was scattered and the competition was disorderly. In April of that year, eight ministries and commissions jointly issued a notice to speed up the structural adjustment of the cement industry; in October, the National Development and Reform Commission issued a No.50 document, proposing to promote the cross-sectoral and cross-regional reorganization and alliance of cement enterprises, to develop in the direction of collectivization, and to improve the production concentration and market competitiveness of cement enterprises. The country has an industrial policy, but who will do it? Who is capable of doing it? What should be done? China's building materials hope to be able to do this, one is out of their own development needs, and the other is to assume the responsibility of restructuring the industry is also the responsibility of the central enterprises. This is what I thought at that time. Where to start? At that time, we had a Julong Cement in Xuzhou, which had two production lines, one of which produced 5000 tons per day. In the past, all the cement in Xuzhou was supplied by Julong. Later, Haichuang, a conch employee shareholding company, built a large-scale production line with a daily output of 10,000 tons in Xuzhou. The two companies fell into vicious competition and ended up losing money. In this case, either continue to fight a fierce price war, or one side buys the other side. Price wars are unsustainable, but who buys who if they buy? Ccement. Com/brandnewslist-1-1000121. So strategically, Xuzhou is very important to CNBM's overall cement program. At that time, for conch, it was actually just a question of how to do a line, while for Chinese building materials, it was related to whether the cause of cement could be done in the end. At that time, I felt that Xuzhou Conch had to be closed. First, it could maintain our market in Huaihai and produce synergistic effects. In addition, it was also a declaration to the industry and the market that China Building Materials was an ambitious enterprise, and we had the determination to restructure cement. This was a deep idea of mine at that time. Because this reorganization takes place between Chinese building materials and conch, it is particularly noticeable. The equipment of Xuzhou Conch production line is imported from Germany, which we call "the 10,000-ton line armed to the teeth". Within one month after the acquisition, China Building Materials, which "does not understand cement", has completely mastered the production line. Of course, Conch has also left many technicians to help us. On the surface, the acquisition is a business war, in fact, from the internal point of view, the two sides are very friendly cooperation, including technology, spare parts and other aspects, Conch has given us a lot of support. About this acquisition, there is a saying in the market that conch has lost its strategy and Chinese building materials have spent more money. In fact, in my opinion, we have won the strategy, and the conch has made money and achieved a win-win situation. This is a very good case. It is of great significance for large enterprises to adjust or replace their production capacity, form their own core interest areas, and jointly promote the healthy development of the industry. Later, the state organized a post-project evaluation of the acquisition, and the conclusion was that China's building materials acquisition of conch achieved a win-win situation. 2. Comrade Xi Jinping sent a congratulatory letter to Southern Cement. After the reorganization of Zhonglian Cement was basically settled, China Building Materials began its next goal: to make Southern Cement. A few years ago, my dream of southern cement, which was shelved because of the unsuccessful introduction of foreign capital, was finally able to change from a paper map to a real industrial "territory". In the southern region, there were a few shares of Jiangxi Wannianqing, Fujian Cement and Hunan Shaofeng in our own loan, so our original idea was to set up a cement company in these provinces, so we went to Lafarge to attract investment. After the formation of Southern Cement was put on the agenda, I thought about it again. Where does Southern Cement begin? Although we do not have one or two cement in Zhejiang, nor do we have any shares in the local cement enterprises, there is a chaotic war, the competition is cruel, the price of cement has dropped from more than 400 yuan per ton to 180 yuan, and the cement enterprises are suffering. Undoubtedly, Zhejiang has become a value depression for cement investment. At that time, China Building Materials launched an acquisition, which can be said to be "bottom-hunting". But even so, I think we should start from the strategy, consider the key points and steps of the reorganization, and consider the feelings of the acquired enterprises, so we have the "Wangzhuang Talks" by the West Lake and the "three plates of beef" I brought out. The Wangzhuang talks took place one day in April 2007. Zhejiang Cement and that day was really not easy to drink, from morning to evening. Before the tea, the four companies were either being watched by other bidders or seeking their own reforms: Jianfeng Cement was going to Malaysia next day to sign an agreement, Zhejiang Cement had received a deposit from an Italian cement company, Hushan Cement was about to cooperate with a chemical group, and Sanshi Cement was planning its own restructuring. At that time, I confided to the four big men that you had fought so hard in the past, but now you have brought in new strategic partners, which is tantamount to hiring mercenaries separately. You still have to continue to fight, and the days will not be sweet. Only when we unite and stop vicious competition, the situation will improve. I promise you: "First, the price is fair, not forced to buy and sell; second, leave a certain amount of equity for everyone; third, let everyone continue to be the CEO of the enterprise." It should be said that my statement touched everyone. On the same day, Jianfeng Cement cancelled its trip to Malaysia, Zhejiang Cement withdrew its deposit from overseas companies, Hushan Cement refused to cooperate with the Chemical Group, and Sanshi Cement suspended its restructuring plan. I remember once on the plane, the old director of the Building Materials Bureau said to me: "Zhiping, all the people in Zhejiang, you can't see Song Zhiping. He is too powerful. If you see him for 20 minutes, you have to go with him." I said, "It's not that simple. They are all mature entrepreneurs, not children. I must have spoken to their hearts. Everyone is happy and willing to join China Building Materials." I think one of the important reasons why so many enterprises can join us is that they are instinctively willing to unite, because they fight one by one and make everyone miserable, which is a big background. Second, China Building Materials has a win-win cooperation pattern and mind, and gives everyone a mutually beneficial and win-win policy, which has played a great role; Third, the inclusive corporate culture of Chinese building materials. Every time I receive an enterprise, I will take off the emblem on my suit and pin it on the entrepreneur's chest. Despite a small action, it shows everyone's recognition of Chinese building materials culture. Southern Cement later attracted the attention of Harvard Business School. The senior vice dean of Harvard Business School came to China in person. His team went deep into our enterprise to do research for two months, and finally formed a classic case that entered the Harvard teaching plan. In 2017, when we held a symposium in Hangzhou to commemorate the 10th anniversary of Southern Cement, I invited all the old leaders who participated in the integration at that time, and everyone was very impressed. It is easy to build a cement plant and integrate 300 cement enterprises with different ownership components and sizes, which requires huge integration capacity. But China Building Materials has done it. In a specific time, we have seized the window of opportunity and made it. The president of the Building Materials Federation used the word "great" at the symposium, which he said was the first time he used it. He commented that it was "a great decision in the historical development of cement", which changed the track of China's cement development and created a new stage of cement. Later, I went to Southern Cement many times, and I was very happy to see that the original vassals were neat and the red octagonal badge of Chinese building materials was pinned on the collar. In terms of benefits, Southern Cement is also successful, with net profits exceeding 10 billion yuan in recent years. 3. The regional strategy of doing something and not doing something has been completed for Southern Cement, and we have begun to focus on the southwest region. After the Wenchuan earthquake in 2008, we did two projects to support earthquake resistance in Beichuan and Anxian, with two cement production lines of 5000 tons each. At the end of 2011, after China's building materials include Zhonglian Cement, Southern Cement and Northern Cement. Why not develop Northwest Cement? I remember one year, the SASAC held a working meeting of central enterprises in Qinghai, and the director of the SASAC asked me: "Zhiping, why don't you make some cement in Qinghai?"? He said: "Very good, the central enterprises do not have vicious competition between brothers, I agree with you to do so.". In fact, this is also my strategy, that is, to be an enterprise, we should "divide the world into three parts" rather than "conquer the world". At that time, after Sinoma made Hanzhong Cement in Shaanxi Province, it has been promoting its western cement strategy around Qilian Mountain in Gansu Province and Tianshan Mountain in Xinjiang. In fact, there is a foundation for China's building materials to do the northwest market, because whether it is Tianshan Cement or Qilian Mountain Cement, we originally allocated the shares of the loan, but we have withdrawn and transferred them to the brother company China Sinoma. We have some internal arguments about this. I said that this is a strategic issue. Sinoma has room for cement development. If it can be done in the northwest, it will not go back to Shandong to do it. Our Zhonglian Cement will be stable. We should have a definite object in view and do nothing. Facts have proved that this strategy is right. China Building Materials concentrates on Huaihai, South, Southwest and Northeast regions, which is a major choice we made at that time. In the region, we hope that there are no big competitors, so that we can not only cultivate the market, but also reduce the direct conflict: we do not do it in Anhui, because there is conch; we do not do it in Beijing, Tianjin and Hebei, because there is Jidong; we do not do it in Hubei, because there is Huaxin; In Henan, we only made one in Nanyang and Luoyang, which is a short-legged product with Tianrui Cement and Cement". Reasonable economic transportation radius is only more than 200 kilometers at most, so China's building materials cement strategy is based on regional layout, emphasizing the core profit area in the region, in the core profit area to be able to control the plate, have a certain pricing strength and pricing power, if it can not control the plate, it will be abandoned. For example, Northern Cement is sitting in Heilongjiang, dividing the world equally with Yatai in Jilin, and only doing Dalian market in Liaoning. Heilongjiang Province is the foundation of northern cement and the key area of our target strategy. There is a Pennsylvania cement plant, located 30 kilometers near Harbin, with two lines of 5000 tons and mining resources. The location of this factory is very important. It is located in our core profit area, surrounded by Jiamusi, Mudanjiang and other cement plants of China Building Materials. For this reason, when Pennsylvania Cement was auctioned in the Shanghai Property Rights Exchange Market, we went all out and were determined to win. At the same time, there is also a Hebei cement company bidding with us, which is also a strategic need and is determined to win. When two companies that are determined to win meet, the auction is doomed to be very cruel. When the Pennsylvania Cement Plant was listed for auction, I attended an international cement conference in Russia, but I made arrangements in advance for Cao Jianglin to take part in the auction. This cement factory is in the heart of our strategic fortress, and it is large, so I gave the order to take it unconditionally. Just as the acquisition of Xuzhou Conch is related to the life and death of Zhonglian Cement, Pennsylvania Cement is related to the strategy of Northern Cement and the loss or gain of the whole Heilongjiang market. At the time of bidding, the bottom price was raised by adding 3 million yuan each time, and you came and went for a whole afternoon, bidding 131 times, and finally China Building Materials won. After the result came out, although we got it, we still felt very stressed because it was much higher than reserve price. When I had a meeting in Russia, I kept the auction in mind. When I heard the result, I told them that in fact, we only paid 3 million yuan more than our competitors. The key is that we got the project, which is very important for us. These things in the market are very thrilling, and you must choose when you should choose. The price is given by the market, so there is no room for bargaining when bidding, it can only be a choice between doing and not doing. As an enterprise leader, it is very important to make a decisive choice. Whether it is Xuzhou Conch or Pennsylvania Cement, in fact, I did not participate in the price negotiation when I got the project, but I gave a clear authorization to let my subordinates know whether to do it or not, and when to do it, otherwise we can not make a decision on the battlefield. Take the Pennsylvania auction for example, we shot it all at once, and the other party went out to make a phone call to ask the boss, so it took a long time. But the Chinese building materials is very simple, as long as he shoots again, we will shoot again and again, and finally the other side claims to have soft legs. The reason why both sides are unwilling to give up after shooting more than 100 times is related to the consideration of market value. Companies like Penn Cement can no longer be valued at replacement cost, and only the market has the final say on how much they are worth. Although Chinese building materials paid a high price, they got the Heilongjiang market, and the premium part was recovered in the second year. Later, the relevant review department specially inspected the project and felt that the project was very correct. Now, the whole Harbin cement market is supplied by this cement factory. So I often think, whether it is acquisition or auction, we are not acquiring for the sake of acquisition, but for the sake of achieving economies of scale. There will be a premium in the acquisition process, and the integrators will make up for the premium with the money they earn later. The reason why they can make money is that the market concentration is high, which is the logic. Many people do not understand this, only entangled with the acquisition premium, but do not know that the acquisition is to make money, making money can make up for the premium. Like Southern Cement, the after-tax profit in 2011 was 5.4 billion yuan. The after-tax profit of Northern Cement in 2011 was 1.8 billion yuan. 4. "Is China's building materials crazy?" In the process of large-scale reorganization of China's building materials, there are some doubts in the society. At the peak of the reorganization, a market person wrote a letter to the SASAC, the headline is very scary, called "China's building materials are not crazy.". The letter was later published in the media, the core meaning is that China's building materials to carry out such a large-scale acquisition is a "national advance and private retreat"; the purchase is better than sale of fine, China's building materials enterprises so, there must be a loss of state-owned assets; China's building materials so rapidly expanding, there are so many talents to support, and so on. In short, it is a very negative and punitive letter. Of course, not only this letter, but also the media published an article "SASAC re-copy of China's building materials", for a time, I and China's building materials have been under pressure. I think it's normal to have different opinions on anything. Criticism should also be treated with a normal heart. The key is whether you know what you are doing. At that time, we sent a letter back to the SASAC, explaining how we did it and whether it was the advance of the state and the retreat of the people. Reorganization is a market behavior, regardless of state-owned enterprises and private enterprises. In reality, the reorganization of China's building materials is not as some people imagine, as if we suppress private enterprises, forced to buy and sell. When we reorganized in Zhejiang, the local private enterprises were in the abyss of vicious competition. In fact, we freed everyone from the dilemma of price war, and because of the reorganization effect, everyone made money, and we also left shares for everyone. This is a win-win way.When we went to the southwest region to reorganize, it was after the Wenchuan earthquake that a large number of cement production projects were launched in Chengdu. The market price dropped from 800 yuan to 180 yuan. The enterprises were miserable. At that time, private enterprises were calling for China's building materials to save us? These private enterprises have a lot of loans. If the factories go bankrupt, what will the banks do? In fact, looking back now, the restructuring of China's building materials involves more than 400 million tons of cement and thousands of enterprises. According to the replacement cost, the average cost of this large-scale acquisition is only 375 yuan/ton, while the replacement cost of cement today is 450 to 500 yuan/ton. There was some premium when we bought it, but the premium was far less than appreciation of its land and mines. For example, we collected a lot of limestone mines, which cost less than 1 yuan at that time. Now, in some places, the auction of limestone mines costs more than 20 yuan per ton. In this way, if a mine has 100 million tons of limestone mining rights, it will increase by 2 billion yuan. Sometimes I often think that China Building Materials is not only a profitable company, but also a very valuable company, because the present value of our cement enterprises, including land and mines, has exceeded 200 billion yuan today, but many people do not calculate this account, only the original things. Not long ago, we moved several cement plants in Zhejiang, and the local government took over several pieces of our land. The land price alone was much more expensive than price of the cement plants before, so all our acquisitions were profitable and valuable. What about the problem of talent? After years of market training, these personnel have passion, responsibility, spirit of struggle, business ability, and cultural integration after entering China's building materials, and have become an important force in the management and technical team of China's building materials. Of course, social doubts are also a kind of concern, especially as a state-owned enterprise, because people care about state-owned assets, there will always be a variety of concerns, so they will express some different opinions. I think we should take a correct view of this matter, correct it if there is one, and encourage it if there is none. We should look at the problem with this mentality. Later, at an annual forum of Peking University, the leaders of the State-owned Assets Supervision and Administration Commission (SASAC) said in their speeches that China's building materials restructuring cement encountered many doubts, and some veteran comrades wrote letters to the Commission to oppose the restructuring. Now it seems that China's building materials restructuring cement is right. China's building materials have come all the way, not only restructuring work, but also other work has been questioned. But I think it doesn't matter. The more the truth is debated, the clearer it becomes. We should allow people to have different voices. We should also listen to different opinions. This is necessary for the growth of Chinese building materials. 5. The capital market has also encountered the "Waterloo" reform, which is an arduous process. In the whole process of cement restructuring, China's building materials have encountered greater difficulties besides being questioned, which is a bit like the "Waterloo" of China's building materials. After listing in Hong Kong, China Building Materials has been triumphant all the way. As soon as we listed, we acquired Xuzhou Conch. The stock continued to rise. China Building Materials was listed in the Hang Seng Index of Hong Kong. It should be said that the company's development prospects are very good. At that time, we wanted to take advantage of this east wind to continue the rapid progress of enterprise restructuring. Our stock has risen all the way to 39 yuan, and we think it's time for another round of issuance. As a result, China Building Materials announced to issue 300 million shares, 300 million shares is more than 10 billion yuan, enough for us to buy more cement plants! In the middle of this, just in time for the global financial crisis in 2008, the domestic infrastructure market was not optimistic after the financial crisis, and some speculative funds in Hong Kong began to take the opportunity to sell us short. During that time, our stock plummeted from a high of 39 yuan to 1. Some irresponsible investment bank analysts were quoted by Hong Kong media as saying that if the stock price of CNBM fell to 50 cents, the company would go bankrupt! But I firmly believe that the quality of our company is very good, we are intentionally "short selling", the background of short selling is the international financial crisis, speculative funds take advantage of China's short-term difficulties to deliberately confuse the public. I believe we can survive. At that time, I think the country will expand investment, "China Building Materials News" also reported my view. In fact, I had no basis at that time, just my own intuitive judgment, but later it all came true. In the middle of the night one day, I received a notice that I would attend an emergency meeting the next day. After I went there, I learned that the country would launch a "4 trillion" investment plan. Later, with the support of financing platforms and banks from local governments, China's economy soon recovered, and the stock price of CNBM recovered rapidly. However, we regrettably missed that round of financing opportunities. We often say, now or never, because this opportunity is often only given to you once. That round of crisis also made the cement restructuring of China's building materials also encounter difficulties, because at that time it was at the peak of the restructuring of southern cement, signed many acquisition contracts, waiting to pay, and the stock decline made the original fund raising plan ruined, and the market began to have rumors that China's building materials had no money to restructure, which made us very uncomfortable. Reminds me of an Arab proverb, "Money that is not in hand cannot be spent.". Banks have helped us in difficult times, and the credit of banks has played a role for so many years. Some banks agree with the business philosophy of China Building Materials and understand our restructuring ideas very well. At the critical moment, they generously supported 10 billion loans at one time, which enabled us to complete that round of acquisition. So I often say that banks are not only icing on the cake, but also timely help. The key is that enterprises have to be trustworthy, so that banks can trust you. This is also a causal relationship. Perhaps there are some problems in the approval of our departments. For a listed company, there is a window period for financing, which may be unanimously favored and accepted by everyone at a certain moment. In the window period of 39 yuan stock price, if it is red chips, we decide to issue shares in the morning and get the money in the evening, more than 10 billion yuan, how can there be a high asset-liability ratio behind it? Later, I made a speech at the conference of the China Securities Association. I said, "Leaders always want our entrepreneurs to seize the opportunity of rapid change. I have seized the opportunity, but you did not approve it and missed it.". Later, you complained about my high debt, and I was also very aggrieved. At that time, the chairman of the Securities Regulatory Commission sat below and laughed. Although it was not his term, I felt that his laugh was a recognition of the problems existing in the past government approval system. 6. After the joint reorganization, the focus is on management and integration . China's building materials industry is a real economy. What should we do during the financial crisis? Because we have received so many companies, if the management is not good, it means that every more enterprise will wear one more shackle for itself, so we must do a good job of management integration. In May 2008, we held an internal meeting on management integration in Hangzhou, which was called "Hangzhou Conference". At that time, first, the whole country was busy with earthquake relief after the Wenchuan earthquake, and second, the impact of the global financial crisis began to appear in China, and everyone felt pressure. At this time, it is also meaningful to gather everyone together to study the management integration of enterprises. Because I was born in a factory, I was familiar with basic management. At that moment, I felt that it was necessary for everyone to practice their internal skills and do some basic skills. At that time, I said, "The thunder outside is rumbling, and the sound of books inside is loud." We should do a good job of integration. In fact, after the acquisition of Xuzhou Conch in 2006, I have realized a very important thing, that is, how to manage the acquisition of cement enterprises. I remember that on the day of the acquisition, Chairman Guo Wensan of Conch and I took a walk by Yunlong Lake next to Kaiyuan Hotel in Xuzhou. Guo Wensan told me that it was not difficult to manage the cement plant, and the key was to do two things well: one was to manage the operators in the central control room well, and to carry out the internal benchmarking of the plant every month, and to eliminate the last one; the other was to carry out the benchmarking among the plants, and the cost indicators such as coal consumption per ton, electricity consumption per ton, oil consumption per ton, ball consumption per ton, refractory brick consumption per ton, and repair cost per ton should be continuously benchmarked. He came to Conch Cement after graduating from university and has been engaged in cement for most of his life. He is very professional in the management of cement enterprises. Although cement management is not complicated for him, it is not easy for China Building Materials to do a good job in cement enterprises because it is a new entrant and developed by reorganization. On the basis of the idea of "five modernizations" management integration put forward by "Xuzhou Conference", "Hangzhou Conference" further summarizes the "three five" management integration model, which refers to five modernizations, five centralizations and five key indicators. In addition to the well-known "five modernizations", "five centralizations" refer to sales centralization, procurement centralization, financial centralization, investment decision-making centralization and technology centralization, while "five key indicators" refer to net profit, product price, cost, cash flow and asset-liability ratio. By solidifying these management methods, the cadres of enterprises have achieved clear management objectives, and the overall management level of enterprises has been greatly improved. Now almost every monthly meeting of Chinese building materials has become a digital benchmarking meeting, and the management ability of cadres has been greatly improved. Once I went to Hong Kong for a road show, because we all spoke with numbers, especially when I talked about the key indicators of KPI, a fund analyst said that there was hope for enterprises in mainland China, and the chairman understood KPI. I introduced to him that after the reform and opening up, enterprises in mainland China developed rapidly. The management level of many excellent enterprises is not inferior to that of the United States and Japan. When I worked in Beixin, I was fascinated by learning the management methods of Japanese enterprises. Japanese enterprises solidified some management methods and called them "construction methods", such as "5S" and "TQC" in factories. I introduced some construction methods of Japanese enterprises to Beixin, and the effect was very good. After the large-scale joint reorganization of Chinese building materials, in the management integration work, I pondered over and over again, and introduced the management method of "eight major construction methods". In fact, the "eight major construction methods" are some management ideas and methods summarized for the key content of enterprise management, including the content of "three five" management integration, as well as some market-oriented management practices of joint reorganization. "Eight construction methods" include five centralizations, KPI, zero inventory, counselor system, benchmarking optimization, price, cost and profit, core profit area, market competition and cooperation, etc. The mentor system was inspired by Toyota. I was reading the Harvard Business Review on a plane, and an article analyzed that Toyota's global car manufacturers produced equally good products, and the secret was the mentor system. Toyota has more than 3000 technicians as counselors. No matter where a new factory is opened in the world, Toyota will send some counselors to the new factory to guide the workers. In this way, some of Toyota's management and operation methods are accurately copied to the local enterprises. I think this method is very suitable for the integration of cement enterprises in China's building materials industry. Later, every time CNBM received a factory, it sent five counselors, who were responsible for process, control room (main control room), procurement, market, on-site equipment management and other affairs. These counselors copied some basic methods of our management, so that all factory management could be consistent. At first, we promoted the counselor system in Zhonglian Cement. In some well-managed enterprises, we selected excellent on-site operators as counselors, and then sent them out to coach other enterprises. This method is very effective, and the management level of many enterprises has been rapidly improved, such as the original Taishan Cement Plant, which lost 60 million yuan in half a year before the acquisition, and made a profit of 60 million yuan in half a year after the acquisition. I often think that management integration is very important for joint and reorganized enterprises. Why did many enterprises that started by mergers and acquisitions collapse in history? Because if there is no strong integration ability, the more enterprises acquired, the more shackles they put on themselves. So I often say that mergers and acquisitions are not easy, and integration is even more difficult. Compared with enterprises that have developed by building their own factories all the way, enterprises that have developed by joint reorganization may take more effort to do well. 7. Now that the strategy has been set, we must stick to it. How is the reconstituted cement doing? CNBM currently has 5. It can be said that the strong cement business has laid a solid foundation for the rapid development of the Group. The significance of the reorganization of China Building Material Cement is far-reaching, not only the enterprise itself has become bigger and stronger rapidly, but also the two major adjustments of the organizational structure and technical structure of the cement industry have been promoted. The adjustment of organizational structure is mainly reflected in industrial concentration. Driven by the large-scale reorganization of building materials in China, the industrial concentration of cement industry in China has increased from less than 10% to 62%, which has changed the ecological environment of the whole industry. In the reorganization, we have done waste heat power generation treatment for all the acquired enterprises, and vigorously carried out the co-disposal of industrial waste and urban waste. Now the cement plants of China's building materials not only have very good economic benefits, but also have very good social benefits. I often say that our cement factory is not a garden in the factory, but a factory in the garden, a factory in the forest and a factory in the grassland. In addition, in our reorganized enterprises, there are not only large 10,000-ton lines, but also individual small vertical kilns. Why? We will blow up the small vertical kilns collected, and then use their mines and land to build new large-scale production lines. Only in this way can we eliminate backwardness. In 2007, we reorganized a cement plant in Zaozhuang. This cement plant is located in Shilong District of Zaozhuang. It has 13 small vertical kiln production lines. After the reorganization of China Building Materials, it was blown up in one fell swoop. This sensational "first explosion of China's cement" had a great impact and accelerated the pace of eliminating backwardness in the whole country. CCTV also broadcast the news at that time. Blowing up the production line of small vertical kilns at one stroke is known as "the first explosion of cement in China" . Generally speaking, after about 10 years of large-scale cement restructuring, China's building materials industry has not only achieved tremendous benefits, but also made great contributions to promoting the structural adjustment and healthy development of the industry. Looking back on the road of integration, we had some inadaptability at the beginning of integration, and after integration, there were ups and downs, such as the glory in 2011 and the trough in 2015. Without everyone's insistence, he would have fallen down long ago. I often tell you not to doubt our strategy easily. After the strategy is set, we must firmly carry on. There may be some difficulties in the process, but it will be over if we stand up again. Looking back, we will find that our original choice was correct. The road of making cement from Chinese building materials fully illustrates this point. I always say that cement is a good thing. Cement is 180 years old, copper is 4000 years old, and iron is 2500 years old. Compared with copper and iron, cement has a very short history, but it has a very wide range of uses. Less than 35% of cement is used in construction, and 65% is used in infrastructure. For example, runways can only be made of cement. In addition, cement has many functions, such as waterproofing in tunnels, resisting pressure in dams, and resisting radiation in nuclear power plants. Many people say that cement is a traditional product, in fact, although cement is traditional but not backward, cement is a very cost-effective material, economic construction, production and life are inseparable. This reminds me of my visit to Lafarge President Mr. Lefeng many years ago, when he asked me, "Mr. Song, do you think there is a material that can replace cement in the next 50 years?"? As we all know, many products are changing very fast now, and they are facing subversive innovations, such as cars may be subverted by electric vehicles. But cement is irreplaceable for the foreseeable future. 90% of China's iron ore is imported, and most of the timber is also imported. Limestone, the raw material of cement, has a reserve of 9 trillion tons in China, and the Chinese people have a preference for using cement, so cement is the most cost-effective cementitious material in China. Of course, the cement business is also facing the task of transformation and upgrading, including deepening supply-side structural reform, technological progress, energy conservation and emission reduction. For example, in terms of technological progress, I propose that cement products should adhere to the principle of "high standard, specialization, commercial mixing and product". According to the requirements of "four modernizations", China Building Materials advocates elimination. 32 . Looking back today, I think it is strategically right for China Building Materials to choose to make cement, and it is also strategically right to choose to make "cement king" by means of reorganization. In the process of restructuring cement, China Building Materials has made contributions to the country and the industry, set a benchmark, and won rich benefits for itself, doing a profitable and valuable thing. Practice has proved that restructuring is indeed a good method. I advocate more restructuring if possible. The central government says that "as many mergers and reorganizations as possible and less bankruptcy liquidation". Restructuring is actually for bankruptcy. Only restructuring can make excess capacity withdraw orderly. This is not only the road taken by the western developed countries in their early years, but also the only way for us to reform the supply-side structure today. Chinese building materials is equal to the first step, although the risk, eat crabs, but also won the first opportunity. The joint reorganization of Chinese building materials can be said to be just in time, we seize the opportunity of reorganization, and make this matter vigorously and vigorously. If you think about it carefully, this reorganization is really a magnificent epic undertaking, which really makes the impossible possible, and it is not big enough to measure it. This is also the reason why many Western scholars attach so much importance to the reorganization of Chinese building materials. Some people say that I have long thought of joint reorganization, but I have not done it; some people say that I have long said it, but I have not done it; some people have done it, but they have not done it. But the Chinese building materials belong to the kind of thought, said, also did, but also made it into the enterprise, this is commendable. Doing business requires ideas, as well as painstaking efforts and time to operate. I have been in Beixin for 23 years, and I have been a factory director for 10 years. I have been in China Building Materials for 16 years this year, and I have been making cement for more than 10 years. Without these years of perseverance, it is very difficult to get things done. Therefore, if you want to do something, you have to stick to it, and only when you stick to it can you get things done.
After receiving Xuzhou Conch, we received Taishan Cement with two production lines of 5000 tons in Shandong. It has stabilized the core position of Zhonglian Cement in the regional markets of southern Shandong and Huaihai.
