China's steel industry Internet industry development

In 2019, the market demand of the steel industry was better, mainly due to the stability of downstream industries such as infrastructure and real estate, but the development situation of various industries was not the same, among which investment in the infrastructure industry maintained a low speed and steady growth, real estate investment and new construction maintained a high speed growth, and the machinery industry remained stable.

The poor layout of China's steel industry, the mismatch between supply and demand, the formation of the "north timber south transport" supply and demand structure, and the traditional steel circulation is based on the "hierarchical" distributor agent distribution model, supply chain module segmentation, there are information islands, facing the information flow, logistics and capital flow can not be "three streams into one" pain points: (1) At the level of information flow, the traditional steel distribution network faces the pain point of multi-layer information transmission, while the complicated transaction circulation chain leads to high transaction costs, and the poor return of demand feedback information leads to the asymmetry between steel supply and demand. (2) At the logistics level, the dispersion of industrial layout has formed a complex and diverse steel logistics dilemma. (3) At the level of capital flow, the capital pressure in the middle and lower reaches of the industrial chain is large, and the financial support is unstable.

The traditional steel distribution network has problems such as imperfect business flow contract and single pricing model, multi-layer transmission of information flow and poor return of demand feedback information, and there are fewer high-level talents within the distributor, and the endogenous transformation and upgrading of the traditional steel industry chain is difficult and takes a long time. For the downstream procurement side, there are pain points such as multiple levels of circulation chain, complicated transaction links, low efficiency, high transaction costs, and opaque offline procurement processes. For the upstream production end, there are pain points such as difficulty in matching supply and demand information, strong transaction uncertainty, and single marketing model.

During the "12th Five-Year Plan" period, China's steel production capacity reached about 1.13 billion tons, the utilization rate of crude steel production capacity declined, and steel production capacity showed absolute excess. In December 2015, China's Central Economic Work Conference proposed "capacity reduction, inventory reduction, deleveraging, cost reduction, and strengthening the five tasks". The steel industry to reduce capacity kicked off. In February 2016, The State Council issued the Opinions on Resolving excess capacity in the Steel Industry to achieve Development, proposing the goal of "reducing crude steel production capacity by 100-150 million tons in 5 years from 2016," laying the tone of steel capacity reduction. Since then, a number of ministries and commissions have frequently issued policies related to the steel industry's capacity reduction, and excess capacity has been effectively improved. The core purpose of removing excess capacity is to help steel companies get out of trouble as soon as possible and improve profitability. The steel industry Internet platform will guide the healthy development of the steel industry and help the transformation and upgrading of the industry in the context of the national economic restructuring.

In order to consolidate the important success of the supply-side structural reform during the 13th Five-Year Plan period, the state vigorously carried out environmental protection work, issued relevant policies to control the pollution problems, resource waste problems and high energy consumption problems in the steel industry, and issued the Three-year Action Plan to win the Blue Sky Defense War in 2018. In addition, the implementation of differentiated environmental protection production restriction policies for individual regions, such as the Beijing-Tianjin-Hebei region; Strict eco-protection measures will be implemented for special environmental protection areas, such as the Yangtze River Economic Belt. At the same time, China is also speeding up the regulation of pollution emissions in the steel industry, for example, the 2019 Opinions on Promoting the implementation of Ultra-low Emissions in the Steel Industry and the 2020 China Environmental Protection Industry Association "Ultra-low Emission Transformation Technology Guide for Steel Enterprises". The steel industry Internet can effectively integrate the resources of all parties, promote the concentration of production capacity in the steel industry, resolve excess capacity, reduce emissions, and contribute to the cause of environmental protection.

Since the concept of "Internet +" was mentioned in the government work report in 2015, the integration of the Internet and traditional industries has been continuously improved, and the integration process has gradually accelerated. In 2017, the Ministry of Industry and Information Technology issued the Three-year Action Plan for Industrial E-commerce Development, which clearly "encourages the innovative development of e-commerce platforms for bulk raw materials such as steel, petrochemicals, nonferrous metals, and building materials." As one of the cultivation directions of e-commerce platforms in key industrial industries, the steel industry Internet platform has directly obtained policy dividends, and the steel industry Internet has entered the fast track of development. In recent years, with the popularization of the Internet economy, the industrial Internet that integrates upstream and downstream enterprises and supply chain links has flourished. In 2019, 12 ministries and commissions including the Ministry of Commerce issued the Guiding Opinions on Promoting the Development of Platform Economy in Commodity Trading Markets, proposing to "cultivate and form a number of open, efficient and green supply chain platforms".