China Minmetals : New China Minmetals Will Create RMB 100 Billion Internal Market Next Year – Business Integration Making Substantial Progress

On December 21st, China Minmetals held the 'Creating an RMB 100 Billion Internal Market'advancement meeting in Beijing, at which it officially put forward its plan to create anRMB 100 billion internal market. China Minmetals has made substantial progress in integration after achieving the strategic recombination and headquarters function reform.

The market pays close attention onhowthe recombined central enterprise boost its business integration and achieve maximal recombination profits. The persons concerned believe that such anew and innovative action as creating an RMB 100 billion internal market will show that the integration of two Fortune500 enterprises is engaging in actual operations. At the meeting, China Minmetals General Manager GuoWenqing pointed outthat creating an RMB 100 billion internal market isan important and innovative operation action of New China Minmetals following the recombination, and it should be carried out through consideration of the situation, comprehensive analysis and repeated research and calculation. Its successful creation will reflect the recombination logic of the two enterprises. The strategic recombination opens the whole metal mining industrial chain, including reconnaissance, mining, smelting, processing and trade, and New China Minmetalsis givingfull play to its industrial chain advantages to achieve integration, eliminate the weakjoints ineach link, seek benefits in the joint operation of the industrial chain and generatemore advantages by creating an RMB 100 billion internal market.

The integration of ChinaMinmetals after the recombination is very complicated, so the leadershiphas been looking for a useful method and reasonable procedure to boost the process. GuoWenqing pointed out that on the basis of deep research and full investigation, China Minmetals will make efforts to create an RMB 100 billion internal market, i.e., a large business collaboration platform and carrier. Creating such a marketwill bring tangible profits, as well as being the most direct and effective business collaboration action with the easiest operability. He also pointed outthat creating an RMB 100 billion internal market could effectively promote mutual understanding between various professional work. Such aninternal market will havea strong driving function. It will also be the base of comprehensive business collaboration and deep integration. If such an endeavor fails, other plans related to collaboration and integration will become invalid.

China Minmetals made great efforts to prepare thisadvancement meeting, such as analyzing the opportunities, space and scale of the internal market, explaining all the rules and policies for its exploitation, and officially issuing an internal collaboration manual. Moreover, the advancement meeting set a link for signing. Many units from the former China Minmetals and MCC signeda cooperation agreement of demonstrative and collaborative business, including material purchasing, engineering construction, real estate development, industry-finance services, production & maintenance, metallurgical services and management service. GuoWenqing hopes that the signing units will boost their cooperation, make real achievements as soon as possible and play leading roles in the constructionof the proposed internal market.

As to how to define the RMB 100 billion internal market, China Minmetals explained that its concept was defined through numerous studiesand repeated calculations. From 2011 to 2015, the business volume of the former China Minmetals and MCC, and the business volume of the cooperation between the two enterprisesreachedRMB 125 billion in total. According to current calculations, the internal market of New China Minmetals may achieve an RMB 100 billion business volume in 2017. From 2017 to 2010, the whole internal marketisexpected to achieve a business volume of RMB 374.2 billion and profits of more than RMB 10 billion.

Guo Wenqing told reporters that creating an RMB 100 billion internal market is an important action forboosting the internal enterprise's supply structure reform. It can turn dispersed, low-level services and capacity with strong substitutability into high-end supply integrated with industry, technology, services and capital. As such, it can form irreplaceable advantages that are accessible to the whole industrial chain, and improve the operation quality, profits and core competitiveness of New China Minmetals.

As for the problem of the internal market loweringthe business collaboration standard, ChinaMinmetals has madespecific arrangements in advance. Atthe internal meeting, GuoWenqing specifically pointed out that in order to create an internal market, they must adhere to market standard, regulations and rules, and meet all the supervision requirements. Rights and responsibilities are correlative. Enterprises must keep careful accounts even if they are on friendly terms. The market standard is not allowed to be changed and unfair provisions thatcan result in a loss of profits forone party cannotbe formulated just because it is aninternal market. He also emphasized that there cannot be internal parasites. The internal market is intended to create more profits, not a situation in which powerful enterprises lead weak enterprises.

ChinaMinmetals pointed out that they will promptly revise and perfect the rules of business collaboration to ensure the sustainability of the internal market. Later, they will launch abusiness collaboration information-issuing platform as soon as possible, hold regular advancement meetings to track the implementation situation of the internal market, and hold irregular special business connection meetings. ChinaMinmetals emphasized that they will clarify the reward mechanism of business collaboration and give special rewards to units, teams and individuals who make great contributions in building the internal market.

The business collaboration of the recombined ChinaMinmetals has achieved preliminary progress, and steel distribution has been carried out for the early projects of ChinaMinmetals and the MCC Group. As of November, there are 138 cooperation projects, and the signing weight of steel and cementhas reached1.83 million tons. Engaging in trade and resource development,Minmetals International has conductedsupportingoperationwith MCC Overseas in productivity and some deals with MCC.

Aninsider explained that the business between the two enterprises is distributed around the industrial chain so as to avoidoverlappingas much as possible, and this is called 'complementary recombination'. The two enterprises havebecome one, and this is reflected in the re-optimization and connection of each link in the industrial chain. Natural creation forms ahuge internal market. The insider also pointed out that if the internal market enjoysgood exploitation and obvious effects, and achieves'one plus one is greater than two', it can set an example for the recombination and integration of large central enterprises.