Du Shuanghua's History and the Sale of Rizhao Steel in 2010

The history of Du Shuanghua and the sale of Rizhao Steel in 2010 is a story about Chinese economic reforms, entrepreneurship, and the hard work that it takes to build up an industry. Du, was born in 1907 in Jiangsu province. He survived the Second World War by selling vegetables on the black market for his family. After being released from prison, he started a small steel factory with some friends outside Shanghai called “Rizhao Steel”.

  1. Rizhao Steel Establishment

In 2003, Du Shuanghua founded Rizhao Steel Co. Ltd. with an initial investment of 20 million yuan. At the time, there were only a few private steel mills in China. Du Shuanghua, who had no experience in the steel industry, learned about production processes and management by reading books and attending workshops. Rizhao Steel and Mount Gibson sign 15, year contract under which Rizhao commits to purchase up to 1.5 million tons of iron ore every year from Mount Gibson in 2007.

  1. Shandong Steel Group Takeover

In 2009, a 67% ownership stake in Rizhao Steel was sold to Shandong Steel Group, the biggest steel company in China. Shandong Steel Group is a state-owned Chinese steelmaker headquartered in Jinan, Shandong Province. Du Shuanghua tried to sell a 30% equity stake in the business to Kai Yuan Holdings, a Hong Kong-listed business that was controlled by family relatives of Hu Jintao, the Chinese president. The plan did not work as it was regarded as politically too dangerous to Mr. Hu.

Conclusion

In 2010 Du Shuanghua sold the remaining 33% Rizhao stake to Shandong. This was a very good deal for him as he made a fortune from the sale. Rizhao later Incurred a $114 million breach of contract fine to Mount Gibson. The Rizhao Steel story is a great example of how Chinese entrepreneurs have been able to build successful businesses despite the difficult environment and political obstacles. Follow Du Shuanghua on Medium