Entering the Leader of Special Steel Industry – Longteng Special Steel Group

Since the beginning of this year, downstream demand has been slow to recover, impacting steel companies. However, in such market conditions, some enterprises have maintained stable profitability, demonstrating strong resilience through clear development concepts, precise market positioning, and continuous innovation.

Jiangsu Longteng Special Steel Group is one of CNBAOSTEEL’s important partners. Despite market fluctuations, Longteng Special Steel continues to maintain a leading position in the industry with outstanding performance. What is their secret to success? Let’s take a look at how they have successfully developed in a downturn market cycle.

1. Focus on segmented markets: Ji Bingyuan, Chairman of Longteng Special Steel Group, stated that regardless of market changes, focusing on improving product quality and cultivating niche markets are key. By strengthening cooperation with the industrial chain, promoting refined management, and continuously pursuing technological innovation, Longteng Special Steel occupies a leading position in segmented market fields.
2. Control of the industrial chain risks: Longteng Special Steel has reduced operating risks and diversified market risks by strengthening control of the industrial chain. This has ensured stable sales of metal products even in situations of market price declines.
3. Improve management efficiency: Longteng Special Steel pursues refined management, continuously improves production efficiency, and provides the most comprehensive and highest-quality products and services to increase customer loyalty.
4. Focus on technological innovation: With the backing of a national-level technology center, Longteng Special Steel continuously strengthens research and development investment, focusing on comprehensive innovation in quality, brand, process cost, production capacity, and per capita efficiency.

The success of Longteng Special Steel is attributed to its excellent financial strength, moderate enterprise scale, and superior geographical location. These factors have jointly contributed to their competitive advantage and resilience in the market.

Promoting Innovation

In times of economic downturns, the strategies of corporate management evolve. Longteng Special Steel is actively fostering innovation in management to drive high-quality development.

Ji Bingyuan emphasized, “Institutional development is vital for the growth of enterprises. Recognizing the distinction between foreign-funded and private enterprises lies in the former’s establishment of robust modern management systems.” Accordingly, we draw insights from German enterprises, emphasizing stability, precision, resource optimization, and problem-solving approaches. We bolster management systems and incentive mechanisms, focusing on safety, environmental protection, technology, products, and marketing to create comprehensive systems tailored to our enterprise’s current needs.

Regarding talent development, Ji Bingyuan highlighted, “Our workforce is our most valuable strategic asset.” We collaborate closely with universities like Beihang University to cultivate talent, optimize talent acquisition along the industrial chain, and continuously improve talent cultivation mechanisms.

Driving technological innovation through effective management, we recognize that high-quality development is pivotal in competitive markets. Guided by industry development standards and leveraging national-level technology centers, we innovate comprehensively to enhance quality, brand, cost efficiency, production capacity, and workforce efficiency, achieving industry-leading levels.

Ji Bingyuan noted, “While stabilizing segmented product markets, we aim to reduce costs and boost efficiency. In our pursuit of innovation, we focus on both stock and incremental innovation.” We bolster innovation in incremental industries by expanding our industrial chain, integrating resources, and continuously developing innovative products and processes. Within existing industries, we enhance product research and development, ensuring quality across the entire industrial chain to improve market competitiveness.

With a dedicated focus on research and development, we allocate no less than 3% of our annual revenue to scientific and technological innovation. This investment strengthens technical teams and product research. In 2023, we established additional research platforms such as the Jiangsu Province Ocean Engineering Metal Materials Engineering Technology Research Center, supplementing existing platforms like national-level technology centers and Jiangsu Province enterprise technology centers.

Furthermore, we actively contribute to setting industry standards, holding 378 authorized patents, including 21 invention patents, and participating in the formulation of 26 national and industry standards. Several of our products have received certifications and awards, including the Jiangsu Province Steel Industry Scientific and Technological First Prize.

Learning from Longteng Special Steel: Insights for Steel Enterprises

Producing 4.5 million tons of specialty steels annually may seem modest compared to China’s steel industry, operating at a scale of 1 billion tons. However, Longteng Special Steel has achieved remarkable sales profitability and per-ton steel profits, leading the industry amidst turbulent market conditions earlier this year.

Longteng Special Steel, with its focus on differentiated development over the past 30 years, maintained industry-leading profit indicators in the first two months of this year. What lessons can we glean from the success of this “small yet exquisite” enterprise?

Transitioning from “resource-oriented” to “product-oriented” operations is crucial for influencing enterprise profitability. The steel industry is shifting towards a product-driven approach, linking enterprise profitability with the prosperity of downstream industries.

Analysis of profit status among member enterprises of the Steel Association in recent years reveals that product variety is a key factor affecting current profitability. Emerging companies like Xingcheng Special Steel, Hunan Iron & Steel, Xinxing Cast Pipe, and Longteng Special Steel have risen unexpectedly, primarily due to a high proportion of high value-added products catering to prosperous downstream industries. Longteng Special Steel’s wear-resistant steel balls target the mining industry, while its section steel finds usage in shipbuilding, both in favorable development phases. However, even Longteng Special Steel’s “star product,” PC steel bars, currently operates at the brink of loss due to its heavy reliance on the construction industry.

It’s evident that domestic steel demand has plateaued. Profound changes in the supply-demand dynamics of the real estate market prompt many steel enterprises, primarily serving the construction sector, to seek transformation and explore new development directions. Choosing the right downstream industries and segmented markets may lead to successful enterprise transformation, while the opposite may pose risks of transformation failure.

“Service” replaces “product” as the key to market success. Longteng Special Steel has established its market position by deeply understanding customer needs and enhancing customer loyalty. For instance, when entering the domestic mining enterprise market, Longteng Special Steel innovated its sales strategy by not charging customers for purchases but opting for profit-sharing settlements based on ore tonnage. This reduced costs and risks for customers, making it economically easier for them to accept new products. By understanding customer needs and exceeding expectations, enterprises can gain customer trust and stand out in intense market competition.

“Distinctiveness” replaces “scale” as the key to survival and development. Longteng Special Steel’s success is attributed to its deep specialization and continuous pursuit of quality. While the market’s elimination mechanism does not specifically target certain types of enterprises, companies without distinctive features and those that fail to innovate are likely to be eliminated first.

The business philosophy of Longteng Special Steel emphasizes adjusting product structure and market strategy according to changes in downstream industry demand, adapting to market changes to navigate through storms.

We anticipate more “small vessels” emerging as pioneers of steady operation and accelerated high-quality development in China’s steel industry.