The Survival And Development Of Private Enterprises In The Present Situation

Since China’s reform and opening-up, the country’s private economy has been developing very quickly. With an increasing proportion in the economy structure, it has become the most dynamic part of the overall economy. Privately-owned steel companies have been developing rapidly since the government allow and encourage private capital to invest in the steel industry. Their importance is self-evident as their crude steel output accounted for around half of the2010national total of more than600million tons.The government has applied series of measures since2005to regulate the development of the capital-, technology-and manpower-intensive steel industry due to problems including high energy use, environment pollution and production overcapacity. In the meantime, inflation pressure is significant in developing countries after the2008global economic crisis with boosting liquidity around the globe in2011. With CIP hit new highs for several months in2011, China has applied a special credit policy for industries including steel. In addition, insufficient raw material supplies such as iron ore and coking coal become prominent and their prices have been surging in recent years with the rapid development of the Chinese steel industry. The average profit margin of the steel sector in2010was only around3%, the lowest among all industries. Steelmaking enterprises are facing huge challenges for survival and development.It is especially import to see how medium-and small-sized private steelmakers without a "state-owned" halo would develop under the current political and economic environment. Their production scale is small, production facilities and technology are not advanced enough and products quality needs to be improved.Shanxi Jianbang Group is one of those steelmakers. This paper analyses private enterprises’overall development environment and their internal weak points as well as particularity Shanxi Jianbang Group faces in the steel industry such as accelerated industry consolidation, increasingly strict enforcement of government requirement for outdated capacity closure, surging raw material costs, steel overcapacity and oversupply.To solve the above problems, this paper comprehensively analyze Shanxi Jianbang Group’s micro-environment factors-political, economic, social and technological factors using the PEST method and study the company’s strengths, weaknesses, opportunities and threats using the SWOT method and gives planning and policy recommendations that Shanxi Jianbang Group should expand its production capacity, immediately upgrade and improve its production technology, put more focus on environmental protection, enhance construction of its industry chain, adjust product mix for Shanxi and Shaanxi provinces and produce further processed products.