Friday, November 12, 2010

Baosteel

A few weeks ago, we visited the headquarters of Baosteel, the world's 3rd largest steel producer and a state-owned enterprise (SOE) critical to China's industrial strength. It dominates its local area in Shanghai, even supplying the name for the Baoshan District.

A Baosteel official answered our questions before we visited one of their production facilities. He talked about the interaction of the government and the company as if it was normal as blueberry pie for the government to select top management, to set production targets, etc. My surprise probably says more about my complete acceptance of American capitalism than about him or Baosteel. Anyway, he used familial and paternalistic language to describe the government's involvement. For him, it was natural to set up a school system, a university, a hospital, etc. to support Baosteel's workers and their families; for me, it seemed like the company and the government were isolating its workers from much other interaction or perspectives.

However, I may be over-emphasizing the different ideologies. At one point in the conversation, the official said all top management should join the Communist Party and shrugged it off as a cost of doing business, the way an American manager may join the local Chamber of Commerce or industry association. He emphasized the continuous feedback between the top management and the government so it's most appropriate to think of the government as a board of directors, which is its actual role. I, along with what I imagine is popular American thought, imagine the government controlling every single aspect of the workers' lives. However, that image is extremely far from the truth; on most matters where the government has little interest, top management and workers are allowed to run free, while only on a few matters, the decisions by the government may trickle down to the daily lives of workers, similar to the Western conception of a board of directors.

One of the production facilities. Located in what looked like a warehouse, the facility was incredibly large. We didn't have a tour guide so I don't know what's going on in the picture. However, we watched the glowing piece of steel roll across the production line, get stretched out through its movement, and get cooled by water. The process was entirely mechanized; I could count the workers on the production line on one hand.

Fancy machinery. We walked across a balcony that ran about half the length of the production line, but we weren't allowed to watch the steel from any closer. It's surprising that in 20 years I've never before visited a large-scale factory or assembly line. If you have family friends in the auto, steel, or manufacturing businesses, I'd highly recommend checking out the production facilities. It's an aspect of our lives that you completely take for granted until you realize someone has to make all these decisions about quality, pricing, operations, etc.

The water cooling off the glowing steel. I was fascinated by the intricacy of the production line; even though we consider developing countries and their people to be less advanced than us, there's no way I understood what all the machinery was doing. It's interesting that in advancing beyond those jobs and roles, many of us, myself included, have forgotten or never learned them.

The rolled-up coils of steel. I'm not sure who Baosteel's major consumers are or where these coils of steels of headed. However, they extended for rows upon rows upon rows.

The pollution from one of the production facilities, which may be one of the reasons most of these facilities and jobs have moved outside of the US. The Baosteel complex was expansive, requiring a bus to take us from one side to the other.

The port from where Baosteel receives its raw materials including iron ore and from where it ships finished steel to locations around the world. The official mentioned that the company had to increase the depth and width of the lake so that large-scale ships could enter the port with their immense amount of wares. To put this into perspective, Shanghai built a 20-mile bridge to an island where the waters are suitable for a deep-sea port that allows the world's largest container ships to unload their wares. So making sure the water is deep enough to allow proper unloading is incredibly important to Chinese industrial strength and egos.

Visiting Baosteel was an unprecedented experience, not only to hear an official describe an SOE's interaction with the government in his own words but also to witness an immensely large industrial production facility. In my opinion, we often ignore the mechanics behind many of our advanced gadgets and lifestyles at our own peril. Of course, it's up to you how much time you want to spend understanding these mechanics, but regardless of how confusing or disorienting, it's time well-spent since few people, at least in my interactions, seem to understand them well.

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