Metallurgical of China : Recasting 'National Strength' – A Look Back at the MCC Group’s Reform Deepening, Loss Reversal and Transformation

　　'The goal of building a national team is not for MCC or China, but for the world; not for the past or the present, but for the future.'

　　--China Minmetals General Manager & Party Committee Deputy Secretary and MCC Chairman & Party Secretary Guo Wenqing

The China Metallurgical Group Corporation (MCC Group) is a mirror of the reform and development of China's state-owned enterprises.

The MCC Group has been a national team for 60 years. As the pioneer and main force of China's steel and iron industry, it has made historic contributions to the development of the industry and stood as an important support of national economic strength for a long time, taking charge of the construction of more than 90% of domestic medium and large steel and iron enterprises including Ansteel, Wusteel, Baotou Steel, Pansteel, Baosteel and so on. Ma Wanshui with his valiant and competitive spirit was an MCC employee, 'Holding the leading position and carrying the Red Flag', and enjoying equal popularity with Wang Jinxi.

After the financial crisis, MCC faced an unprecedented dilemma caused by the slowing down of the global economy, the profound adjustment of the iron and steel industry, and the blind annexing and recombination of enterprises a few years ago. In 2012, the MCC Group lost RMB 7.36 billion, ranking in the forefront of enterprises with deficits. The liability with interest was more than RMB 170 billion, while the receivables and inventory were more than RMB 210 billion, so many banks stopped granting credit to the MCC Group, and its capital chain was on the verge of breaking. Furthermore, a 'confidence crisis' arose in the internal group, which was filled with disappointment and had become sluggish.

In 2013, the MCC Group made a profit of RMB 4.44 billion, reversing losses of RMB 11.8 billion, and its profit growth ranked first among central enterprises; in 2014, it made a profit of RMB 6.03 billion, representing an increase of 35.8%, and it took the lead in being out the list of central enterprises which reform to get rid of difficulty and in 2015, it made a profit of RMB 6.86 billion with an annual profit growth of 24.8%. Its business performance broke historical records three years in a row, its profits continued to grow rapidly, its amount of newly signed contracts repeatedly hit historical highs, the quality of its assets improved greatly, and its enterprise brand and international influence improved significantly. On July 20th, 2016, the responsible person of central enterprises announced the 2015 business performance assessment results from 2013 to 2015; the MCC Group was named a 2015 Class A enterprise, and was honored as an 'Excellent Technological Innovation Enterprise' from 2013 to 2015.

It took only three years to achieve such great change from large losses to large profits. It is an enigma for the outside world that the MCC Group is making progress now after going through so many changes, having so much switched capacity, requiring so much reform, being so deeply involved in deep interest adjustment, and not making any progress for years. What lesson can be learned from this? We can comprehend that the state of reform to overcome difficulties inspired the MCC spirit of 'Never delaying and never slacking', and we can see MCC's strong belief in serving the Party and country in the noble ideal of 'Responsibility for the State' revealed in the strategy 'Taking charge of leading China's metallurgy to a higher level with a world-class metallurgical status, dominant core technology, irreplaceable integrated advantages of the whole metallurgical industrial chain, and constant innovation', and the spirit 'Doing a great job in work deployed by the Party is the greatest politics and the greatest loyalty'.

The MCC Group has undergone three years of reform, in which our country has faced a great 'battle' with new historical features. MCC's legendary efforts to reverse its losses and make a transition is the most convincing argument for the present reform of state-owned enterprises and supply parties. It shows people that central enterprises have the confidence and ability to achieve the goal of becoming 'Stronger, better and larger with vitality, influence and risk prevention ability' raised by the Central Party Committee, and to be worthy of the trust of the Party and country.

When risks to state-owned enterprises formed, 'Never delaying and never slacking' was put forward to overcome difficulties and achieve self-rescue

2012 was a hard year for MCC people. As an old and traditional metallurgical enterprise completely depending on steel, the MCC Group witnessed long-term and deep-seated contradictions and significant problems, and faced the great downturn and declining profits of the metallurgical market. This was at its worst in 2012. Most significantly, MCC Huludao Nonferrous Metals Group Co., Ltd., MCC Hengtong Cold Rolling Technology Co., Ltd., and MCC Paper Industry Group Co., Ltd. suffered great losses, becoming the 'Three Mountains' of the Group. MCC's amount of losses ranked third among the more than 100 central enterprises. It was rated as a Class D enterprise by SASAC (State-owned Assets Supervision and Administration Commission) in the business performance assessment for two consecutive years, and classified as an enterprise that required special debt risk supervision in by SASAC for the same two years. Many MCC people thought there was no hope, and this feeling bred unrest.

The biggest problem for MCC caused by its early expansion was not excess production capacity, but exacerbated debt. The risks seemed to spring up overnight. Many people gathered at the MCC Building at Sanyuan Bridge, Beijing. The price per share of MCC decreased from RMB 5 to RMB 1.5. MCC's shareholders struck the table and said, 'The Group is in decline. It's over. We won't trust you anymore'. The most awful thing was the internal 'confidence crisis'. Filled with pessimistic emotions, the promoted leaders were unwilling to take office and the in-service technicians requested to be transferred. Many people thought that MCC was at its most critical moment.

September 5th of 2012 was a memorable day for MCC people. Facing huge financial risks, Guo Wenqing who had just taken office in August said, 'We can't let dangers and risks defeat MCC. We have to solve the problems immediately. We have a responsibility to share the Party's cares and burdens. We'll never wait during heavy burdens, do nothing in the face of many difficulties, try to elude risks or flinch from huge difficulties; we have to build up our confidence, make reforms and reverse our losses by never delaying and never slacking!'. The Party's cadres and construction must be where the risks are, so the Party's activities must be considered in every link of risk tackling.

MCC had a clear awareness that they had to 'defeat' the risks. In the face of difficulties, the MCC Group Party Committee organized its strength to solve the risks and stabilize the situation, just like an emergency squad.

After dealing with several loss-making enterprises and restraining the risks in good time, the MCC Group Party Committee came up with a new top-level design out of a mess. They made the important decision to 'Return to the main works' and came up with the development prospect of 'Focusing on the main works of MCC and building a beautiful MCC'; according to the development procedure of 'One step in one year and one leap in three years', they overcame the phenomenon of 'Being unable to do a great job when one is doing many things simultaneously', focused on the core works of metallurgical construction and consolidated a foundation for national strength.

Behind the self-regulation and active control lie profound insights into the laws of economics and a deep understanding of the status of state-owned enterprises. Guo Wenqing said that the economic hardship was temporary and that it was necessary to focus on the main works of steel proceeding from the general interest. The new development prospect of MCC answered some significant questions in a critical period: 'What kind of state-owned enterprise is MCC?', 'What is its way?' and 'What is its goal?'.

After the '9.5' meeting, the MCC Group started to reform so as to overcome its difficulties and save itself, and implemented stripping strategies for the three enterprises with huge losses to help them escape from their dilemma.

In 2012, MCC Hengtong was transferred to CTS after declaring bankruptcy.

In March, 2013, MCC Paper was merged into the Chengtong Group by internal resource integration within the central enterprise.

On December 31st, 2013, Huludao Nonferrous Metals entered bankruptcy reorganization.

At the same time, many contradictions and risks arose. Taking this opportunity, the MCC Group Party Committee carried forward a series of reforms internally, activated the vitality of systems and mechanisms, and implemented the main responsibility of the Party's construction; integrated business resources, optimized resource allocation, actively explored the vertical integration of the industrial chain, steadily promoted the local integration of domestic subsidiary enterprises and overseas business integration, optimized the layout structure and avoided homogenized competition; promoted the internal structure of subsidiary enterprises to reform from a metallurgical market to a relative diversified market, built a management and control platform for the purchasing of equipment and commodities, the mineral business and the Group's unlisted assets, and realized the full utilization of resources and the optimization of assets. Boosting these comprehensive reforming measures motivated vitality in the internal enterprise.

In project management, MCC comprehensively resolved its ongoing projects. Management was different for high-quality projects, ordinary projects and difficult projects. High-quality projects strived for boutique creation and brand-building; ordinary projects contributed their cash flow to the greatest extent; and projects that could not escape from their difficulties were disposed of immediately to speed up the turnover of capital and avoid risks.

Through its continuous efforts, the MCC Group gained the prospects of a solution to dissolve the 'Three Mountains'. Obstacles which were able to influence profit and the safety of the capital chain had been basically eliminated, and the significant risks of projects had been effectively controlled. As a result, MCC people started to achieve a new cohesion.

It was unbelievable for a company to move from RMB 7.3 billion in losses in 2012 to RMB 6.03 billion in profits in 2014, but many people thought there was hope in taking 'One step in one year and one leap in three years'.

This strategy helped 'zombie enterprises' to find appropriate 'graves' and Huludao to reappear as a magnificent sight by breaking through the first difficulty of its challenging bankruptcy reorganization.

It was complicated to eliminate the 'zombie enterprises'. At a meeting of the Party Committee, Guo Wenqing said that they should help enterprises experiencing difficulties to get rid of them, and find appropriate 'graves' for 'zombie enterprises'. Facing the most urgent problems, many old and traditional enterprises were still very hesitant to tackle them. It was a typical case for the MCC Group to conduct a bankruptcy reorganization of the Huludao Nonferrous Metals Corporation (hereinafter referred to as 'Huludao Nonferrous Metals'). Huludao's leaders said that they never expected such a solution to improve the corporation's vitality and power. It is still the biggest bankruptcy case among central enterprises, a difficult period that caused many instances of uproar.

At the end of 2007, the MCC Group expanded its business from resource development to the smelting and deep processing of nonferrous metals, gaining 51.1% of the stock rights of Huludao Nonferrous Metals. At that time, Huludao Nonferrous Metals was in insolvency. After investing RMB 9.8 billion into helping Huludao Nonferrous Metals reverse its losses and escape its difficulties, if MCC had continued to provide it with more capital, it too would have come to face a dilemma before long.

At the end of 2012, the asset-liability ratio of Huludao Nonferrous Metals was 241.68%. It was in heavy insolvency, and it became a huge 'zombie enterprise'. It lost RMB 1.08 billion in 2011. Its capital chain broke and it was unable to pay its short-term and long-term bank debts, which amounted to about RMB 3.7 billion.

Huludao Nonferrous Metals was about to stop production altogether. Its employees were living hard lives. About 12,000 civilians were living without water or electricity. Social problems were arising. The situation was extremely urgent.

Most urgently, if Huludao Zinc Industry did not complete its reorganization in 2013, it was going to be delisted. 'Central Enterprise Delisting' would make a great impact at home and abroad.

Huludao Nonferrous Metals prepared to make a bankruptcy reorganization. Many people were stunned when they heard such news. Some even grinned from ear to ear. In order to help Huludao Nonferrous Metals and Huludao Zinc Industry reverse their losses and escape their difficulties, several schemes were proposed including investment in technological upgrading, relocation, stock rights transferring, bankruptcy liquidation and bankruptcy reorganization. Bankruptcy reorganization was the last choice of the MCC Group.

Bankruptcy liquidation would have had a negative effect on local economic development, put social stability in danger and resulted in enterprise resources being unable to be used effectively. Moreover, the local leaders persuaded MCC leaders by saying, 'State-owned enterprise bankruptcy means that it is over. Can you declare it?'

MCC people explained that declaring bankruptcy was a lawful act in a market economy period. It was able not only to regroup stock rights under the legal framework and debt, and help enterprises get rid of their dilemma, but also maintain the stability of enterprises and society under the guarantee of legal procedure. Its purpose was to improve the efficiency of resource allocation, enterprise profitability and market competitiveness.

On November 6th, 2012, the State Council SASAC's 220th Party Committee agreed to and supported the reforming scheme of the MCC Group Party Committee to dispose of 'zombie enterprises' through bankruptcy reorganization.

Only thinking about reform or being brave enough to pursue reform are not enough. Being able to reform is the real ability. Guo Wenqing recalled that time, saying, 'Bankruptcy involves many aspects. It's very complicated. Everything is linked with everything else.' It was complicated and confusing because of the bankruptcy reorganization of two enterprises, involving two bankruptcy repayments and other cases. For example, when you have to find restructuring parties, the private enterprises will say, 'You have to get rid of your burdens.' However, MCC's 'persuaders' said, 'I'll never leave the burdens for you but many benefits.' Importantly, it's necessary to balance the profits among the reorganization parties and the original shareholders, creditors and employees of the enterprise. There were 3,600 creditors, so carrying out the capital source reorganization and formulating the 'reorganization plan' under legal procedures had to be done in a considerate and legal manner.

On October 22nd, 2013, the State Council SASAC and Liaoning Government held the first conference to discuss the bankruptcy reorganization of Huludao Nonferrous Metals, at which it was decided that the MCC Group, local government and third parties should take part in the reorganization and implement the adjustment of the stock rights. The first step was to complete the bankruptcy reorganization process in accordance with the law and let the three parties have access; the second step was to boost enterprise restructuring.

The introduction of the reorganization parties was key. Many central and local state-owned enterprises flinched, so they had to choose between 5 private enterprises. Finally the Hongyue Group, the larger metal purchasing enterprise in the northeast, was selected as the organization party under the support of Liaoning Province. As such, the first share proportion goal was achieved: the MCC Group held 55% of the shares, the Hongyue Group held 35%, and Liaoning Province and Huludao City held 5% each.

In less than one month, the invested additional share capital and shareholder loans of the MCC Group and Hongyue Group amounted to RMB 1.256 billion, providing sufficient reorganization capital for Huludao Zinc Industry.

This consisted of implementing the scheme before succeeding. Huludao Zinc Industry's remarketing was the foundation of successful bankruptcy reorganization for MCC. Huludao Zinc Industry was able to make a profit again, and was remarketed on August 6th, 2014 after 18 months by sorting out and disposing of historical problems, greatly carrying out environmental protection and technological improvement, promoting management, decreasing costs, increasing benefits and so on. Huludao Zinc Industry's share price increased to RMB 6.3 from its suspended price of RMB 3.88, at which its enterprises, employees and 200,000 investors were full of confidence. It also provided a solid assurance for Huludao Nonferrous Metals to deal with the resettlement of its staff in the following phase of the reorganization.

The redemption of debt was an obstacle. The MCC Group paid off RMB 7.8 billion. The remaining RMB 0.61 billion was used to resettle the staff; RMB 4.5 billion was used to effectively and legally pay off banks and financial institutions, creating a decent financial environment for the later development of the enterprises; MCC also strictly and legally paid off business debt of about RMB 2.7 billion, which helped the enterprises to alleviate their debts.

The last part was the disposal of affiliate enterprises and the elimination of 'zombie enterprises'. In the second half of 2014, the management staff successively completed the stock rights transfer of 2 inefficient and invalid subsidiary enterprises, and the eliminating of 4 'zombie enterprises'.

Later, the MCC Group started to implement deep stock rights adjustment for Huludao Nonferrous Metals, strictly controlled risks and implemented measures step by step. Finally, the Hongyue Group succeeded in holding 39% of the shares, while Huludao City held 29%, the MCC Group held 27% and Liaoning Province held 5%, and the production impetus and operation vitality within the enterprises were motivated as a result. The mixed ownership reform was an effective method for improving the system and mechanism of innovation. The enterprises achieved 'three news': a new mechanism appearance, new power creation and new vitality enhancement.

About 24,000 re-employment workers were resettled, 7 social functions were transferred including 'three supplying and one management', about RMB 15 billion in debt was paid off and the assets were consolidated.

Most happily, under the condition of the continuous depression and overall losses of the nonferrous metals smelting industry, Huludao Nonferrous Metals made a profit of about RMB 0.1 billion for three years in a row after its reorganization, compared with more than RMB 1 billion in losses every year before the reorganization.

Was this caused by the pressure of survival or reform motivation? Regardless of what it was, the final result was the rebirth of a phoenix, an expression which was commonly used at the time. People today can witness the reform dream of Huludao; it was spectacular and magnificent.

At that time, the completion of Huludao Nonferrous Metals' bankruptcy reorganization was the biggest case among central enterprises. The former events had passed away because of reforming. There was only one fact that people remembered: the central enterprises had not left their problems to the government or society but fulfilled their social and moral responsibilities as a national team, and made a great job of conducting the reform and promoting the prosperity of the enterprise.

Create new momentum; walk the path of high-tech construction; display national core competence in the 'One Belt One Road' strategy - The world's steel and iron industry is different because of MCC.

The former capacity has been taken out, and the new capacity will soon be accumulated. MCC is heading for a new realm at top speed, displaying China's power in the steel industry along the 'One Belt One Road' route.

In 2015, MCC achieved operating revenue of RMB 221.8 billion and a net cash inflow of RMB 15 billion. Its asset-liability ratio dropped to 79.6% from 86% in 2012, and its newly-signed contract amount speedily exceeded RMB 400 billion. At that time, Guo Wenqing declared that the enterprise had stepped onto the path of normal and sound development.

In July 2016, the MCC Group combined planning, investigation, design and engineering construction with operation services. Involving tens of millions of tons of material and three years of hard work, over 20,000 elite MCC workers from 14 units successfully built the Baosteel Zhanjiang Steel and Iron Enterprise, which is the most advanced low-carbon plate production base in the world at present. The MCC Group explores a unique innovation-driven road as it turns losses into benefits by surmounting reform & poverty alleviation and transformation & innovation. On the premise of laying a solid foundation in the first two years, MCC proposed to forge the updated version of the 'Four Beams and Eight Columns' business system in 2015, rebuilding the new advantages of constructing a 'Beautiful MCC' and setting the goal of being the 'strongest, largest and best national team of operation services in metallurgical construction in the world'. On June 23rd, 2016, the Action Handbook on Constructing the MCC Metallurgical Construction National Team was officially released in Beijing, marking that the National Team of Metallurgical Construction has arrived at a new beginning and entered a new period.

The construction of the Zhanjiang Steel and Iron Project manifests the 'national team's' strength of Chinese metallurgy's whole industry chain integration advantages. The Group's top design enterprise cooperates with its top construction enterprise so as to create world-class iron and steel product projects, thereby raising a large milestone to guide China's iron and steel industry to a higher level.

How should we define 'stronger, better and larger'? The enterprise definition of Guo Wenqing is to take the responsibility for leading Chinese metallurgy to a higher level and continuously expanding the international influence and controlling force of Chinese enterprises with core technology always holding sway, irreplaceable whole industry chain integration advantages in metallurgy, and continuous reform and innovation capacity. The picture scroll is gradually spreading out in reality on 'One Belt One Road'.

Separated by the sea from the Zhanjiang Iron and Steel Project, the Formosa Vietnam Ha Tinh Steel Project was planned, designed, constructed and operated by MCC personnel. It is the largest modernized steel plant in Vietnam and the typical benchmark project of steel construction and operation in Southeast Asia, as well as the whole world.

Planned, designed and constructed by the MCC Group, the Malaysia MCKIP Steel Project with an annual output of 3.5 million tons is a demonstration project in that its capacity entirely goes out. Malaysia hesitated several times, but they finally found MCC. The project adopts the entire steel smelting production process in the global mainstream, as well as such international leading environmental protection technologies as an environmentally friendly stock yard and compacted 'pot' molten iron transport and hot charging & hot delivery to produce bars, wire rods and H-shaped steel, filling the blank in the whole ASEAN area. It shows MCC's unique internationalization road of 'technology + capacity'.

Heading west along the 'Maritime Silk Road', India is the largest arena that the world's steel giants are contending for. When MCC people went to India in 2006, local steel enterprises turned their noses up at 'Made in China'. Having failed to win any bidding for three consecutive years, they had to cooperate with second-rate steel enterprises in India. MCC's strength has remarkably changed the minds of Indian people in just a few years. In October 2015, CISDI defeated its opponents in fierce competition with companies from Germany, Austria, Italy, Japan and Korea, and independently won the world's largest new blast furnace project - the design and technical service contract for the Indian TATA steel KPO Steel Plant's 5,870m3 blast furnace - thereby solidifying MCC's world-leading position in blast furnace technology. In March 2016, the four ovens of MCC ACRE's KPO Phase I Project were fully put into operation, marking the establishment of the strong power of China's steel capacity 'going global'.

In the 'Silk Road Economic Belt', the Iranian Alpha Steel Company's Ardakan 0.8 Million t/y Electric Steelmaking and Continuous Casting Project, contracted overall by MCC CERI, has become a typical project of win-win cooperation, laying a good foundation for the subsequent winning of 7 general contract projects for the Iran National Steel Company.

If you're careful, it isn't hard to discover that MCC's internalization has quietly undergone a profound transformation in recent years. The 'Going Global' of formerly simple engineering construction has changed into promoting the 'Going Global' of steel capacity. Undertaking contracted projects on one's own has turned into win-win cooperation with superior local resources. The central government proposed open and new idea of capacity 'Going Global' and international cooperation in the middle of 2015, and the MCC Group is in the vanguard of this kind of exploration.

Of course, scientific and technological innovation capacity is the core competitiveness for the MCC Group to improve its quality and efficiency and promote its development. In the operating performance evaluation of the responsible persons of central enterprises in the tenure from 2013-2015, the MCC Group was awarded the honorable title of 'Outstanding Enterprise of Scientific and Technological Innovation', ranking in the forefront of central metallurgical and architectural enterprises, and sharply rising compared with the previous tenure. As a national innovative enterprise, the MCC Group's valid patents have ranked fourth among central enterprises for three consecutive years. It possesses 17 national research & development platforms and 108 provincial and group-class scientific & technological innovation platforms, ranking in the forefront of central enterprises. It has received 8 national science awards within three years, and one Chinese patent gold medal. It has also guided the formulation and issuing of three international standards. All this strongly supports the 'going global' of MCC's technology, engineering and equipment.

'Pasture your sheep where there is grass; throw your net where there are fish'. When Guo Wenqing took office, he clearly realized that the Party was handing us an extremely large enterprise, and that we should enlarge the function of state-owned assets so as to maintain and increase their value. If MCC completely depended on old traditional metallurgical enterprises, there would be no way out without conducting transformation and upgrading. In fact, steel accounted for 80% of MCC's contract amount in 2012, whereas it only accounted for 18% in 2015, and that percentage dropped to 12% in the first quarter of 2016. The market is cruel; depending on over 60 years of technological accumulation, MCC people have extended the Group's industrial construction technology advantages over water, electricity and gas in the field of the metallurgical industry into the field of civil use and municipal administration, taking the lead in establishing six MCC Institutes of Technology covering comprehensive pipe galleries, sponge city, beautiful village & smart city technology, water treatment, health preservation and theme parks. On October 29th, 2015, the China MCC Institute of Technology, China's first professional comprehensive pipe gallery institute, was formally established and inaugurated, marking that the MCC Group had preliminarily completed the opportunity period of grasping the 'third strategy' of national urban comprehensive pipe gallery construction. MCC's pipe gallery projects are developing well in Zhuhai, Changde, Shenyang, Baiyin, Baotou and Siping. Rated as having 'the longest total mileage and the best individual project results' by the Department of Housing Construction, MCC has become a pacesetter of high-tech construction in emerging industries worthy of the name.

In 2015, in the face of the economic new normal with speed change, structure optimization and power conversion, and according to the 8 parts and 19 business units of steel metallurgy, the MCC Group is clear about the first place and second echelon of subsidiary enterprises of the design class, as well as the matched subsidiary enterprises of the construction class, and it has formed its basic formation and core of its metallurgical construction national team, guaranteeing that MCC not only has sufficient power to effectively conduct its main metallurgical business, but it also has sufficient power to transform and develop, thereby creating powerful new strength.

If the enterprise is positioned in the overarching environment and pattern of national development and global development, its existing problems will become small from large and its opportunities will be more from few. Now, MCC puts forward a clear goal that its market occupancy will increase from 60% to 80% in the world metallurgical market by 2020, and it will allow Chinese steel power to head outwards to the rest of the world. He stressed that MCC must stick to walking the path of high-tech construction in the long term if it wants to be an important power for implementing the 'Going Global' and 'One Belt One Road' strategies.

Accompanying the leap of MCC from D-level to A-level, the Party's leadership was unprecedentedly strengthened. The 'One Core and Five Guidances' tells the 'most important stories' of Chinese enterprises.

The operating business performance evaluation for the responsible persons of central enterprises in tenure is China's most important assessment of central enterprises. The MCC Group has been evaluated as D-level for two consecutive years, and was promoted to skip C-level. It stayed at B-level for only one year and became an A-level enterprise in 2015, marking its entrance into the first square.

MCC people realizes their rebirth of the phoenix, a new lease of life in the most difficult and dangerous period. The MCC Group gives people the strong feeling that it has passed through a historical phase for over three years. During these three years of rapid transformation, MCC left behind the 'overlaying three stages' while simultaneously dealing with a gear change in the economic growth rate, made difficult structural adjustments and absorbed the effects of previous economic stimulus policies. They walked through the 'Snow Mountain and Grassland'. They invariably speak of the '9.5' meeting of 2012 when looking back over the 'Long March' of reform.

The undercurrents of the long reform river are deep, and we can discover the amazing conversion of waterways in the precipitation of time. During my investigation of the MCC Group, many middle-level cadres told me that the most important experience of reforming and reversing losses is to unswervingly adhere to the leadership of the Party. Follow the Party and don't slack off. Their analysis in the precipitation of time makes us convinced. It seems that one of reasons for the losses of some central enterprises is over-expansion and carrying unnecessary baggage. The basic reason is that certain major decisions deviated from the Party's leadership principles and were not studied by the Party Committee. As a result, the Party's leadership of state-owned enterprises was weakened. After the '9.5' meeting, the MCC Group's major decisions are carried out under the leadership of the Party Committee. Guo Wenqing has held the Party & Government joint committee no less than 50 times for the Huludao Nonferrous Metals bankruptcy reorganization alone. The Party Committee always plays a leading role, from making the overall plan of governing unprofitable enterprises to ensuring that the responsibilities for loss governance are taken by Party organizations and Party members at all levels.

Guo Wenqing said that where there is reform, there is Party building. We should adhere to the Party's leadership on reform at all times. The responsible persons of state-owned enterprises can't forget their political responsibilities at any time. The reform is intended to break the traditional interest pattern and establish a new interest pattern. It has many difficulties; for example, can state-owned enterprises go bankrupt? Can they introduce private capital? Will state-owned assets flow away? Every step is faced with trials. MCC people sincerely believe that reform and reversing losses can't be carried out so smoothly and quickly without the collective leadership of the Party Committee and the leadership and support of the SASAC Party Committee. Some cadres said that we are catching up in good time: the good policies of state-owned enterprise reform proposed during the Third Plenary Session of the 18th Central Committee of the Communist Party of China. As such, MCC forms a good habit in which Party Secretary Guo Wenqing will organize the learning and delivery of the reform policies and important spirits proposed by the Party Central Committee and the State Council for the first time, sometimes once a week or at least once every half a month.

The MCC Group proposes upholding the leadership of the Communist Party. This is not a slogan but a leading system. The specific content is 'One Core and Five Guidances'. Centering on the Party's leadership, we should implement political-style guidance, development strategy guidance, reform problem-breaking guidance, institutional innovation guidance and state-owned enterprise culture guidance. The Party's construction is like a big tree, rooted in the deep soil of the reform and development of state-owned enterprises, with luxuriant foliage.

The MCC spirit of 'Never delaying and never slacking' is a response to the policy of deepening reform by the Party Central Committee and a guidance of political style. MCC was filled with a state of 'non-action' at that time, and many people were afraid of losses and became dispirited. In a central enterprise, the subsidiary companies depend on the headquarters, which relies on the general manager. The general manager doesn't go to work at 9 O'clock. The risks accumulate. The greater risk is losing confidence in reform. There is indeed a 'crisis of confidence'.

After the '9.5' meeting in 2012, Guo Wenqing proposed being vibrant persons and working seriously. He usually comes to the office at 7:00 in the morning and stays until late at night. Some employees have the habit of dragging and slacking. Guo Wenqing will consecutively call them several times by chance, which is a kind of intangible warning. The upper layer monitors the middle layer, and the middle layer monitors the lower layer, so the slack 'haze' scatters quickly. Subsequently, building layer upon layer of systems perks up the atmosphere of the subsidiary companies. MCC implements a system in which it can hold meetings at any time on weekends and employees might have to attend them at any time. The whole of the MCC Group shows a fresh atmosphere of 'doing work without distraction and singing with one voice'.

'Never delaying and never slacking' is actually a kind of political behavior that unifies thinking and actions with the decisions and deployment of the Central Party and the State Council. As Guo Wenqing said in the Party Committee, 'We are Party members. Central enterprises must do as the Party says. Being loyal to the Party and serving our country is a principle that we must uphold.' He added that the Party and the people hand over state-owned assets to us. They put prodigious trust in us. We must observe strict and impartial political discipline and political manners, and strengthen the team's Party spirit cultivation. The screws must be tightened in our deep thoughts.

Adhering to the key role in the political affairs of Party organizations focuses on the leadership and checking of selecting and employing talents. In the three years of reversing losses, MCC had a negative list of cadres that could not be 'reappointed'. MCC explicitly puts forward the requirement that leading cadres need to 'vigorously carry forward the five styles and improve the five kinds of capacities', including 'the style of acting boldly and contending for first place' and 'the style of studying seriously, truly understanding and working steadfastly '.

'Correct strategies command the overall situation and innovative thoughts solve problems' is a strategic guidance for the reform and loss-reversal of state-owned enterprises by MCC's Party Committee. Analyzing MCC's decision logic in the background of the country, you can see how to lead an entire enterprise forward through formulating development strategies and grasping the direction of the MCC Group's Party Committee. It is a process of gradually evolving and deepening. The milestones are very clear, one after another. MCC's decision-makers first proposed the vision of 'Focusing on MCC's main business and building a beautiful MCC' in 2013. The steel industry had entered a 'winter' at that time, and overcapacity was an unquestioned fact. How should MCC have dealt with that changing environment? At the beginning of 2014, MCC loudly shouted out that through 3 to 5 years, it will strive to form its advantages with top core technology and irreplaceable whole metallurgical industrial chain integration, focus on forging high-end advantages, undertake the national responsibility of leading China's Metallurgy to a higher level and continuously expand the international influence and controlling force of central enterprises. In fact, it set the goal of making itself stronger, better and bigger. It proposed to stick to the road of high-tech construction in 2016, which is the path of development. This concept leads the mainline of the development of state-owned enterprises during the '13th Five-Year Plan'.

The modern enterprise system construction of state-owned enterprises is the system guidance for the reform and loss-reversal of state-owned enterprises by the MCC Group's Party Committee. By rethinking the reason behind such major risks as the 'Three Mountains' appearing in MCC, the MCC Party Committee should strictly manage itself through the self-improvement of state-owned enterprises, further improve the Company's governance, strictly implement decision-making procedures, and standardize operating decision-making and management, so as to form a modern enterprise management system with coordinated operation and effectively mutual balance. They continue to strengthen risk management and internal control work, establish an accountability system of serious internal control weaknesses and set up a sound risk management system with a continuous and effective internal control operation mechanism matched with its strategic goal. We should highlight supervisory emphases, strengthen the supervision and management of key positions and important persons, and especially improve the 'three important and one large' decision-making monitoring mechanism layer upon layer. They closely link the Party's leadership with the Company's management.

Guidance for solving difficult problems is a practical guidance for the reform and loss-reversal of state-owned enterprises by the MCC Group's Party Committee. The nonferrous metal bankruptcy reorganization of Huludao teaches the cadres of the whole Group why to reform, how to reform and how to achieve the goals of reform. Huludao Nonferrous Metals is a demonstration case.

The establishment of MCC SOEs' entrepreneurship of 'struggle, exploration & innovation, precision & shrewdness, being loyal to the Party and serving the country' is the cultural guidance of the MCC Group's Party Committee. Guo Wenqing saw that MCC people obviously classify 'being loyal to the Party and serving the country' as entrepreneurship during investigation. He admires the absolute sincerity and constancy of enterprise leaders. Not many central enterprises operate like this across the country. It shows the deep understanding of MCC people towards 'state-owned enterprises'. They firmly believe in the unique advantages of SOEs and vigorously carry forward the Ma Wanshui spirit in various ways. From the early Ma Wanshui spirit of 'Holding the leading position and carrying the Red Flag' to the simple yet profound MCC spirit of ''Never delaying and never slacking', it is the driving force for the MCC Group to rebound at the bottom, break through dilemmas and embark on a road of healthy development in the economic New Normal, from which MCC people gain their persevering spirit to face difficulties and forge ahead in the reform of SOEs.

The true content of all epoch-making times comes into being due to the need of that period to generate these systems. In this way, on the premise of solving the core problem of strengthening the Party's leadership, the MCC Group successively showed its political style guidance, development strategy guidance, institutional building guidance, problem-solving guidance and cultural guidance over those three years. MCC strengthens the leadership of the CPC as they solve certain reforms without any progress for many years, involving deep interest adjustment. The Party's building experience becomes rich and mature.

A prominent change has taken place in MCC. The Group gave up thinking of investment stimulation for nearly three years. The external investment amount has dropped from nearly RMB 20 billion to only billions of yuan, which is invested in deepening enterprise reform and scientific & technological innovation. The investment has sharply reduced, but the number of newly-signed projects is rising greatly. These years have been the most remarkable stage of market development for the MCC Group since its establishment. The value involved in the newly-signed contracts has shown an average increase of 25.1% over the last three years. Its 'high-tech, comprehensive and large-scale' projects contracted and stored have sharply increased. It has newly signed 131 contracts for major projects, amounting to over RMB 0.5 billion. Its contract amount is RMB 160.6 billion with a year-on-year growth of 27.2%.

The figures are boring, but the fruits of enterprise reform and development strongly illustrate and vindicate the work and fighting strength of the Party organizations. It tells us that the MCC Group has finished deepening its reform and reversing its losses, and it has taken the road of sustainable development. The Party Central Committee decided that the supply-side structural reform should be undertaken and completed in only one year, and the MCC Group has achieved that goal and handed in a beautiful answer sheet.

Move forward through the waves with wind from afar. Bouncing from the low ebb and ushering in the historical turning point of a new round of steady development, the MCC Group proposes the strategic positioning of being the 'national team of metallurgical construction, the main force of infrastructure construction and the pacesetter of emerging industries, taking the road of high-tech construction in the long term' and shoulders the state responsibility of leading Chinese metallurgy to a higher level, which is the profound understanding and implementation of state-owned enterprises as comprehensive national strength stressed by Xi Jinping.

Just as Guo Wenqing says, this is a cause that the MCC Group really wants to fight for, must fight for and can fight for, and a goal indomitably, persistently and unswervingly pursued by several generations of MCC people.

With such a development road of state-owned enterprises and such power of deepening reform and reversing losses, does MCC not deserve the trust of the Party and the country? Does MCC not deserve to be depended upon by the Party and the country?

State Councilor Wang Yong thought that the MCC Group proposed a good development orientation in May 2015. The development thinking was correct and conformed with the spirit of the Central Committee. He took the lead to applaud for the MCC Group.

MCC has embarked on a new path of reform in the last three years. A path different from those of its predecessors and peers, it is a unique path of the reform of state-owned enterprises. We are closer to the expectation of strengthening the Party's leadership and effectively completing SOE reform by the Party Central Committee than we have ever been on this road.

Just as Xi Jinping said at the meeting of the 95th anniversary of the founding of the CPC, history will never wait for the hesitant, sideliners, slackers and cowards. Only those advancing with history and sharing a common fate with the times can win a bright future. MCC's process of reform and reversing losses is like 'riding a roller coaster with all its ups and downs'. It can be called the 'most important story' in the reform history of SOEs. We have every reason to believe that MCC people shouldering the mission of national strength will adhere to the Party's leadership, walk the development road of high-tech construction and speed up the transformation and upgrading of enterprises, which will continue to writing that 'most important story'. The bright future of MCC people is full of hope.