The reporter learned from the 2013 Steel Industry Non-Steel Industry Conference that in the first half of this year, the non-steel industry revenue of China's seven steel enterprises with production capacity above 20 million tons accounted for 23% of their total revenue, an increase from 20% at the end of 2012. For some steel enterprises, non-steel revenue and profits already account for 50% of total revenue and total profits. The development of non-steel industries in China's steel sector has entered its best period.

　　However, steel enterprises' development of non-steel industries also faces much controversy. Some affirm it, believing that against the backdrop of a sluggish steel industry, non-steel businesses are the "lifeline" for steel enterprises to turn losses into profits; others question it, believing that shifting the focus of steel enterprises toward non-steel industries will endanger the security of the steel industry.

　　How exactly should we view the growing non-steel industry? Can steel enterprises really survive and develop without non-steel industries? Will non-steel industries really prop up "half the sky" for steel enterprises? What problems do steel enterprises face in developing non-steel businesses? The reporter visited enterprises and discussed these issues with industry experts.

　　Offsetting Losses with Profits: Non-Steel Industries Become the "Lifeline"——

　　Despite the controversy, without non-steel industries, steel enterprises will certainly have a hard time in the future

　　Last year's "Wuhan Iron and Steel raises pigs" incident caused a huge public sensation, but this year, steel enterprises' development of non-steel industries has become a widely praised trend.

　　The shift in public opinion stems from the enormous role of non-steel industries as a "lifeline." In 2012, the sales profit margin of China's large and medium-sized steel enterprises was only 0.04%, while the average sales profit margin of non-steel industries was 3.5%–6%. Although this did not reach the national industrial average profit level of 6%, it has already made a huge contribution to steel enterprises.

　　In the steel industry, Baosteel Group, which has the best core steel business structure and the highest profitability, saw its non-steel industries contribute 37% of the group's profits in 2012. In many steel enterprises with low core business profitability, it is basically reliance on non-steel businesses to subsidize the core business that has barely enabled them to turn losses into profits.

　　An even more undeniable backdrop is that, as pressure on the environment and resources grows, the international economic situation remains complex and volatile, and the contradiction of domestic steel overcapacity is difficult to ease in the short term, the low-profit situation of the steel industry will continue.

　　Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, said that whether steel enterprises should make great efforts to develop non-steel industries is controversial in society, but it is certain that without non-steel industries, steel enterprises will certainly have a hard time in the future.

　　Extending the industrial chain and developing a circular economy are highlights of non-steel industries.

　　To ensure a stable supply of iron ore resources, many steel enterprises have continuously increased overseas equity ore resources and domestic self-owned mine supply. As early as 2011, among the total main business revenue of steel enterprises with annual output above 5 million tons, mining profits accounted for 20%.

　　To increase product added value and improve service levels, some steel enterprises have built steel deep-processing projects. Today, Baosteel has established 37 processing and distribution centers across the country, with an annual processing capacity of 7 million tons and an annual laser tailor-welded blank capacity of 20 million pieces. In accordance with the principles of "reduction, reuse, and recycling," super-large steel enterprises such as Baosteel, Ansteel, and Wuhan Iron and Steel use solid waste resources to carry out deep-processing and comprehensive utilization, which not only yields economic benefits but also promotes the "green transformation" of enterprises.

　　Perhaps because non-steel industries have been regarded as a "lifeline," their status in steel enterprises' development plans has risen to an unprecedented level: in Baosteel's plan, by 2015 annual non-steel industry revenue should reach 200 billion yuan, of which 100 billion yuan should come from outside the enterprise; Wuhan Iron and Steel plans that by 2015 annual non-steel revenue should reach more than 110 billion yuan, accounting for more than 30% of the group's planned total revenue; Jinan Iron and Steel Group proposed that during the "12th Five-Year Plan" period, non-steel revenue and non-steel profits should grow by more than 25% annually.