Chinese do not understand business over a bottle

Alas, I am not Rockefeller’s granddaughters, so I’m worried about how the metal market will change due to our country's accession to the WTO. I understand that no one will say to me: “On you, Anton, two billion of some conventional units. Someday you will give one billion, and I will give the second one so that you are the coolest trader. ” I don’t have such a grandfather, but I know the rules of the game in our market, and foreign colleagues who have already lined up outside our country’s borders do not know. Let's take the same Chinese: they produce more than 50% of metal products in the world, with high-quality and cheap ones, which makes them very aggressive competitors.

Plus, along with the EU companies, they own long cheap money, thanks to which they can ship metal with long payment delays or sell it for some time with negative liquidity. If foreigners are told that banks give us loans at 20% per annum, while they cost them about 2-6%, the guys will fall into a coma. They do not even have so much profit, but we manage to pay interest and still live poorly, or poorly, who have gotten the job.
And the Germans, Finns, Italians? They are also just waiting to enter the Russian market, but are they ready to work on it? They do not know the main features of our business.

It is difficult for a foreigner to understand why he did not win a tender with a good price and excellent quality. He will never be in his head, that in order to buy high-quality metal at a great price, he should talk to a “big” person. He doesn’t even know why we meet with partners in a restaurant for 15 minutes to solve a number of questions, and we roll out from there in the morning to friends. And no one in the morning anymore remembers what the conversation was exactly about and what they agreed to by the time the fourth bottle of whiskey was empty, the main thing is that after such a meeting there is a feeling that everything is smooth and there is a contract in the portfolio. In general, the only ones who can play by our rules here are the Slav brothers, or rather, the Ukrainians.

All of us, merchants from metallurgy, are concerned, in essence, one thing - the possible re-division by foreigners of our domestic market, and this applies to all links in the chain: metallurgists, steel consumers and traders.
Before the WTO, we had barrage duties. For example, the same pipe that is ready to flow from Ukraine from 10 to 13%, which allowed our pipe makers to feel normal in the domestic market. In the near future, these barriers will decrease by a factor of several.

However, our government, as a novice, has the right to apply several ways to protect the market: the first is import quotas (a limit on certain types of products and in relation to certain countries), the second is anti-dumping measures (a price is determined for a specific product, below which the supplier cannot sell goods in Russia). Yes, on the one hand, this is bad for metal consumers, but the mechanism has worked here - we choose the lesser of two evils: if we, for example, allow a cheap Chinese stainless steel, the traders will benefit, but the metallurgists will smoke aside. The third method of protection is compensatory measures, which are applied in the form of additional duties for the very high teducation foreign factoring, according to which our state subsidizes domestic producers. Again, these options for protecting the domestic market are ambiguous: it seems to be how to release the reins, give free rein to the competition, but no - they took the side of metallurgists.

And if you did not get up? Should give a green light for cheap imports? It seems impossible, because it will break the internal distribution networks of precisely those metallurgy oligarchs who dragged us through the thorns into the WTO and clearly lobbied for entering.
Well-known vertically integrated holdings, which in this situation have been more successful than others, are particularly bright with a smile: MMK, Evraz, NLMK, TMK and Severstal (ferrous metallurgy), UMMC, Norilsk Nickel, RMK (colored). It is they who mainly rule the steel industry in our country and set the rules of the game, why is it profitable for them? Russia is a global supplier of raw materials: oil, gas, wood and, of course, metal since the times of Stolypin. At the moment we are ranked third in the world in the export of rolled metal products after China and Japan.

But! Today, in ferrous metallurgy, we mainly export products of the first processing, because prior to joining the Trade Organization, prohibitive duties and quotas on the importation of high-quality products were in effect in relation to Russian companies in the EU, the US, and therefore we were forced to sell only the workpiece, which is extremely disadvantageous. The child understands: the greater the degree of redistribution, the greater the added value and, accordingly, the more profitable the business. Of course, Europe and America were not undermined to remove quotas and reduce import duties on August 23,
but now our metallurgists can challenge and reduce them in a quasi-judicial order. In general, a little bit more, and metallurgists will open the way to the foreign market - produce and sell.

Those who lose from the WTO are small “candlesticks” metal factories, which were built in the middle of that century and still melt metal in the old fashioned way in blast furnaces. Yes, about five to seven years, while the country keeps its defenses against the Varangians, they will stay afloat, and then what? The paling of protective measures will have to be thinned or removed sooner or later. In addition, 12-15 percent duties are still in force for the export of scrap metal from the country, but in a few years we will have to lower them to 5-7 percent, which will lead to a compression of the cheap raw material base and negatively affect us all. Another nuance: just by that time, large state orders for metal products for global infrastructure projects - Olympic facilities, World Cup, EXPO-2020, and the space center, due to which many plants are not going to the bottom, will end. And then what?

Compared to domestic monsters and numerous comrades from other countries, the products of the outsiders of metallurgy will not be quoted either in quality or in price. In general, they are cranks, and such are legion, and most often these plants are city-forming enterprises in single-industry towns. On the one hand, why rescue those who cannot independently fight and survive in a competitive environment, because by and large no one is to blame for the fact that they could not embark on new rails. But on the other hand, as a rule, every second resident of a single-industry company works at such enterprises. These people need something to eat, educate children, dress them. In addition, if so many people are left without a livelihood, then they will take up the remnants of the reinforcement and will look for some Neo who will help defeat the "Matrix".

I am not a supporter of manual economy management, but in such situations only it can help. The fate of outdated plants can only be decided by the government together with the regional authorities, and in one single way - “ask” serious holdings to take these enterprises for themselves, as they did with the Zlatoust metal plant. This plant makes spetsstal - a product of high redistribution, but the company was bent on the lack of raw materials and problems with sales. After bankruptcy, Mechel took it, and now a quality product is leaving the factory. Of course, in general, the business suffers from this approach, because you only have to show your “fi” how you are put in place.

Figuratively speaking, any businessman can be said that just yesterday, a place was made next to Khodorkovsky, and that’s all - there will be no more complaints from the businessman. This is bad, but sometimes, as it turns out, it is beneficial.
If, on the whole, we take the market, the producers will still benefit from the entry into the WTO, but many consumers of the metal will be in a difficult situation. In general, they can be divided into two categories - builders and machine builders. The construction market in 2008 sank by more than 60% and has not yet been fully restored. Machine builders are also in a difficult situation - there is no long money, the order book is unstable. Although, I must say that not everyone, there are also those who belong to the “locomotives” of the economy. The same Uralvagonzavod is the largest machine-building holding, but there are few such enterprises in our country, many will lose. Not only do they have no modern production sites, they have no orders, and they do not have cheap "protocols" for rolled metal and raw materials.

Although, to be honest, I believe that all the “hard work” in relation to producers is a blessing for the country. Owners of holding companies are accustomed to put money somewhere in England or Switzerland, after which they consider themselves on Forbes lists, making sure that they are better than their neighbors in the azure cottage. And now, in order to earn, they will have to compete with foreign holdings.
There is a third link in the chain of the metallurgical market - traders. There are two groups of traders in Russia - sales service for manufacturers, who are neither cold nor hot from the WTO (they both worked in the structure of giants and will be) and independent. Just the second will have to spin, and here everything will unfold according to the same scenario: the big business will feel fine, but if small businesses have enough brains and resourcefulness - that is, chances of survival, if not - then no one rushes to save.

But for us there are also pluses from the WTO: it used to be difficult to buy metal from foreigners (duties, problems with internal certification), and now it's forward with a song, but for now - in theory.
However, unlike our metallurgical giants, who are seized and the dealership contract is signed only if you take at least a thousand tons of products per month, the same Chinese already give only preferences when entering into a contract from 20 tons.

I hope that this will also encourage our metal holdings to restructure their work with traders.
Who definitely will not win from the WTO is a simple man in the street. Nothing will be cheaper for him, as promised: neither square meters of housing, nor cars, nor even products in the supermarket.

In some industries, from reducing import and export duties will benefit the business, such as food retail and metal producers, in some profits overlap with new government chips, as happened with the recycling collection on foreign cars, but to the buyer, that is to us with you, in general, no advantages will come. If you bought sausage for 300 rubles, a car for a million, and you were ready to pay 70,000 per square meter, then from what company or government would reduce this cost, even if it all became cheaper for them - they'd better earn more. In economies with a high degree of moral responsibility of management, the development of the situation according to such a scenario would be possible, while in Russia it is definitely not.

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