Wednesday, August 24, 2005

Cement in China French cement maker, Lafarge, already the #1 company in its market, has announced it will merge its Chinese division with those of Shui On Construction & Materials Ltd.of Hong Kong. This will create one of the largest suppliers in the burgeoning Chinese market, and with Lafarge's accees to cash and technology, it may soon catch up to #1 AnhuiConch . Lafarge will control 55% of the operation. The market is inviting. As a Reuters report notes: China doubled cement production in the last decade to 1.027 billion tonnes in 2004, half the world's cement, to feed a boom in infrastructure and housing. But the government is keen to shut thousands of small, often unprofitable, low-quality cement makers that sprang up in the 1980s, and has ordered banks to stem lending to several industries, including cement, that it believes are sucking funds from needier areas such as energy. In other words, Chinese government policy in this sgement has been to get rid of local small businesses, and to replace them with well-heeled, efficient oligopolies. It's strange that cement, an industry with such a low barrier to entry, should be so quickly concentrating. 5:29:07 PM

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