ABSTRACT
On a cold and rainy winter day in Cambridge in 1999 an international seminar was discussing an equally ‘cold’ topic: China’s coal industry. A case study of the best coal company – the Shenhua Group – was presented and some of the world’s leading coal, oil and gas companies, as well as some banks, expressed considerable interest in the case. Shenhua is a real superstar in China’s coal industry. It has the best and largest coalfield, a dedicated rail link and port, the most advanced imported equipment, global levels of productivity and the government’s comprehensive support. However, most of the seminar attendees were surprised to hear that in 1998 the Chinese government had forced this superstar to ‘merge’ with five traditional state-owned coalmines, most of which were in great financial difficulty. This so-called ‘forced marriage’ changed Shenhua’s basic features at a stroke. After the seminar most of the delegates felt confused by this enforced change in Shenhua, asking themselves why the government would do such a foolish thing.
