Wuhan Iron and Steel Co has made a foray into the food producing sector. Its international trading subsidiary presented 38 kinds of grape wine at a recent food expo in December, the Securities Daily reported Monday.
The newspaper said the company's goal is to make its non-steel operations account for 30 percent of its business by the end of the 12th Five-Year Plan, up from the current 8 percent.
The move comes at a time when China's steelmakers are suffering from rising costs and dipping profits.
Profit rates at China's large- and medium-sized smelters came to 2.8 percent in the first ten months of 2010, according to the China Iron and Steel Association. The actual profit rate would fall to 2.58 percent, deducting returns on investment, which is lower than the benchmark deposit interest rates of 2.75 percent, according to the newspaper.
China also is reining in the property and auto industries, which are the top steel consumers in the country, the paper said.
Other steelmakers like Nanjing Iron and Steel Co and Baosteel also have beefed up non-steel sectors such as mining exploration and financing, but their new businesses are still linked to steel. Wuhan Iron and Steel Co's move into the wine industry is too remote from its core business.
In 2009, China's wine production amounted to 960,000 tons, an increase of 27.63 percent from the previous year, according to the National Bureau of Statistics.
Sales of wine on the Chinese mainland amounted to 44 billion yuan in 2009, up 12 percent from a year earlier, according to research by global management consulting firm AT Kearney.