Procurement Systems and Industry Dynamics

Abstract

Abstract This chapter explores the development of procurement systems for the mass production of steel in the United States, Japan, and China over the past 120 years. It shows that the evolution of global procurement systems in the steel industry is the result of the creative adaptations of the industries of the three countries based on the historical conditions in each of them. Thus, in the first half of the 20th century, US steel mills established the captive mine system and extended their vertical integration into iron mines; in the second half of the 20th century, Japanese steel producers adopted a long-term contract system with overseas iron ore suppliers. The rapid growth of China’s steel industry in the early 21st century created a spot market for iron ore. Facing the decline of the long-term contract system, Chinese steel companies adopted a pluralistic strategy that combined all three procurement systems.