The steel trading platform is expanding its services across the supply chain and is tapping overseas markets, but the revenue-boosting moves come at a cost
image credit: Bamboo Works
Key Takeaways:
- Turnover rose nearly 37% last year but gross margins shrank and losses surged
- The company is ramping up its international presence and rolling out AI tools in a bid to fuel long-term growth
Once dubbed the Alibaba of the steel industry, ZG Group (6676.HK) is actively evolving into more than just an online trading hub.
And the changes underway at ZG Group illustrate a wider trend, as China’s online business platforms aim to become more deeply involved in the industries they serve.
For ZG Group, one of China’s biggest digital platforms for steel trading, that means moving beyond simple matching services into selling products and fulfilling orders, expanding overseas and rolling out AI upgrades.
The imperative is financial. In a maturing market, transaction fees from digitally matching steel suppliers, traders and end users are not enough to sustain long-term growth. Steel demand is driven by macroeconomic and property cycles, and the resulting volatility serves to intensify competition among platforms, making it hard to keep raising commission rates.
But getting more directly involved in the supply chain also has its downsides. The diversified revenue streams are often accompanied by declining profitability.
These dynamics are evident in the latest annual earnings from ZG Group, which reported a leap in revenues but on lower margins and with a much wider loss.
Integrated services
The company is now positioning itself as a technology services company, leveraging industrial data and AI agents to offer intelligent transactions, smart logistics and supply-chain services.
On the international front, the company aims to replicate itself overseas within three years, spearheaded by an accelerating push into the Middle East and Southeast …