theceomagazine.com | 151The most significant development in China’s
power sector in recent years was the government
announcement of an unprecedented investment
in renewable energy. It will aim to spend at least
US$360 billion on the sector by 2020. This
expenditure is projected to create around 13 million
jobs. The shift to more sustainable energy sources is
also expected to reduce the emission of greenhouse
gases, which have contributed to global warming,
and help lessen air pollution around Chinese cities.
The renewables sector has become far more
cost-effective in recent years, partly due to advances
in manufacturing. Min says
the transition to this relatively
new sector is good news
for CRP’s growing
renewables arm.
“The Chinese
government is
bearing a lot of
pressure to reduce
our national
particulate emissions.
There are real
incentives to look at
more alternative energy
projects. From CRP’s
perspective, we are very good at
controlling our construction costs, so our
profitability on our renewables looks to be strong,
especially this year. We are already seeing benefits
from the national investment in renewable energy.”
Another recent seismic shift in the Chinese
energy industry was the deregulation of retail power
sales. This allowed companies without grid access
to enter the retail electricity market, which is worth
US$500 billion. Min acknowledges the move has
introduced a new class of competitors but says CRP
is well placed to withstand the challenge.
“Fortunately, we own many major power plants
and this enables us to sell electricity very efficiently.
Ownership is a major advantage in competing with
the smaller enterprises in this market. We also have
a level of organisational efficiency that is very useful
on this front. Customers come first for us, so we
have really geared our business around providing
the best service. That is a point of difference from
our competitors in China.”
In terms of its power generation business,
CRP continues to leverage its technology and
benefits from steep barriers to entry. “I think this
is how we respond to the market better than
others in the industry,” Min explains.
Any coal-powered plant is reliant on its coal
suppliers and Min says CRP has applied simple
criteria when choosing coal sellers to build
relationships with. “We look for someone
who can develop a long-term
working relationship in
a friendly way. We regard
this as the top priority
in working with our
suppliers as we have to
build a close and very
efficient relationship.
“The second thing
we look at is the
quality. For our
equipment and coal
suppliers, in particular, it is
extremely important for the
procurement program that we can
control our cost while maintaining exceptional
quality. We have an enterprises committee whose
aim is to ensure a reasonable price when we acquire
coal or equipment.”
CRP has also recently worked with a number
of energy solutions provider start-ups. Min says
that entry barriers can be high in the energy
industries for such companies, but that partnering
with established industry players can be more than
mutually beneficial.
“We see a lot of opportunities to work with
smaller companies and incorporate their
technologies into our own capabilities. There are
particular opportunities in emerging fields, where
these providers can help us gain more knowledge
of new areas.”“ Our profitability on
our renewables looks to
be very strong... We are
already seeing benefits from
the national investment in
renewable energy.”
Interview | INVEST