Firm powers ahead with expansion

Shanghai Electric aims to become key supplier in Chinese energy projects abroad

Shanghai Electric, a power-generation equipment and machinery maker, is launching an aggressive overseas expansion strategy, to ride the wave created by Chinese energy firms.

Already present in more than 20 countries and regions, the company hopes to further expand in developed markets and become part of a supply chain for the Chinese energy companies that are increasingly taking on global projects, brand manager Zhou Xiaoming says.

"Our equipment is already known in the industry to be world class, and as our market share in China is already large, we're eyeing opportunities globally to increase our revenue," he says.

Shanghai Electric has a long history, with its oldest subsidiary dating back to before the 1880s. It is known for its innovative research and development, and has had several technological breakthroughs.

Its core business today focuses on supplying equipment for industries related to thermal, nuclear, wind and gas power. Its has 70 projects spread over more than 20 countries generating more than 6,100 kilowatts of power capacity.

Last year, the company was ranked 64th in the ENR.com global top 250 international contractors. Most of its overseas projects are in Southeast Asia, Africa, and the Middle East.

Zhou says now is a good time to engage with other regions, including Europe, as major Chinese nuclear, wind and gas power firms are taking on projects in these markets. Shanghai Electric, as a trusted supplier in the domestic market, can grab many fresh opportunities, he adds.

Britain will soon become the first European nation to house a Chinese nuclear power plant. The deal came as a result of an agreement between France's EDF Group and two Chinese nuclear companies, China General Nuclear Power Group and China National Nuclear Corp, in 2013. The two Chinese companies will support EDF's project, Hinkley Point C, and in return EDF will support the two Chinese companies in the development of a new atomic plant at Bradwell B, the site of a partially decommissioned nuclear power station in Britain.

Shanghai Electric has a good opportunity to participate in the project as a supplier of nuclear equipment, Zhou says, although details of the deal are yet to be finalized.

He says the company is already a trusted partner to many Chinese nuclear enterprises for second and third-generation technology, high-temperature reactors, fast reactors and other multiple reactor types, so it is natural for Chinese enterprises to choose Shanghai Electric for their supply chain in overseas projects.

"One key advantage we have is the completeness of our supply chain, so that we can provide all types of equipment that a nuclear plant would need. Another advantage is the high efficiency of our equipment," he says.

The equipment Shanghai Electric supplies to nuclear projects is wide-ranging, including nuclear island pressure vessels, steam generators, pressure stabilizers, inner components for reactors, control rod drive mechanisms, steam-turbine generators, main auxiliary equipment, heavy casting and forging, and thermal control instruments.

Gas turbines are another energy area Shanghai Electric is trying to internationalize, and the company reached a milestone last year when it bought a 40-percent stake in Italian engineering company Ansaldo Energia for 400 million euros ($437 million).

Key to the deal was the establishment of two joint ventures in China for gas turbine manufacturing and service for Asian markets, and also an research and development center in Shanghai focusing on gas turbine technology.

The acquisition is also designed to give Shanghai Electric access to key technology in gas turbines while helping Ansaldo Energia boost sales in Asia, which accounts for half of the global gas turbine market.

"Our R&D center will be used to make breakthroughs in many challenges to the gas turbine market, so that together we can have the best technology and then put this into production," Zhou says.

"In the area of wind energy," he adds, "we have opportunities to develop good technology, as China's landscape is varied, with high mountains and large seas, so we can build wind energy generation facilities in different types of environments."

In thermal power, he says, Shanghai Electric's growth has benefited greatly from the Chinese government's increasingly strict emissions standards because its equipment already exceeds the standards.

"The higher the standards, the more profitable we will be," he says. "For many years our customers have demanded high environmental standard products from us, which prompted us to develop equipment with minimal emissions. Top-quality technology is not achieved over a short time. In fact, we have been working toward energy efficiency since the 1950s."

As brand manager, he said he has the opportunity to travel internationally to meet customers and see how his companies' products are used.

Visiting high-growth countries such as India has left a deep impression, and he recalls being surprised by the high demand such markets have for Shanghai Electric's equipment.

"India is a fast-growing country, but some of its regions had a shortage of power supplies," he says. "With the help of our partners in India, I witnessed some thermal power plants being completed as fast as they are in China."

From speaking to local clients, he says, he realized Shanghai Electric was not just seen as a provider of equipment, but a key enabler in the generation of energy, which is crucial to the lives of Indians.

More importantly, many customers told him Shanghai Electric's entry into local markets provided more choice, as previously imported equipment had been much more expensive.

"When we enter bids in markets such as Vietnam, our brand image is regarded as highly as Western firms such as Siemens," Zhou says. "This is not the same as 10 years ago when we first started to supply the market and people were not so familiar with our quality."

Keen to have its story told to a wider audience globally, Shanghai Electric is taking part in the Milan Expo this year, exhibiting its equipment models inside the China Corporate United Pavilion.

The pavilion, jointly hosted by several Chinese enterprises, has three levels. The basement focuses on industrial and infrastructure companies, and the second floor looks at brands related to aircraft, railways, textiles, wine, construction, and Chinese medicine. The top floor is a small cinema.

The Shanghai Electric stand, in the basement, has large boards explaining the company's history, strength and overseas activities. In addition, the firm has displayed small models showing its equipment in thermal, nuclear and wind power and gas turbines.

Zhou says that although Shanghai Electric is already a well-known brand within the energy industry, he hopes the Milan Expo will give his team increasing exposure to the general public.

"We wanted to showcase our best technology," he says. "After all, the universal exposition started as a display of industrial strength and breakthroughs. We believe what we have shown is true to this spirit."

In the future, he says, the company will continue to expand internationally.

"For us, going overseas is an important strategy for us to grow sales and generate profit, because we believe we have world-class technology and we are capable of supplying power projects globally."

cecily.liu@chinadaily.com.cn

(China Daily European Weekly 06/05/2015 page20)