Doing Business in China: Road Map for Success

Transcription

1 Doing Business in China: Road Map for Success For Rotary Club Calgary December, 2009 By Jim Wong - Zenalta Management Ltd. & Angelo Zia - Canada Link Resources Development Co. Ltd.

2 40 Bayview Drive SW Calgary, AB Canada T2V-3N6 Who are we? James Wong President Zenalta Management Ltd. Tel : Fax: Cell: zenalta@telus.net 40 Bayview Drive SW Calgary, Alberta T2V 3N6 Angelo Zia President Canada Link Resources Development Co. Ltd. Tel : Fax: Cell: angelows.zia@gmail.com 223 Signature Close SW Calgary, Alberta T3H 2W5

3 The Petroleum Industry in China: Road Map for Success The theme (objective) of this presentation: Market entry strategies; Petroleum opportunities; Successes and failures; Cultural factors

4 The Petroleum Industry in China: Road Map for Success Outline o o o o Current China facts Chinese Petroleum Industry Opportunities for Alberta companies (petroleum) Strategy and Road map for success

5 Beijing

6 Shanghai

7 China s Topography

8 Population (2006)

9 Total GDP by Province (2006)

10 Top ten coal producer and consumers

11 Top Ten Oil Fields Junggar Basin Tarim BasinQaidam Basin Sichuan Basin Ordos Basin Songliao Basin Bo Hai Basin HuaBei Basin East China Sea Basin 1 Daqing 2 Changqing 3 Dagang 4 Jilin 5 Kelamayi 6 Liaohe 7 Qinghai 8 Shengli 9 Talimu Zhonghaiyou 10 (Tianjin) Pearl Mouth Basin

12 Canada Through Chinese Eyes Maple leaf Da Shan Mark Roswell Dr. Norman Bethune A neighbour of the United States A peaceful nation A multicultural country World s 2 nd largest country but few people Conservative

13 China Profile Population: China 1.32 billion (July 2007 est.) Canada million (2007 est.) GDP per capita: China $ 2,196 (2006) Canada $ 38,126 (2006) GDP Growth Rate: China 11.1% (2006) Canada 2.0% (2006) (Alberta 3.0% ) Total GDP China $ trillion (2006) Canada $ trillion (2006) (Alberta $189 billion) ( all figures are in Canadian Dollars)

14 China s Middle Class 200 million at present 400 million by 2010 over 500 million make brand choices

15 Did You Know? China has the world s 1st Largest foreign currency reservesapproximately US$1.4 trillion (2008) Chinese residents savings until 2002 is $2042 billion 17.8% growth from previous year China Gini coefficient: (Source: China International Business) s (Canada 0.3) (USA 0.4) -the higher the ratio the greater the difference ( United Nations Human Development Report)

16 Alberta Exports by Region

17 Alberta Merchandise Export to China ( )

18 In 2008, Alberta merchandise exports to China totaled $3.05 billion Canadian. Primary exports included ethylene glycol and polymer, sulfur, nickel, agri products, etc. In 2008, Alberta s imports from China were valued at approximately $ 4.5 billion Canadian consisting of computer parts, telecommunications equipment, consumer goods, and machinery.

19 Energy: Alberta s expertise in oil and gas technology is particularly relevant to China. Since 2004 with the assistance of Alberta government, China has shown interests in oil sands and heavy oil, and interested in Alberta s oil sands development projects. The China National Offshore Oil Corporation (CNOOC) and Sinopec Group invested in oilsands projects in Alberta. Recently PetroChina proposed an investment of 1.9 billion dollars in Athabasca Oil Sand Corporation. All 3 major Chinese oil companies (CNPC, CNOOC and Sinopec) have offices in Calgary.

20 Energy: Promote joint energy development projects in China. Strengthen mutual ties by enhancing science and technology cooperation, providing training program, and promotes trades in the oil and gas sector. Alberta companies like Husky and Sunwing / Ivanhoe have set up offices and production in China.

21 Chinese Petroleum Industry

22 Chinese Petroleum Sector The three largest Chinese oil and gas firms : The China National Petroleum Corporation (CNPC/Petrochina) The China Petroleum and Chemical Corporation (Sinopec) The China National Offshore Oil Corporation (CNOOC)

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24 Chinese Petroleum Sector 2007 Oil production 2007 Gas production 2007 Oil reserve 2007 Gas reserve PetroChina 2.75 M bopd 5.6 bcfpd 3.06 B tons bcm Sinopec 0.79 M bopd 0.77 bcfpd 0.42 B tons bcm CNOOC 0.59M bopd 0.95bcfpd

25 Chinese Petroleum Sector China is the 2 nd largest consumer of petroleum products in the world behind the US only China became a net importer of oil since 1993, now is the 3 rd largest importer China had 18.3 billion barrels of proven oil reserves as of January 2007 (OGJ) China produced 3.8 (mmbbl/d) of oil in 2008; It consumed 7.85 (mmbbl/d) of oil in Gas consumption is expected to triple by year 2010

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28 Chinese Petroleum Sector Domestic Business CNPC covers upstream, midstream, downstream areas, and related activities and services. Sinopec covers upstream, midstream, downstream areas, and related activities and services also. CNOOC handles offshore exploration and production, active in LNG, and also gets into refinery and petrochemical sectors. The three largest firms can compete in every areas. International Business CNPC and Sinopec have projects in following countries: Sudan, Nigeria, Libya, Iran, Pakistan, Myanmar, Indonesia, Peru, Mexico, Ecuador, Venezuela, Russia, Kazakhstan, etc CNOOC: Projects in Malacca Oilfield, Indonesia, Australia, Myanmar, Morocco and Nigeria CNPC, Sinopec and CNOOC now have investment in Alberta

29 Opportunities for Alberta companies

30 Opportunities for Alberta companies In China: Equipment, technology and consulting services Regulatory, standards and governance training Technology, trainers and management training Oil and gas recovery enhancement and infrastructures (midstream and down stream) Production sharing contract in unconventional resources such as CBM, shale gas and heavy oil Collaborative research in upgrading technology, CO2 capture and storage, energy efficiency and alternative energy

31 Investment Attraction to Alberta: 1. Oil sand investment opportunities (mineable or in-situ) 2. Conventional oil and gas 3. Value added process and infrastructures (pipelines, upgraders, refining and petrochemical) 4. Potash

32 Strategy and Road Map to Success

33 General Market Entry Considerations Suggested Business Practices: Key to Success BE COMMITTED. Patience, patience and more patience Understand the market and its needs Design the entry strategy that best fits your products or services Develop a strong and constant local presence Maintain a high contact frequency Have a quick response to prospect enquiries Conduct sales and marketing activities in principal city like Beijing, Shanghai and Shenzhen and second tier cities like Chongqing and Tianjin Market your products and services to both end-users and the supply chain

34 General Market Entry Considerations (Cont.) Suggested Business Practices: Key to Success (cont.) Find appropriate distributors, agents, representatives or local partners Participate in selected national trade shows, conferences and business development missions to China Participate in events in Canada as well Don`t focus exclusively on trade shows and major events Assess and mitigate political and financial risks Use the services of the experienced Canadian consultants, who are knowledgeable of the China market Use the services of the Canadian consulates and embassy, Provincial and city economic development offices and EDC

35 General Market Entry Considerations (Cont.) Barriers to Entry Language Price Country risk Import and export regulations and procedures After-sales services Prospect`s perception of risk using new technology Brand loyalty and competition Security of National data Registration requirements Patents and copyrights

36 Cultural Factors Useful tips Existing school mates` and business network IPR Do not pressure or be pushy Do not expect smooth negotiation Respect face Listen more than talk (Use no humour and slang) Document well, use more diagrams and sketches Prepare thoroughly Check facts carefully Ensure all team members to avoid costly gaffes

37 Success and Failure Successes Bombardier Husky Propak Westport U of A NAIT Amec HighKelly Not so successful Beef import Canola import

38 Zenalta and CLRD Thank you!! Market Intelligence Services (Overview and customized reports and matchmaking and business trip facilitation) Business Development Support Services (sector capabilities and Chinese suppliers search and business trip coordination Contact us Jim Wong Angelo Zia

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