How long has ABB been involved in China?
ABB has been a major supplier of products and technology to the PRC for over 80 years. To better serve the PRC market, an ABB Hong Kong organisation was set up 25 years ago. As soon as the PRC opened up to cooperation with foreign companies, ABB established its first representative office in Beijing, followed by 6 others in various In support of China's push r greater economic and industrial development, further technology and management knowhow was transferred via investment in JVs to manufacture equipment and provide services to the Chinese utility and industrial sectors.
What made the company choose to begin operations there?
China has 25 per cent of the world population, with electricity generated per capita among the lowest in the world. We have heard so often in the past about this "sleeping giant". When this sleeping giant wakes up, he will need energy – and we are in the energy business.
Which products and systems do you supply in China?
We are able to supply products and systems from all ABB's business segments, including Power Generation, Power Transmission, Power Distribution, Industry and Transportation.
How different are China's power demands to those of other Asian countries?
The main difference is in the order of magnitude. China has an installed capacity of some 150,000MW and growing at 7 per cent and 8 per cent annually ie 10,000 and 12,000 MW of new power plants. This is greater than the total installed capacity in many countries in Asia today.
To what extent do you have to train up the people on your systems, and do you retain ABB management at sites?
We have provided extensive training to local staff in Hong Kong and the PRC in the past years, in technical as well as management disciplines. With our current push for manufacturing in China, we will accelerate these efforts. For example, in one of our recent sites, we have plans for 308 man weeks of training for local staff in our technology centres in Europe, in addition to training on site. We are also in the process of establishing a business school in China.
In all our investments, ABB has management control.
What do you think is the key to a foreign company conducting a successful venture in China?
There are no real secrets – we hear about it all the time – find the right partners, know your market well, be sincere in your transfer technology, find the right managers with the right attitudes to run the show.
What are the problems that you have come up against in your dealings in China?
People, communications and attitudes. The meeting of minds cannot be overemphasised. Most often we have different agendas from those of our local partners or prospective partners. We just have to be cognisant of this, and work on the common ground that we can find.
How profitable are your Chinese operations, or do you see them simply as an investment for the future?
In selling projects, products and services into China, ABB has been reasonably profitable for many years, although we have tended to focus more on the customer and market share. As for our manufacturing endeavours, they are still in the startup phases.
What is your opinion on China's future and what it can offer foreign companies in the years ahead?
There will be hiccups along the way, but the general trend will always be forward. The need for technology and infrastructure is real and fundamental. The living standards of the people have to gradually catch up with the rest of the world. On the political level, irreversible steps have been taken to decentralise the economic power, and move towards a more open market economy.
What are ABB's plans then, over the next ten years?
Asia Pacific currently accounts for 17 per cent of the total of ABB's worldwide revenue – equal to that of North America. With the Chinese dynamo of growth, there is no reason why the region should not contribute between 25 and 30 per cent of ABB's worldwide revenue by the end of the decade, with China playing a substantial role.
To do this, ABB has to establish itself in China as the best partner and supplier in the field of electrical engineering. We will push ahead with forging a strategic manufacturing base and setting up regional centres of excellence in China.
ABB's mission is to meet the need for dependable electric energy and thus assure sustainable growth while fully respecting environmental demands. *
Henk van der Tak is president of ABB Holding Ltd, Hong Kong, and country manager for China and-Hong Kong.