Posted by: carboncreditsusa | December 30, 2008

Chinese Natural Gas Distributor ENN Group Expanding Clean Energy Globally With Expansion Into Methanol, Dimethyl Ether, Coal Gasification, Solar and Biomass Energy Sectors

“…we are involved in producing clean energy ourselves by building production bases for methanol in various parts of the country, usually close to coal-mining regions, and by rolling out dimethyl ether plants, which use methanol as the raw material…”

We imported a photovoltaic-module production line from the United States and expect to launch a new-generation product within two to three years.

“…we plan to penetrate foreign markets by leveraging proprietary technology in coal chemical engineering and coal gasification. We are working to make our technology in solar and biomass energy more competitive. Our regional energy-saving and emission-reduction solutions offer something that every nation needs…” 

 http://www.mckinseyquarterly.com/article_print.aspx?L2=3&L3=50&ar=2158

“…privately held ENN Group, better known in China for its subsidiary XinAo Gas, which is listed in Hong Kong. The chairman of ENN, Wang Yusuo, founded the company in 1989 as one of the country’s first natural-gas distributors; its debut project was piping gas to the city of Langfang, in Hebei Province. ENN, which now has more than 20,000 employees, supplies natural gas to more than 40 million people in nearly 70 cities in China and liquefied natural gas to filling stations in more than 20 Chinese cities….”

 The Quarterly:

How has ENN developed its clean-energy business in China?

Wang Yusuo:

We have focused on three areas. First, through our subsidiary XinAo Gas, we distribute the clean energy produced by others. Second, we are involved in producing clean energy ourselves by building production bases for methanol in various parts of the country, usually close to coal-mining regions, and by rolling out dimethyl ether plants, which use methanol as the raw material. In addition, ENN established the world’s first commercial dimethyl ether filling station for buses, in Shanghai, in 2007. We’re also increasing our investment in solar energy. We imported a photovoltaic-module production line from the United States and expect to launch a new-generation product within two to three years.

 

 

 

Finally, we are aggressively pushing for the greater use of clean energy. In response to the Chinese government’s environmental policies, we’ve proposed an energy-saving and emission-reduction plan in an attempt to be the nation’s clean-energy service provider. This plan integrates biomass, solar, geothermal, and methane into a package for a given city’s households and businesses. The idea is that the city could benefit environmentally through the use of multiple energy sources.

 

 

 

Do you have any plans for global expansion?

The Quarterly:

 

Wang Yusuo:

By 2020, we hope to obtain 50 percent of our revenue from overseas markets. We will push our global strategy on two fronts.

 

 

First, we plan to penetrate foreign markets by leveraging proprietary technology in coal chemical engineering and coal gasification. We are working to make our technology in solar and biomass energy more competitive. Our regional energy-saving and emission-reduction solutions offer something that every nation needs.

Second, we plan to focus on international mergers and acquisitions. The future of chemical engineering and energy may shift toward coal, in part because natural gas has become very expensive. If that happens, ENN could be interested in acquisitions in both the coal and the gas sectors, given our existing assets in both areas.

 

 

 

 

What about your current overseas expansion?

 

 

 

 

Wang Yusuo:

At the end of last year, we signed a contract with Egyptian Petrochemicals and Methanex of Canada to build a plant to produce 200,000 tons a year of dimethyl ether in Egypt. This is the first time we were able to use our patented clean-energy technology in a foreign market. We also went into Egypt to give our people some experience in managing global operations.

The Quarterly:

How has ENN’s business developed in conjunction with the liberalization and maturation of China’s economy?

Wang Yusuo:

ENN has usually been able to seize opportunities at the right time and place and to predict the trends. Why? I believe it is because I have a deep understanding of the future direction of China’s economic reform. This is probably because of my active involvement in politics—I have been a member of the Chinese People’s Political Consultative Conference since 1994. Through those activities, I can see more than an ordinary entrepreneur and, as a result, am more likely to anticipate trends and adjust my business strategy accordingly.

 

 

We have also been fortunate not to have suffered every time the government tightened its macroeconomic policy. For example, during the current credit crunch, banks have been willing to give us loans while many other companies are crying for financial help. My insight obtained through political activities and the choice of the right industry or business has a lot to do with that.

 

 

 

 

The Quarterly

:

How has ENN’s management approach kept pace with the company’s expansion?

Wang Yusuo:

There are plenty of business opportunities in China, but good management is the missing piece. A business cannot grow sustainably without effective management. Foreign countries have more experience in this respect, but a foreign model of management does not fit China’s situation. China’s state-owned companies have a management style that has developed over the years, but it is not systematic. On the other hand, Chinese private businesses have not inherited any kind of management style, so we have to figure out our own way.

 

 

Some Chinese companies have introduced performance-management systems, but many failed to get anything of value from them. In my view, the approach of these companies has been too narrow minded—too focused on measuring small upticks in performance and failing to catch sight of the big picture. In recent years, we have adopted a measurement system that disaggregates the company’s strategic targets into key performance indicators and targets for all employees, from the CEO to frontline workers, thereby linking the company’s overall performance with an individual’s performance and compensation. This approach is well known to multinationals, and some other Chinese companies are already using it with great succes

The Quarterly:

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