Sinochem sees in­no­va­tion as key to re­form

China Daily (USA) - - BUSINESS - By ZHONG NAN and REN XIAOJIN Con­tact the writ­ers at zhong­nan@chi­

Sinochem Group, a key State-owned con­glom­er­ate in­volved in en­ergy, agri­cul­ture, chem­i­cals, real es­tate and fi­nan­cial ser­vices, will en­gage in in­no­va­tion-driven re­form to meet the needs of China’s sup­ply-side struc­tural re­form, said its se­nior ex­ec­u­tives.

“While fo­cus­ing on our ma­jor busi­ness in en­ergy and chem­i­cals, we will also keep ex­plor­ing dif­fer­ent sec­tors in­clud­ing agri­cul­ture, real es­tate and fi­nance,” said Ning Gaon­ing, Sinochem’s chair­man.

“Driven by in­no­va­tion, the group will en­hance its re­search and de­vel­op­ment and pro­mote the up­grad­ing of China’s en­ergy chem­i­cal in­dus­try, as well as de­ploy more re­sources to de­velop new ma­te­ri­als for pro­duc­ing new en­ergy ve­hi­cles,” said Ning.

The group earned a profit of 10.4 bil­lion yuan ($1.57 bil­lion) be­tween Jan­uary and Au­gust, hit­ting a record high, thanks to its fast-grow­ing busi­nesses in fer­til­izer, seeds, pes­ti­cides, new ma­te­ri­als and other chem­i­cal prod­ucts in both the do­mes­tic and global mar­kets.

Ac­cord­ing to Ning, sup­ply­side struc­tural re­form is and will re­main Sinochem’s guid­ing prin­ci­ple in State-owned en­ter­prise re­form.

In its en­ergy sec­tor, the group will keep cut­ting ex­cess pro­duc­tion ca­pac­ity and ad­just its pro­duc­tion vol­ume ac­cord­ing to mar­ket de­mand. Mean­while in the fine chem­i­cal sec­tor, the group will fo­cus on the de­vel­op­ment of new ma­te­ri­als with lower costs and be­come less de­pen­dent on im­ports.

An­other key part of the group’s re­form is to op­ti­mize its re­sources and re­struc­ture its de­part­ments to en­sure greater ef­fi­ciency. It has al­ready closed 56 de­part­ments and low­ered the head­count at its head­quar­ters by 32 per­cent since the SOE re­form started.

In the mean­time, Sinochem has es­tab­lished five pil­lar busi­nesses in en­ergy, chem­i­cal en­gi­neer­ing, agri­cul­ture, real es­tate and fi­nance to fur­ther com­pete with other es­tab­lished global ri­vals such as Dow DuPont Co and Bayer AG.

The Bei­jing-head­quar­tered com­pany is also pro­gres­sively en­gag­ing in the go­ing global strat­egy not only for growth po­ten­tial but also for se­cur­ing the coun­try’s en­ergy se­cu­rity by im­port­ing crude oil, ac­cord­ing to Zhang Wei, the group’s gen­eral man­ager.

“We have in­vested sig­nif­i­cantly over­seas to end the era when we were largely de­pen­dent on im­ports,” said Zhang, “It is a mat­ter of the coun­try’s en­ergy se­cu­rity.”

More than 60 per­cent of the group’s as­sets are lo­cated in over­seas mar­kets such as Brazil, the United States, Europe and Africa. Sinochem has also in­vested in shale oil and gas in the US in re­cent years to ac­quire more ma­ture ex­pe­ri­ence, as well as seek­ing op­por­tu­ni­ties to ac­quire qual­ity man­u­fac­tur­ers and co­op­er­ate with en­ergy com­pa­nies in Europe and South America over the past three years.

Zhang said the group will fur­ther en­large ex­ports in­clud­ing pes­ti­cide and rub­ber to the economies in­volved in the Belt and Road Ini­tia- tive, es­pe­cially in Asia and Africa.

The Belt and Road Ini­tia­tive has brought growth op­por­tu­ni­ties for the group. For in­stance, its petro­chem­i­cal plant in Quanzhou, Fu­jian prov­ince, im­ports more than 10 mil­lion met­ric tons of crude oil an­nu­ally from oil­pro­duc­ing coun­tries and re­gions re­lated to the ini­tia­tive, while it ex­ports around 70 per­cent of its re­fined oil to such economies.

He Jing­tong, a pro­fes­sor of trade at Nankai Univer­sity in Tianjin, said Sinochem’s moves are help­ful to se­cure own­er­ship of more in­dus­trial and en­ergy com­pa­nies over­seas, and fur­ther cast off the con­straints on do­mes­tic pro­duc­tion and de­pen­dence on im­ports, es­pe­cially for high­end chem­i­cal and pet­ri­fac­tion tech­nolo­gies and prod­ucts.

“Deep­en­ing SOE re­form is also crit­i­cal in cut­ting in­dus­trial over­ca­pac­ity. Such re­forms are help­ful in im­prov­ing SOE gov­er­nance in ac­cor­dance with mar­ket rules, let­ting mar­ket forces play a fun­da­men­tal role in al­lo­cat­ing re­sources,” he said. South­east



Em­ploy­ees from Sinochem check pipe fa­cil­i­ties at Quanzhou Port, Fu­jian prov­ince.

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