Gas supplier's maxim: Stay ahead of curve

An air separation plant of Praxair China in Jiangsu province supplies customers in the chemical industry. Provided to China Daily

Boss seeks new revenue sources in China after the global financial crisis in 2008

Minda Ho, China president of industrial gases supplier Praxair Inc, said he was a bit timid when he first landed in Beijing some 17 years ago.

Even holding a PhD in chemical engineering from Carnegie-Mellon University, the Chinese-American had very limited first-hand knowledge about the vast country that was just becoming known to the outside world. He quickly discovered the only recipe to survive was "to act humble and keep learning", he said.

"Let's say you are swimming against the current. If you don't swim fast, you will be gone," the 57-year-old chuckled, as he sat in his brightly-lit office in Shanghai's Pudong New Area, the city's most dynamic business hub.

The motto of staying ahead of the curve later became his business doctrine. Ho sensed the need for Praxair, the largest industrial-gases supplier by market share in the Americas and one of the largest worldwide, to look for new streams of revenue in the light of the global recession.

The current re-balancing of China's economy and the cooling signs of the manufacturing sector have hampered the growth of all industrial companies, but Ho believed Praxair should ride China's industrial structure transformation, where the transition toward high-end manufacturing and clean energy are highly valued.

Praxair began its China endeavor in 1988 and established its first joint venture in 1992 in Beijing. With more than 1,400 employees across the country, Praxair currently operates 22 wholly owned companies and 10 joint ventures in China.

The company supplies atmospheric, process and specialty gases, high-performance coatings and related services and technologies to a wide range of customers from sectors including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals among others.

One major change Ho witnessed is people's intention to use their gas supplies. In the past the primary concern was to increase productivity. Now more attention is attached to the reduction of emissions.

Ho said the desire for more energy efficiency, cost reduction and environmental compliance will sustain and drive the growth in industrial gas consumption in manufacturing and in other sectors, which gives the company's businesses a wider platform on which to grow.

"Even with the current backdrop of a sluggish world economy, China still has room for economic development and potential growth in its industries because it has a huge territory with regions in different stages of development," said Ho.

Above all, there are still large inland areas where the pace of growth needs to catch up. "I believe the Chinese government made the wise decision to invest in infrastructure building and development of the western regions," he said.

China's demand for industrial gases could hit 100 billion yuan ($15.94 billion) in 2016, according to the China Industrial Gas Association. In 2011, the nation used 70 billion yuan of industrial gases.

According to a research note from Citi Bank, ongoing industrialization and rising energy costs in most emerging regions means energy conservation and efficiency improvement should be a major source of growth in demand for gas.

The report identified China as a key bright spot, saying that demand from industrial gases is also driven by the need to develop energy options to crude oil, to improve manufacturing processes and use local energy (very often coal) resources more efficiently.

This demands huge volumes of construction material such as iron and steel, as well as heavy equipment. Steel production and heavy equipment manufacturing require large volumes of industrial gases.

"Normally people use air to aid combustion, but air is made up of 79 percent of nitrogen that causes energy losses throughout the whole process. So we developed a technology that is purely oxygen-based," said Ami Gupta, executive director of applications research and development for Praxair Asia.

This saves more than 50 percent of energy loss and consequently saves money for customers, Gupta said.

In addition, the coastal regions that already enjoy affluence and have rapidly developed industries are experiencing industrial upgrading to improve quality, productivity and environmental protection, which will continue to increase the intensity of use for industrial gases.