More companies are capitalizing on social responsibility

Energy enterprises deploy advanced technology and equipment to realize clean production and cut emissions

Chinese companies are increasingly focused on improving production efficiency and willing to invest more in this area during their expansion in overseas markets, say experts.

Driven by the policy to reduce carbon emissions and save energy, a growing number of companies have started to realize the importance of raising production efficiency that is both environmentally friendly and profitable in the long term, especially for energy companies.

"After 30 years of growth, Chinese companies have developed to such an extent that they have enough scale to realize their social responsibility," said Lin Boqiang, director of the China Center for Energy Economics Research ar Xiamen University.

"In addition to the government policy, there is also a need for these companies to pay more attention to energy efficiency to realize a sustainable future because the era of achieving big profits solely by large-scale production is over," he said.

Oil and gas companies, including PetroChina Corp, Sinopec Group and CNOOC Ltd, have been investing in better processing and management to achieve high-quality products with better technology in recent years.

Some foreign companies specialize in process solutions, such as US-based Honeywell Process Solutions (HPS). Siemens AG, based in Germany, and Japanese company Yokogawa Electric Co. They are all trying to benefit from the booming Chinese market.

"We see a great opportunity that lies in front us in the China market," said Jason Urso, vice-president and chief technology officer for HPS.

He said even during the last year when China endured a slowdown in its economic growth, the company still achieved a good performance in the Chinese market because of high demand.

"It slowed down a little, but the economy is still growing strongly among the high-growth regions," said Tony Cosgrove, vice-president of sales, HPS Asia-Pacific.

As a technology solution provider, HPS has been maintaining a good relationship with China's top oil companies, helping them improve their efficiency in sectors such as production and management processes.

In June 2013, HPS' Lifecycle Service Department and one of the largest State-owned petrochemical companies in Harbin, Heilongjiang province, signed a contract to provide a package of solutions for centralized control room upgrading. The scope of the project includes control system station migration and network optimization to meet the requirements of centralized monitoring and operations.

"The Chinese government has carried out policies to improve air quality, which created demand for companies such as us," said Urso. "There is a need for working with major clients such as Sinopec and PetroChina to solve the problem."

According to the central government's plan to improve air quality, which was officially released in September, high energy-consuming and high-polluting industries are required to meet specified emission-reduction standards and control production capacity.

In sectors including steel, cement, petrochemical and nonferrous metals refining, the companies should deploy advanced technology and equipment to realize clean production, according to the plan.

It also requires the major companies in those industries to cut emissions by 30 percent by 2017 from the 2012 level.

Natural gas, power and clean coal utilization are all included in the plan to raise energy efficiency.

The new projects should employ their key installations with top-level energy utilization.

"I found Chinese companies are accepting the technology very well," said Cosgrove. "It is now a very easy place to do business. They have big plans."

Lin, the expert with the energy economics research center at the Xiamen University, shared the same view.

Besides social responsibility and the requirements from the government, the Chinese companies have realized they cannot expand their businesses merely by adding capacity, he said.

"In the past, the companies in major industries focused on ensuring supply for domestic economic growth. They need to rely on raising energy efficiency to live longer and better lives," said Lin.

The energy industry is more stable than others, so even if it is hard to calculate when they can get their investment payback, it is just a matter of time, according to Lin.

According to HPS, the company can help reduce energy consumption by 18 percent to 22 percent by deploying its solutions.

"Most projects can help the companies raise energy efficiency by 5 to 6 percent. It will take several years to recover the cost," he said. "If the figure grows to 18 to 22 percent, it takes three to four years to recover the cost."

Cosgrove said the costs for energy efficiency reinstallation or upgrading depend on specific plants.

"For instance, if a company invests 17 billion yuan ($2.8 billion) to build a plant, then about half a percent to 3 percent can be used for improving energy efficiency," said Cosgrove.

"There is a trend to spend more money on improving productivity maximization in China, and I believe it's a smarter choice," he said.

China's urbanization will continually bring the companies opportunities.

To meet the growing demand for natural gas, the Chinese government has been investing huge money in pipelines and the construction of liquefied natural gas-receiving terminals.

Cosgrove said it is definitely a sector with opportunities.

"We work with lots of pipelines and LNG projects," he said.

In addition, refining, petrochemicals, oil and gas, and the mining sectors are all desperate for technology upgrades.

Chinese companies are gradually growing stronger to provide such technology and services to industries.

An industrial insider who declined to be named said there is a big gap in the prices of products and services among foreign and domestic companies in the industrial processing control sector, which means competition is tough.

However, some leading Chinese companies, such as SUPCON Group, which owns about 15 percent of the domestic market, are developing into top suppliers.

"Domestic companies have advantages in gaining more orders," said Lin. "However, I believe that cooperating with foreign suppliers can help Chinese companies to build a better platform to learn from overseas experiences. There should be no prejudice to either side."