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| Foreign investors covet China's US$2-trillion power market |
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| November 7, 2005 |
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The data released by China Power Enterprises Federation showed China's power industry will grow about 7% in the next ten years, much higher than the world's average of 3%. Due to strong demand, the power industry still needs huge investment. In the next 30 years, China's power industry will need over US$2 trillion investment, of which the purchase of generating equipment will account for 32% of the world's total. This is very attractive to international companies including Alstom, Doosan, ABB and Siemens.
In the past two years, many foreign power equipment manufacturers have expressed their interest in China, some hoping to rapidly enter the generating equipment market.
Zhang Guobao, deputy minister of China State Development and Reform Commission said during the recently held 2005 China Enterprises Summit that China's power industry has developed too quickly, coal is in short supply and the generating equipment production capacity is seriously inadequate. Although China's power installed capacity and annual generated electricity volume ranked the world's second in recent years, the power equipment production capacity is far from sufficient. Currently, production capacity at most is 50 million kw.
In the first half of this year, 20.60 million kw installed capacity was put into operation, but the newly installed capacity was predicted to reach nearly 30 million kw. The previous target could not be realized smoothly, and apart from the macro economic control being strengthened and the disorderly power market construction being rectified, the other major reason is the production capacity of power equipment manufacturers is inadequate and goods cannot be supplied on time.
Currently, China's generating equipment manufacturers mainly include Harbin, Shanghai and Sichuan "Dongfang". Taking into consideration that the tight power supply condition will be eased and that there may even by an oversupply after 2007, the three manufacturers dare not expand their workshop and production capacity blindly, otherwise these resources may lie idle in two years, so they would rather sub-contract the power equipment production task to foreigners.
Harbin generating equipment manufacturer is currently taking this route. Although it has received large orders, its major casting parts are produced in Korea due to its insufficient production capacity.
Alstom, Doosan, ABB and Siemen etc marker leaders believe that China's power market has great potential and the production capacity is not sufficient and are seeking business opportunities in the power equipment market. |
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