Zhu Guangchao: Showcasing the Charm of China Power Grid to the World

Vigorously implementing the internationalization strategy is the only way to accelerate the transformation of the company's development mode and build a world-class enterprise. In recent years, the State Grid Corporation of China has repeatedly exhibited on the international stage and has won praise from all parties. Through dialogue with Zhu Guangchao, the general manager of the State Grid International Corporation, we have learned more about the latest progress and future plans of the State Grid Corporation's implementation of its internationalization strategy.

Convert advantages to "competitiveness"

"The rapid development of advanced technologies represented by UHV and smart grids has formed the core strength of the State Grid Corporation's 'Going Global'."

Reporter: In a short span of four years, the State Grid Corporation of China continues to make remarkable achievements in international business. What are the advantages of implementing the internationalization strategy of the company?

Zhu Guangchao: Accelerating the internationalization process is the only way to deepen the "two transitions" and build a world-class enterprise. This year, the “Two Conferences” of the State Grid Corporation of China carried out a comprehensive deployment of accelerating the implementation of the internationalization strategy, and clearly put forward the long-term goals for the implementation of the company’s internationalization strategy during the “Twelfth Five-Year Plan” and “Thirteenth Five-Year Plan” period. We must strengthen research on international strategic planning, deepen our understanding of the internal and external environment, systematically consider our own resources and capabilities, elaborate breakdown of targets and tasks, and clearly implement specific measures.

In recent years, the company's internationalization strategy has achieved outstanding results. There are several advantages in summing it up.

The first is the correct decision-making and strong leadership of the party group of the State Grid Corporation of China. Ensure that the right investment direction is grasped at key moments and give strong support to human resources allocation and fund raising that need to be resolved in international operations.

Second, the rapid development of advanced technologies represented by UHV and smart grids has formed the core advantages of the “going out” of the State Grid Corporation of China. The State Grid Corporation of China currently operates and manages the world's largest transmission grid with the highest voltage rating, largest capacity, widest range, combined AC and DC, and the highest degree of sophistication. There have been no major accidents in the past 30 years and it has always maintained a safe and stable operation. This fully demonstrates the State Grid Corporation's international leading position in power grid operation management and power transmission and transformation technologies, and increases the international influence and competitiveness of the State Grid Corporation of China.

The third is a strong overall resource advantage. The overall resource advantages of the system provide the company with support in many aspects such as technology, equipment and professionals.

Fourth, constantly enriched practical experience has trained a team of internationalized professionals. The successful implementation of the projects in the Philippines and Brazil enabled the company to gradually become familiar with the rules of mergers and acquisitions in the international market, trained an overseas project team with practical experience, accumulated valuable overseas investment and acquisition experience, and initially established an effective overseas asset management system. The operating model sets a successful example for subsequent project development.

Steadily enhance the international influence of the national grid “The power grid quality and power supply reliability of the Philippines and Brazil projects have been steadily increased, and the scale of power grid construction has reached the highest level in history.”

Reporter: Please briefly introduce the latest progress of the implementation of the internationalization strategy of the State Grid Corporation of China.

Zhu Guangchao: In 2011, under the strong leadership of the State Grid Corporation of China and the concerted efforts of overseas offices, the Philippines and Brazil continued to operate safely and stably, and the power quality and power supply reliability of the power grid improved steadily, thus realizing the safety of the power grid. With stable operation, the scale of power grid construction investment has reached the highest level in history.

This year's international business continues to move toward high-end markets. Focusing on transmission and distribution assets, renewable energy, and high-tech energy, it will actively participate in the construction of UHV and smart grid projects in Brazil, India, Russia, and other countries; carry out high-quality transmission and distribution network and renewable energy projects in Europe, North and South America. Invest in mergers and acquisitions, and strive to achieve substantial breakthroughs during the year.

The radiation effect of the industrial chain will gradually show that “overseas investment has a significant role in driving the entire industry chain. Once the investment is successful, China’s technology, products, and services can more easily enter the European and American markets with severe barriers.”

Reporter: The successful acquisition of the Portuguese project is an important practice for China’s central enterprises to “go global” and has far-reaching significance. Can you talk about the meaning of those aspects?

Zhu Guangchao: As a national-level transmission grid in southern Europe, REN has a more prominent strategic significance and has a stronger radiation effect on the surrounding countries and the Portuguese-speaking countries. The acquisition of its shares by the State Grid Corporation of China can promote the further development of Sino-Portuguese and China-EU strategic cooperative relations.

The acquisition is also conducive to enhancing China's industrial competitive advantage. Portugal's politics is relatively stable, and it has a wide range of radiation to European and Portuguese-speaking countries. State Grid Corporation of China can use this project as a starting point and platform to participate in the construction and operation of overseas power grids. The expected good economic benefits are also an important reason for the acquisition. Portugal has a stable electricity regulatory framework, transparent policies, reasonable returns and controllable risks.

Reporter: With the success of the Portuguese project, entering the European and American markets has also become one of the focuses of the company's international business in 2012. Do you think that the European and American markets have new challenges compared to previous overseas investment projects? What is the significance?

Zhu Guangchao: Investment in developed countries in Europe and the United States will face fierce competition from more and more multinational companies with comprehensive strength. The business culture and operating environment in Europe and the United States are very different from those in China, including stricter industrial supervision and environmental protection, more stringent labor and employment protection, etc.; investment in Europe and the United States will also face some restrictions on access, these restrictions on electricity, The impact of special industries such as infrastructure, state-owned enterprises, and large-scale projects will become more apparent, which will increase the difficulty of developing Chinese project investment.

At present, some developed countries in Europe and America have been affected by the financial crisis and have chosen to sell some assets or equity one after another to provide foreign investors with a rare investment opportunity. The markets of developed countries in Europe and America are relatively standardized, laws are sound and transparent, and power companies generally have high operations. The level of management, rich international business experience, and equity cooperation with them can learn from each other and learn from each other, bringing more opportunities for international investment. Overseas investment has a significant role in driving the entire industry chain. Once the investment is successful, technologies, products, and services with comparative advantages in China can more easily enter the high-end European and American markets with high barriers.