“Depth” of Chinese energy companies innovation way

Polaris solar PV net news: for nearly half a century, the world appears more than once within the scope of “energy crisis”, and cause worldwide economic chaos and social unrest. Despite proven new reserves increased lifespan of conventional energy, but in the long run, conventional energy sources will dry up one day, and all forms of new energy is already being used, but large-scale development of technology is not yet mature. Therefore, both in terms of improving general energy efficiency, or from the perspective of effective development of new energy and Energy Enterprise Innovation is implementation of the sustainable development of “the only way”.

Since the “Twelve-Five” period of time, new changes have taken place in China’s economic growth trend. After a long period of high double-digit growth, China’s economy is in a transition to slower growth. Compared with the previous year, China’s economy has shown a “low growth, low inflation” low. National economy fairly stable, the leading economic index is one of the indicators in this phase range.

Meanwhile, the structural adjustment of our economy is pushing. High-tech industry development trend is good, strategic emerging industrial development continued to accelerate scientific and technological content of the gradual improvement in industrial production. In 2013, the proportion of the added value of the tertiary industry to GDP surpassed the secondary industry, up to 46.1%. Contribution to economic growth improved.

Energy industry is an important pillar of China’s national economy and basic industries. “Twelve-Five”, the slowdown in the recovery of the world economy, sluggish growth in developed economies, tighter international trade environment, intensification of financial market turmoil and other adverse factors, energy companies in China are facing a serious complex macroeconomic situation, guided by the scientific concept of development of the whole industry to speed up the transformation of economic development mode in the main line, and vigorously promote structural adjustment, technological innovation and energy conservation and emission reduction, have achieved positive progress. Industry economic base has remained stable, economic efficiency improved significantly and steadily promote the transformation and upgrading of industry, and continue to optimize the investment structure, and exports keep growing, stable market supply and demand, to achieve a “amidst” overall objectives.

Energy economy

On one hand, energy consumption increases. “Twelve-Five”, China’s energy consumption energy consumption is still increasing, but the growth rate has been reduced. On one hand, China’s economic growth is slowing, but generally maintain a high level of stable growth. Economic growth boosted energy consumption continues to increase. In 2010, China surpassed the United States as the world’s biggest energy consumer. In 2011, the total energy consumption in China has amounted to 3.48 billion tons of standard coal, 20.3% per cent of world energy consumption, surpassing the United States percentage of 19%. From another perspective, China’s enterprises with the “Twelve-Five” plan of energy saving and emission reduction goals, continue to promote energy conservation and emissions reduction. In addition to the year 2011, 2012, 2013, annual energy-saving emission reduction targets have been completed.

According to the National Bureau of statistics announced on February 24, 2014 the People’s Republic of China in 2013, the national economic and social development statistics bulletin, after initial accounting, in 2013, the total annual energy consumption of 3.75 billion tons of standard coal, up 3.7% over the previous year, compared to 2012, 2011 growth rate fell 0.2, 3.3%, where the coal consumption growth 3.7%; crude oil consumption growth 3.4%; natural gas consumption grew by 13% Power consumption 7.5%. National GDP energy consumption fell by 3.7% million Yuan.

The other hand, the new energy and industrial development. The “Twelve-Five” period, China’s new energy industry on the national focus on supporting one of the seven areas, not only national policy support, various localities have established many preferential policies to encourage enterprises to develop new energy industry. Released March 16, 2011 the People’s Republic of China for national economic and social development of the 12th five-year plan calls for “vigorously develop energy-saving and environmental protection, new-generation information technology, biology, high-end equipment manufacturing, new energy, new materials, new energy vehicles and other emerging industries of strategic importance. Energy saving and environmental protection industry have focused on developing energy-efficient, environmental protection, resource recycling key technical equipment, products and services. “” New energy industry have focused on developing a new generation of nuclear power, solar thermal and photovoltaic solar-thermal power, wind power technology and equipment, Smart grids, bioenergy. ”

On new energy development in China has made rapid strides. Currently, hydro, nuclear, wind, solar, biomass and other renewable energy and new energy industries have realized rapid growth, doubling wind power installed capacity for three consecutive years, the total installed capacity has been ranked fourth in the world solar photovoltaic industry has achieved rapid growth, total solar power ranked first in the world. It is reported that the solar, biomass, geothermal and other renewable power generation cost have been near or meet the requirements of large-scale commercial production, laid the foundations for the further promotion of the use of renewable energy. National energy plan, by 2020, renewable energy accounted for about 15% of energy consumption by 2050, use of new and renewable energy sources accounted for 45% of the total energy consumption. Under the favorable policies and funding support, coupled with an influx of private capital, China’s new energy industry is expected to continue to maintain the early momentum of development.

Energy Enterprise innovation development

“Twelve-Five”, Chinese energy companies through their own efforts, overcoming the adverse impact of the economic environment at home and abroad, focus on innovation, in the process of upgrading achieved better operating performance. At present, China’s energy development road of Enterprise Innovation’s biggest advantage is the size of the business strengths. Because successfully aboard the train of China’s rapid economic growth and significant increase in the scale of China’s energy companies, such as Sinopec and PetroChina, three giant State grid enterprises have entered the top 10 of the Fortune 500. Enhance independent innovation for the future of all this has laid a good foundation. Vast domestic market and the rise of new energy industry development for energy companies through innovative transformation provides a tremendous room for growth. Of course, only by results, we should also see that problems still exist in the development of energy enterprises. Especially when compared with the international energy giants, the world’s top 500, there is not a small gap in the energy sector in China, and international competitiveness still needs to be improved, Chinese energy companies need to continue to accelerate the pace of the Chase.

At present, from the macro-economic environment, Chinese energy enterprises in the development of the following unfavourable conditions.

First, the downward effect on economic growth in the enterprise market space. Current energy company most directly facing difficulties brought by the economic downturn reduced demand in the market, Enterprise energy consumption decreased productive capacity cannot meet, capacity utilisation declined by varying degrees. From a demand-side view, endogenous growth momentum of China’s economy slows, especially fixed assets investment growth slow down trends established, then determine the petroleum, chemical, coal, electricity, iron and steel, nonferrous metals, building materials, electrical appliances and other products demand growth fast and even partial periods of negative growth, sustain time secular in orientation. A case study of coal, especially in secondary growth from GDP growth, will inevitably lead to heavy slowdown in industry demand-side asset. 2001-2012, domestic coal output compound growth rates of 10%, 2012 production mainly due to demand-side contraction cause coal companies to drive down yields.

Second, excess capacity fails to remission, blind expansion of some enterprises. In recent years, the rapid development of China’s new energy industry and investments at a high level, investments in new energy projects in China has reached the world. The most obvious examples are found in the PV industry. In Government of strong support and promoted Xia, Bank on PV project big green light, according to Bloomberg 2012 statistics of data displayed, China has been through local government or national guarantees institutions provides of loan to support solar enterprise of development, Suntech Power, and game dimension LDK, and days collection light, and British Lee Green energy holding, and hanwha first solar and Crystal section energy holding, 12 home industry company, amounted to obtained has over 43.2 billion dollars of China National Development Bank loan commitment. Due to the capacity of the great leap forward and the European and American “double reverse” serious imbalance between supply and demand, since 2011 PV industry suffered the serious dilemma in nearly 10 years, solar PV application of national policy of slashing subsidies, leading to a serious oversupply in the market, increasing competition among enterprises, prices plummeted, industry-wide losses. On March 18, 2013, Suntech Power have been a go-ahead creditor banks to jointly submit a filing for bankruptcy reorganization, at the end of February, 9, including commercial bank of China, the agricultural Bank of China, Bank of China and other creditor banks of Suntech’s local and foreign currency credit balance, equivalent to reach 7.1 billion yuan. Suntech’s total debt has reached $ 2.3 billion, first listed Suntech’s market capitalisation has fallen from more than 4.9 billion dollars fell to about $ 150 million, is worth just as much as 99%.

Again, the decline in corporate benefits and costs were higher. In recent years, the energy efficiency of the sector has decreased, sometimes larger decline. For example, in May 2011, the refining industry net loss of 3.09 billion yuan that month, is a 2009 loss for the first time since August accumulated losses within the first, now, in November before refining industry lost a cumulative $ 11.728 billion yuan. Oil refining efficiency deterioration, the most fundamental factor is the issue of price mechanism. Rising costs make the market upside down. 2012 1 ~ November, industry-wide profits total 711.12 billion yuan, down by 3.3%, compared with a national scale growth in industrial profits were 3%. Among them, the chemical industry profit of 10% per cent; refining loss of 11.47 billion yuan, has accumulated losses for 16 consecutive months. In 2013, the oil and chemical industry profits and revenue, which has grown, as compared to a negative profit margin. Meanwhile, corporate losses have significantly improved profitability, steady recovery industry overall efficiency improved significantly.

Meanwhile, the high industry marketing costs, administrative expenses and financial expenses rose sharply. 2012 1 ~ November, oil and chemical industry’s cost of sales of 9.08 trillion yuan, an increase of 12%, higher operating income increase of 1.6% per 100 main revenue cost for 83.03 Yuan, an increase of 1.18 dollars; financial expenses of the whole industry to 122.41 billion yuan, an increase of 32.9% management costs rose 9.2%; turnover of 2.37, down 0.1%. This problem is particularly acute in the chemical industry. Although the chemical industry itself is definitely improving, but compared with other industries, gap in cost management. Statistics show that in 2013, 87.0 100 ‘s main revenue costs in the chemical industry, rose 0.41 Yuan, higher than the national industrial scale 100 ‘s main revenue cost 1.73 Yuan, a large gap. Scale industrial profitability was significantly lower than the national average. In 2013, the chemical industry’s main revenue and profit margin for 5.32%, country-wide industrial 6.11%, low 0.79%.

Finally, the lack of business investment in research and development, innovation capability is weak. From the innovative elements, processes and mechanisms for inspection, problems in energy companies in China have two points:

Is the lack of business investment in research and development, development density is a measure of the industry, one of the most important factors of competitiveness. Our inadequate investment has energy companies. As mentioned above, the Sinorama survey sample’s average development densities 0.76%, below the average for international energy companies. The development density of three of the country’s oil companies are: China National Petroleum 1.01%, CNOOC of China, the China petrochemical 0.3%. Despite the huge decreases in size can be explained to some extent the development density, but outside of China Petroleum, Sinopec and China offshore oil development densities were lower than the level of international oil giants. It can be seen that big gap of Chinese energy enterprises with the world advanced level in China. Domestic enterprises from nearly three years of corporate investment in research and development as a proportion of average income, military, information technology enterprise research and development investment topped the list, followed by manufacturing, iron and steel non-ferrous enterprises, energy companies is at the end. Top companies are: Aerospace Science and technology (15.1%), Huawei Technologies (9.84%), shipbuilding workers (5.96%). CNPC (1.01%), the Shenhua Group (0.68%), CNOOC (0.48%) in top energy companies.

Second, stable research mechanism has not yet been formed, and a deeper look, with world-class companies as the long-term strategy will innovation, especially as compared to the important means to cope with the crisis and the way out of the crisis, Chinese energy companies on the importance of innovation also needs to be improved, and lack of long-term innovation strategies. From reality see, China energy enterprise has long and no established up ensure development inputs stable growth of mechanism, most of enterprise are is according to itself profit and funds status to arrangements development spending; in some strategy shortsighted of big enterprise in the, actually is put development inputs as enterprise of profit regulator to using, and not put technology development as is build technology competition advantage and core competitiveness of long-term strategy.

Energy Enterprise Innovation and development countermeasures

In recent decades, the world appears more than once within the scope of “energy crisis” and causing economic chaos and social unrest around the world. Despite proven new reserves has repeatedly increased the lifespan of conventional energy, but in the long run, depletion of conventional energy resources will eventually run out one day, and in the case of solar energy, geothermal energy, wind energy new energy has long since been used in various forms, but large-scale development of technology is not yet mature, and not widely applied. Therefore, both in terms of improving general energy efficiency, or from the perspective of effective development of new energy and Energy Enterprise Innovation is implementation of the sustainable development of “the only way”.

Held in November 2013, the 18 session of the third plenary session of the party standing at a new historical starting point, full deployment of reforms. In a number of areas there are new breakthroughs and innovation, in particular the market plays a decisive role in the allocation of resources to the new reference to express more clearly the role of market regulation and more targeted. It should be said that three plenary session of 18 points out the direction for the development of China’s energy future and create a better policy environment.

“Twelve-Five”, the transformation and upgrading of China’s economy has entered a critical period, medium-and long-term potential growth rate is declining, the economy will average around 10% of the rapid growth in the past, transferred to an average of 7% per cent of medium-speed growth stage. Since the international financial crisis, China top 500 enterprises in China as representatives of large enterprises (including this newspaper investigations involving energy companies) operating income and profit growth also slowed markedly. Facing slowdown in macroeconomic growth, export to a fundamental improvement in the short term, severe overcapacity challenges. To this end, the energy enterprises in China should be changed at high speed for a long time under the condition of formation of the concept of enterprise development and management, promoting innovation-driven development strategy, strive to enhance independent innovation ability of enterprises, innovation-driven to improve quality and efficiency, and enhance the core competitiveness of enterprises. Ensure completion of upgraded version of world-class enterprise and create China’s economic challenge.

First of all, needs under the slow economic growth in the enterprise’s strategic positioning and business model.

On one hand, to fully understand the inevitability and necessity of a long-term slowdown in economic growth, and give up on ideas. Relevant research shows that although many business savvy against short-term goals of the stimulus, but there are still many enterprises “to” psychological, wished to rely on Government stimulus out of trouble. Should awareness to, the economic growth downward is objective and subjective, variety factors integrated role of results, both 2009-2011 years mass economic stimulus policy exit, and world economic growth long-term downturn of causes, also has central macro and social policy of active regulation, and China developed of “Twelve-Five” period annual growth 7% of target, purposes is governance serious of “not balance, and not coordination, and not continued” of problem, for economic transformation and structure adjustment of created must space. Despite the Government’s investment-led growth model to ridicule, but it must be acknowledged that if the central government ability to rely on its massive revenue, again, massive stimulus, still has a certain space, statistics would be more attractive in the short term at least, some overcapacity problem is partially resolved in the energy business. However, the slow growth of the economy was “structural adjustment” requirements. The current economic slowdown as an opportunity to adjust the structure, such as determined to eliminate backward economic components such as industries with high energy consumption and high pollution emission, encourage strategic value and lead the industry and so on. New central administration costs, benefits of massive stimulus policies are clear, for the urgency of economic restructuring and structural adjustment are clear. So for “to” enterprise, should overcome the psychological, according to the reality of slow economic growth, reexamine corporate patterns of growth, profitability, and location in the industrial chain, reorientation of enterprise strategy in a timely manner.

Meanwhile, energy companies should seriously examine the strategic position of the enterprise under the condition of low growth in the economy and survival mode. For a long time, energy companies benefiting from the rapid economic growth in China. Under the conditions of high economic growth, development of China’s energy companies have formed a certain philosophy and business model. Most of the energy companies are accustomed to in the process of rapid economic growth, relying on the inputs of production factors and the rapid expansion of market capacity to generate a profit. Study results show that, when China’s economy is growing more slowly than 7% when most businesses are unprofitable. Accustomed to economic growth only 1%~3% European and American companies, was able to maintain sustained growth and profitability. Rely not on such growth of factor inputs, nor market capacity expansion, but technical innovation and productivity within the enterprise, improvement of management capacity. In terms of energy, pure exploitation is no longer generating more added value, research and development, purchasing, storage, logistics, financing, marketing, services and technical support services, becoming an important source of value. Along with the infiltration and integration services and manufacturing, services sector’s increasing role in the manufacturing value chain and to promote mining, manufacturing of accelerator. While many mining and pure energy companies still in product production and processing, and low added value. According to the IBM Institute for business data, now in the manufacturing sector in major developed countries in Europe and America, both services and manufacturing business has amounted to 20% per cent, United States 58%, 97.8% manufacturing enterprises in China still remains in a pure product production and processing stages, lack of services. However, the last few years while energy companies continue to expand the scale of production, are affected by product homogeneity, profit margins are falling, after several years of severe competition in the industry exposure, some energy companies at the low end has entered an era. Therefore, the downward economic growth helped to spur the Chinese energy companies think about strategies in transition, from speed and efficiency to the quality and efficiency of transformation, from input-driven and innovation-driven change.

Second, you need to construct the energy characteristics of enterprise technology innovation system.

Enterprise’s technological innovation is a systematic project. Therefore, the enterprise, building energy characteristics of enterprise technology innovation system is an important support and effective science and technology innovation Foundation.

First, improve innovation infrastructure of the organization. Enterprise technology innovation system needs to establish rational division of labor, the clear positioning of innovative infrastructure of the organization. For example, the national grid through the integration of research institutions of several restructuring, and constantly improve the innovation main body function, changing research interests overlap, duplication of resources, working on their own situation, gradually comes to immediate industry institutions affiliated to research units as the backbone, focusing on Science and technology innovation of firms, provincial research institutions based on organizational structure.

Second, to establish a sound mechanism for innovation. To achieve scientific and technological innovation system to work, the improvement of innovation mechanisms must be established. National grid through strategy integrated, and schema restructuring and run mechanism construction promoted innovation group operation, achieved each innovation subject in company innovation chain Shang reasonable layout, promoted technology management by bar segmentation to collaborative unified, and dispersed extensive to concentrated fine benefits way of fundamental change, will dispersed in units of technology funding resources, and technology human resources and laboratory resources for concentrated management and combination, maximum to played group directly under the research units, and directly under the industry units and provincial research institutions of innovation Heli, Promoting the overall scientific and technological innovation and promote the overall development of enterprises.

Third, integrating internal and external creative resources. Energy system of enterprise technology innovation system includes both internal research and development organization, also includes the integration of external innovation resources used. A case study of Shenhua group, within its technology centers have been built in some industries, the main technical management functions, direct integration of resources in the field of science and technology development, production, operation and management activities, and feedback in the first major technical problem on site. Shenhua post-doctoral research station was established at Headquarters. Starting from 2002, Shenhua will strengthen cooperation with domestic and foreign regions, enterprises, universities and research institutes to carry out technology innovation as the core content of the strategic partnership. Among them, especially with Shanghai Shenhua and China Aerospace Science and technology group of strategic cooperation is most typical. National grid with capital and technology advantages, traction leading role into full play, combined with equipment manufacturers, universities and research institutes to carry out scientific and technological research, and effective utilization of external innovation subjects in related fields of resources, by integrating innovation, for major construction projects provided important support to succeed.

Finally, strengthening science and technology innovation of security management. The guarantees indispensable for the smooth advancement of technology innovation management. A case study of Shenhua group, Shenhua group in terms of funding, evaluation, motivation and talent give full protection. Among them, the Shenhua Group’s input is not set to scientific and technological innovation, as long as the input is required, annually in recent years, scientific and technological innovation of the scale of investment in billions of Yuan, a total of well over 10 billion yuan of investment in technological innovation fund. Meanwhile, according to the different sources of science and technology innovation activities for graded management of funding, for the subordinate enterprises approved by the headquarters, technology innovation inputs can be directly recognized by filling the assessment for the year profit reduction. In addition, the Shenhua group every two years to carry out science and technology progress award, a scientific paper award and adjudication process, Technology Conference and regularly exchange of results and experience, recognized, award-winning technical team and staff.

Finally, you need to seize the opportunity to push forward industrial restructuring and upgrading.

The new Administration’s prescriptions, speed growth in macroeconomic environment was forced to play active role in the development of economies in transition, structural adjustment has become the new Government an important, long-term economic goals. Seen from the energy sector, promote industrial restructuring and upgrading, particularly needs to accelerate the pace of technological innovation, optimizing the allocation of resources, should take the initiative to eliminate excess production capacity and even strategically exit certain areas of excess. Through the transformation and upgrading of traditional energy industries and actively develop strategic emerging industries such as new energy, produce more internationally competitive enterprises in the energy sector, enhance the voice of Chinese energy enterprises in the global market.

Speed up the energy sector to promote transformation and upgrading of traditional industries, and fundamentally solve the overcapacity problem and irrational industrial structure, it is important for steady growth and restructuring. China’s energy industry has a huge mining and processing base, which boasts the world’s largest market. How to take advantage of our “low cost” and “low-cost research and development” double low advantage bypass was the ability to lock the lower value-added part of the trap, and climbed to the high added value of the industry chain link, is the pressing realities of industrial restructuring and upgrading traditional energy issues. We must attach great importance to the upgrading and transformation of traditional industries, in particular, to promote the independent innovation of traditional industries, and enhance its ability to occupy the high end value in the chain link and competitiveness.

Present case, speed up the transformation and upgrading of traditional industries can start from 3 directions: one is to take full advantage of the current international market remains in the doldrums of the forcing mechanisms, further strengthen demand, prompting companies to change the traditional incremental development, accelerate mergers and reorganizations, pay close attention to eliminate backward production capacity, effective integration of internal resources. II is more conducive to promoting transformation and upgrading of traditional industries and the development of innovative policies and measures to guide enterprises to continuously strengthen the technological innovation ability and comprehensive service capabilities, from traditional manufacturers transition to integrated packages of services providers. Third, encourage the development of transnational support-traditional industrial clusters “go”. In promoting transformation and upgrading of traditional industries in the process of energy companies to increase the strategic use of information technology. Enterprises by deepening the development and widespread use of information resources, you can improve the efficiency of manufacturing and management decision in traditional industries, enhance the ability to respond to market changes, promoting the upgrading of traditional industries. Increase the use of information technology in manufacturing companies, to increase the proportion of services in mining, manufacturing, promotion of traditional energy industry services, communications technology, information flow, logistics and fund flow through the network, traditional energy industries informatization, marketization, industrialization and modernization.

New energy industry, the energy industry’s emerging industries of strategic importance. Will speed up energy industry, new energy industry leader and mainstay industries, transform the mode of development of the energy sector, to seize the major international economic and strategic point of strategic deployment. New energy industry, the energy industry and the international competition for the development initiative an important Fulcrum; in today’s world, scientific and technological progress and innovation have become the primary factor in the development of productive forces, to seize the emerging industries of strategic commanding point in technology, it is a war for the future development of the initiative. Energy companies should follow the policy guidance, with policy support, enlarges to the layout of the new energy industry. Related of energy environmental industry to breakthrough energy efficient and Echelon using, and pollutants control and security disposal, and resources recycling and cycle using, key core technology, development efficient energy, and advanced environmental and resources cycle using of new equipment and products, implementation clean production and low carbon technology; new energy industry to development technology mature of nuclear power, and wind electric, and solar PV and hot using, and bio mass power, and biogas,. In the current environment is deteriorating, the Central case attaches great importance to environmental issues, energy companies in particular, to increase investment in energy conservation, environmental protection and related technology research and development, accelerate the development of energy saving and environmental protection industries. At the time of development of new energy industry, should not blindly follow investment rush in; energy companies must combine the characteristics of existing industries, technical reserves and the advantage of research and development, market demand trends, science into decision-making.

(This article written by SASAC Research Center researcher Hu Chi)

Original title: China Energy Enterprise Innovation way

Posted in News.