Energy

Merging cultures and companies

By Xin Zhiming (China Daily)
Updated: 2010-12-13 10:53

A Sinopec badge on a gas station attendant's uniform. [Photo / Agencies]

The challenges faced when businesses go international

BEIJING - If you google Sinopec, the name of China's largest oil product producer, most of the results would be related to stories of its take-over moves abroad, as Asian oil companies accelerate their push into other continents.

While beating international big names and securing one international contract after another, however, Sinopec has had to cope with many challenges that those who only eye its glowing acquisition and merger records would have ignored.

The latest oil contract that hit the headlines, reported on Friday by the Wall Street Journal, involved two blocks in Venezuela, together with local national oil producer Petroleos de Venezuela SA. The Sinopec Group did not confirm the report.

"Sinopec's overseas expansion started five or six years ago and it has accelerated," said Zhang Zhiguo, deputy director of the group's general administrative office. "But we are in dire need of qualified professionals as expansion continues."

Adi Karev, Deloitte's global leader for oil and gas, agreed. "Africa, South America and Canada are good places for the Chinese companies to go and invest, but there is already a shortage of talent in the industry. Engineers, scientists, analysts and technicians are in demand, which is also the problem the Chinese oil and gas companies need to solve," he said.

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Sinopec has purchased companies and assets in almost all continents ranging from Africa to Europe, with diversified cultures, corporate management styles and regulatory environments. Chinese managers working for those new ventures have to adapt to the local environment and management methods.

"Language is one of the most crucial challenges for us managers going abroad," said Zhang Yi, chief executive officer of Switzerland-based Addax Petroleum, a Sinopec Group company. Sinopec acquired the oil explorer for $7.2 billion in the summer of 2009.

People in Sinopec's other overseas ventures think the same way.

"Sinopec is a very professional partner. We are looking forward to more cooperation with Chinese companies. They are honest in their job," said Abdul Shakkour El Basha, chairman of Oudeh Petroleum Company in Syria. The company is a partner of Sinopec in developing the Oudeh block in the northeastern part of the country. "The Chinese people are serious about their jobs and focused on their field, but if there's anything I dislike, it's their (spoken) English."

What could be more crucial than language is management expertise, something many Chinese companies lack.

Chinese managers must learn to adapt to the typical Western style of management. "Being a top manager dealing with European colleagues, I must be truly open in discussing questions with them," Zhang of Addax said, using English. "And I show to them I care for them and care for the growth of the company."