Energy

Merging cultures and companies

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

Good management encompasses cultural understanding.

"You should find the commonalities between the two cultures and, most importantly, you should ensure the company remains an international one instead of a Chinese one after the purchase," Zhang said. "Once it becomes a Chinese company, its growth potential could weaken."

Sinopec sent only 18 managers to Addax after the deal, accounting for 2 percent of overall staff. Thanks to the management expertise and the open and accommodating style of Zhang and his colleagues, the initial uncertainty of some foreign staff has turned into an aspiration to grow together with the new company.

"There was a mixture of feelings (upon hearing about the purchase) - trepidation and excitement, a little bit of concern, but (now) I'm excited to be part of China's growth story," said Don Macleod, corporate head of human resources for Addax, who has worked for 18 years for international companies.

"There's a lot of mutual respect and willingness to learn from each other," said Yannis Korakakis, a senior Addax manager, who has worked for 10 years for the company and now is based in Nigeria. "Sinopec is a proven able investor."

Related readings:  Sinopec faces challenges after takeover  Sinopec goes after Argentinian assets  Sinopec sees higher domestic oil demand  Sinopec says Jan-Sept net profit up 11.5%

As the world's oil reserves decrease, it is becoming ever more difficult to find new sources and bid for existing ones, which could prove much more challenging than technical issues such as language and expertise for Chinese companies, analysts said.

"The Western companies have taken the early-comer advantage and control many of the resources," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. "Chinese companies made some successful bids during the financial crisis period, but it will become ever more difficult for them in the future."

Many of the oil fields now available for exploration by Chinese companies come with complex underground geographical conditions, which hikes the costs of development, analysts said.

Political factors may also affect the overseas development of Chinese oil companies.

The US, for example, strengthened sanctions on Iran this summer, forbidding Western companies from having business links with the country. "As a result, more than 20 experts from Shell, our partner in an Iran project, withdrew," said Fan Shengli, president of Sinopec International Petroleum Exploration and Production. "We can still continue the project since we've learnt a lot from those foreign experts, but the impact is substantial," he said.