| In recent years, energy giant China Petrochemical Corp. (Sinopec) has seized opportunities to boost its overseas presence. In keeping with its "going global" strategy, Sinopec competes internationally to optimize resource allocation. Its mergers and acquisitions have caught the world's attention.
Have Sinopec subsidiaries in foreign countries accustomed themselves to local conditions? And what experience have they gained in asset integration and cultural adaptation? Not long ago, People's Daily interviewed veteran Sinopec employees in Switzerland, Syria, Saudi Arabia and the United Arab Emirates.
Career commitment
One cannot truly understand another person unless they stick together through thick and thin, said a senior geologist with the Sino Saudi Gas Ltd, a joint venture established in 2004 between Sinopec and Saudi Aramco. The Saudi Arabian, nicknamed Abu by his Chinese colleagues, has worked with the Chinese for five years. He said their company was like a family. The Chinese are professional and sincere, he said, and they spoke highly of his contributions.
Abu joined Saudi Aramco in 1981. In 2005, the oil exploration expert was appointed to the exploration department of Sino Saudi Gas. Along with his team, he contributed greatly to the seismological and stratigraphic studies of the company's Contract Area B. His work has been widely recognized by the Sinopec International Exploration and Production Corp., Sino Saudi Gas and other supporting companies.
In Syria, the Sinopec International Exploration and Production Corp. operates a joint venture with the Syrian Petroleum Co. The joint venture purchased two oil fields in northeast Syria formerly owned by a Canadian company in 2008. The joint venture's board chairman, known by the Chinese name Ba Xia, said the acquisition has created a bright prospect for his company. Sinopec employees in Syria are kind-hearted and career-minded, and without the cooperation between Chinese and Syrians, the company would not be what it is today, he said.
A geologist with the Syrian subsidiary of the Sinopec International Exploration and Production Corp. said he was greatly impressed by his Chinese coworkers' dedication. The geologist, known by the Chinese name An Tong, worked with French, German and Canadian companies before joining Sinopec. He said Chinese geologists would rush to an oil field immediately upon receiving a call, even during leisure time. He said he had learned a lot while working with Sinopec.
Sinopec sets great store by employee development, environmental protection and social responsibility, said the deputy general manager of the Addax Petroleum Nigeria Ltd. The British professional said Addax Petroleum had long been a success in Nigeria. He said he believed the company would continue to make headway after acquisition by Sinopec, as the two companies integrate businesses, share resources and learn from each other. Chinese and Syrian employees had already benefited from mutual learning and all of them wanted to work hard for the new company.
Cultural integration
After making an acquisition, a company should be able to assimilate what it has purchased, Zhang Yi, CEO of Addax Petroleum, told People's Daily at the company's headquarters in Geneva, Switzerland. Only in this way could it gain a new competitive advantage. While seekinga international presence, Chinese companies should manage not only their overseas assets but also their corporate culture, he said.
Sinopec acquired Addax Petroleum in August 2009—the largest successful deal for overseas oil and gas assets a Chinese company has ever concluded.
Founded in 1994, Addax Petroleum is listed in Toronto and was also listed in London before the acquisition. It ranked 1,326th in Forbes' Global 2,000 list in 2009. It currently employs 936 workers from 30 countries. Most of its international staff come from the world's leading oil companies such as BP, ENI, Shell and Chevron.
"Employees with working experience in multinational companies are Sinopec's most precious assets," Zhang said. Since Addax Petroleum was an international oil exploration company committed to Western values, Sinopec attached great importance to cultural adaptation as it carried out asset restructuring.
Shortly after its takeover, Sinopec adopted a distinctive approach to integration that underlined mutual learning, seeking common ground while reserving differences, harmony, and common development. Geng Xianliang, the first CEO of Sinopec-owned Addax Petroleum, explained the company's new development strategies, visions and goals to all staff members. This initiative helped relieve foreign employees about their concerns over the company's development and the future of their careers.
Sinopec has worked to forge solidarity among employees from different countries and with different cultural backgrounds by fostering a corporate culture with Chinese characteristics. It has also tried to establish shared values, ethics and codes of conduct so Chinese and foreign employees could work together to implement the company's business strategies.
At Addax Petroleum, Sinopec adopts a cross-cultural management system which calls for tolerance and respect. While preserving its former corporate culture and respecting cultural differences, it advocates diversity in cultural development. It allows Chinese and foreign employees to retain their own cultural systems provided they agree on fundamental values.
Statistics from U.S.-based consultancy McKinsey and Co. show about 70 percent of acquisitions the world over are unsuccessful, and most of the failures can be attributed to problems in integration. In other words, integration has a vital bearing on the success of an acquisition.
Building confidence by seeking common grounds while reserving differences has become common practice for Sinopec subsidiaries in overseas acquisitions. They invite international employees holding mid-level management positions and above to visit Sinopec headquarters in Beijing so they can get an understanding of the company, business operations and management practices, and Chinese culture.
They also require Chinese representatives in joint ventures to take the initiative in observing corporate regulations and local customs, along with foreign employees. The Chinese representatives, committed to studying new work procedures and managerial concepts and enhancing mutual understanding through strengthened communication, have won the recognition and respect of foreign employees.
All these practices have enabled Sinopec's overseas subsidiaries to rapidly integrate into local societies. They have also given local people a picture of the 5,000-year-old Chinese civilization
The chief of Addax Petroleum's human resources department told People's Daily that Sinopec has not only preserved the company's former training system but also increased incentives on employee performance, safety and long-term corporate growth. The official said Addax Petroleum's cultural integration is a success.
Brand-building efforts
"I think it worthwhile to take pains to cultivate a good brand for Sinopec," said Wang Guolai, a project manager with the Saudi Arabian subsidiary of the Sinopec International Petroleum Service Corp.
In 2004, the then 30-year-old Wang led Sinopec's first geophysical survey team to work in Saudi Arabia's Rub'al Khali Desert. The region, whose temperature can reach up to 50 degrees Celsius, is almost uninhabited. Wang and his team undertook a project their employer Saudi Aramco considered too difficult to tackle because of complex topography and harsh working conditions. He and thousands of other Sinopec workers conquered all challenges and completed the project as scheduled. Their efforts brought fame to Sinopec, and Saudi Aramco presented a certificate to honor their safe and efficient operations.
Apart from hard work, Sinopec also attaches great value to its business credibility. Sinopec Engineering contracted its first overseas project in Yanbu, Saudi Arabia, in July 2005. But, at the end of the year, the employer decided to postpone the project for 13 months. As a result, Sinopec Engineering would have to bear extra costs. In the face of this dilemma, the company was undaunted. It completed the project on time at a high quality level. Sinopec Engineering's efforts have paid off. Over the past five years, it has signed contracts worth nearly $1.6 billion and executed 20 projects.
"It is a shared belief of Sinopec overseas employees that they will contribute to the development of China and the countries they work in," said Chen Xifu, deputy chief of Sinopec's Saudi Arabia office. "We will honor our social responsibilities, strive for win-win results and help to enhance understanding and friendship between Chinese and other peoples and boost the local economies."
Sinopec has established a training center in Saudi Arabia to train local staff. It has also created employment opportunities for residents. To date, it has trained more than 600 Saudi Arabian employees. More than 1,000 Saudi Arabians are working with Sinopec entities in Saudi Arabia. Currently, trade between Sinopec and Saudi Arabia accounts for 50 percent of total China-Saudi Arabia trade.
Addax Petroleum's Zhang Yi said his company has set up a fund to help underdeveloped countries in Africa and the Middle East with education, health care, community development and environmental protection. By 2009, it had sponsored 35 projects with a donation of more than $1.9 million.
Ba Xia of Sinopec's Syrian venture said Sinopec donated $5 million to local charities last year. The company has recently decided to plant 1,000 trees and build a road for the city where it is located. It also volunteered to clear up a faraway lake polluted by oil—an initiative that was applauded by residents.
"With concrete action, Sinopec staff have helped foster Sinopec's image as a responsible Chinese company in foreign countries," said Sui Rongliang, General Manager of the Saudi Arabian subsidiary of the Sinopec International Petroleum Service Corp.
Sui founded the subsidiary six years ago by himself in the hope of carving a niche in the Saudi Arabian market. Today, he runs a highly skilled and efficient oil exploration company with 26 construction teams employing nearly 3,000 people.
"I'm proud to see that, along with the rapid rise of China's international influence, overseas Chinese companies have gained approval of local governments and people," he said. |
