The horizons are broadening at Beijing Tianhai Industry Co. Ltd (BTIC). As the close of 2010 sees the company complete its eleventh five-year plan for growth, BTIC is ready to embark on the next phase of development and strive for success beyond the world of cylinders.

In 2011, BTIC will implement its twelfth five-year plan and broaden both its product range and footprint throughout industry. Suitably enough for the new Chinese Year of the Rabbit, beginning 3rd February, this new strategic plan will see BTIC take a considerable leap forward.

The clean energy and natural gas markets in particular, afford a wealth of opportunities in China, while BTIC will also have a focus on the vehicle & transportation equipment going forward.

Further still, BTIC harbours aspirations to further develop its presence beyond the domestic Chinese market and into new, exciting geographies. The company already operates with a roughly 50-50 ratio between domestic and export business – and the next five year plan could see this export activity increase even further.

But how will BTIC achieve this? What’s driving growth in China? And how has BTIC managed to position itself at the forefront of cylinder supply in the first place?

Mr Wang Pingsheng, Chairman of the BTIC Board, explains all in an exclusive interview with gasworld magazine.

The early years
How and when was the company formed, tell us a little about the company’s history?

BTIC’ s predecessor is Beijing High Pressure Cylinder Factory, which was established in 1978. As time goes by, and with the steps of reform and opening-up of policy, Beijing Tianhai High Pressure Container Co., Ltd was formally founded on 10th August 1992, attracting foreign investment, and then renamed as Beijing Tianhai Industry Co., Ltd on 7th October 1993.

After ten years of rapid development, BTIC has become a group of companies with six professional cylinder production bases in Beijing, Tianjin, Shanghai, Mulin, Langfang, Daxing, and a sales and service centre (BTIC Westport). Currently BTIC has 2,500 employees with an annual output of three million cylinders between them. The annual output and sales of seamless steel gas cylinders has been ranking among the top outputs in the global industry.

In addition, BTIC now has the quality system certificates ISO 9001:2000 and ISO/TS16949. Besides these, BTIC has more than twenty international approvals, including the US DOT approval, ASME, Germany TUV approval certificate, and Canada TC approval. Today, BTIC’s products have been exported to more than 40 countries, with a great reputation as the famous Beijing brand and for well-known Chinese products.

What makes BTIC so competitive? What does BTIC bring to the China market?
I think the core competency of BTIC is the passionate and energetic management team, the executive middle management team, the well-trained workforce, the excellent corporate culture, and our continuous innovation.

The company follows the human-based management concept, establishing a strategic management system to meet the requirements of rapid development, strengthening the reservation of professional management and technical talents, improving employees’ competency structure, actively creating an environment which is conducive to talent development, and forming a Tianhai team with the perfect ability to be passionate, driven and creative, dedicated and with strong cohesion.

Another strength is our excellent corporate culture. After years of development and accumulation, BTIC established its own characteristic culture – namely the culture of ‘honesty, dedication, learning, innovation and aiming to be first class’.
Further still, continuous innovation is fundamental to BTIC’s competitive edge. This is not only the management innovation, but also technology innovation. BTIC has been dedicated to new product development, especially the high value-added products. In recent years, we have developed fully-wrapped carbon fibre-reinforced aluminium lined cylinders, LNG cylinders for vehicle use, cryogenic tanks, and much more.

At the same time, we introduce advanced technologies and processes learned from overseas to continuously improve quality. The product quality of BTIC is first-class. We sell not only the cylinder, but also the ‘safe’ responsibility, which is just as our objective states – the pursuit of perfection.

A changing marketplace
How has the global economic environment of late affected BTIC and the Chinese cylinder business?
The global recession in 2009 entailed a dramatic influence on the domestic cylinder industry and gas equipment market. The weak demand incurred a serious shortage of sales contracts, which resulted in semi-suspended production, cancelled production and even the shutdown of most cylinder companies.

In order to compete for limited marketing resources, most cylinder manufacturers have to reduce their cylinder price, which obviously caused a price war to heat-up and further exacerbated the difficulty of operations.

To face the sharp decline in market demands, BTIC persists in using two resources, stabilising the international market and seizing the Chinese government policy of ‘Expand domestic demand, stimulate the growth’ – so as to develop the domestic market. In 2009, as we saw a drop of purchase orders in the international market, we refocused our efforts on domestic market orders for various products, which was relatively adequate.

Especially the traditional industrial gas cylinder, which was around 70% in domestic market share, this allowed our company to accomplish the ‘expected’ plan.

Are there any industries or applications that have been adversely affected in particular?
Generally speaking, almost all the industries or applications have been adversely affected by the global economic downturn.

The demand of industries and applications is reduced and the output capacity is excessive. In the steel industry, the three main operators of iron mines have raised the price of iron ore, the steel manufacturer’s output capacity is larger than market demand, and the inventory is increasing. The industrial gas industry has been adversely affected too.

The adverse market conditions reduce cylinder demands significantly. But the good news is that the current global economic situation has begun to stabilise, and the cylinder market has been revived with the new demand.

What’s driving growth for BTIC? Any technologies or applications, in particular?
Continuous innovation is driving growth for BTIC. The research and development of new products plays the most important role in our growth.

We have a very professional R&D team, working on the R&D of high value-added products; in fact the sales of new products occupies up to 20% of our total sales every year.
At the same time we have also been introducing international advanced technologies and testing equipment to ensure the highest quality of our products.

Current & future
What are BTIC’s hopes for 2011 and beyond?
Well, 2010 is the last year of ‘The Eleventh Five-Year Plan’ for BTIC’s strategic planning; our target is to achieve RMB 2bn (US$300m approx.) in sales, which goes far beyond the expected RMB 1.8bn in sales.

Currently, we are working to develop the next Five-Year Plan. Our ‘Eleventh Five-Year’ strategic plan is ‘to be the world’s most innovative professional cylinder manufacturer’. According to the development of the product market in recent years, the clean energy natural gases are widely used. The gas storage and transportation industry market is growing too.

We have an extensive domestic and international sales network in this field, and also have a good network of contacts, a strong knowledge base and experience. The Tianhai brand of products have a growing reputation in the gas storage and transportation industry.

Therefore, in addition to the cylinder industry, BTIC also has a considerable development potential in the field of gas storage and transportation, such as cryogenic tanks, cryogenic tankers, and high-pressure tube trailers. BTIC has been qualified by the Chinese Government to design vehicle tanks and tank containers, in December 2009.

So the ‘Twelfth Five-Year’ strategic plan of BTIC is ‘to be the top rank of international enterprise in the world gas storage and transportation industry’ and our product category will be extended from gas cylinders to the cylinders, tanks, vehicles, field. The tank, vehicle and station market will be the new growth point for the development of BTIC.

What projects does BTIC have underway at the moment?
Depending on cylinders alone will not deliver increased success. So we continue to capture market information and actively explore the extension of the industrial chain.

For example, now we are planning to build a new special vehicle and cryogenic factory to produce high-pressure tube trailers in the Tongzhou district, in Beijing.

We are going to expand the production capacity of our current plant that produces cryogenic vessels, LNG tanks and cryogenic storage and transportation equipment.

Any other surprises up your sleeve?
We are now building-up our overseas branches and preparing to be listed on the stock market.

Which markets does BTIC aspire to enter?
We insist on a ‘both-legs walking’ policy and actively developing our presence in the international and domestic markets.

Our international sales are focusing on the US, Middle East and South-East Asia; we plan to expand our international business into Europe, Africa and South America.

Gases and equipment in China
What can you tell us about the dynamics of the China gases & equipment market?
With the rapid development of the China economy, the automobile, chemical, fire-fighting, medical treatment, petroleum, energy, metallurgy, mechanics and electronics industries have risen dramatically – which drives domestic demand.

Take the industrial gas market as an example; the growth rate in 2002 was 12%, 15% in 2005, and it is estimated that the total output value of China’s industrial gas industry will reach RMB 100bn by 2016. The growth rate is around 10% each year.

The large international gas companies are optimistic about the China gases market. Linde-BOC, Air Liquide, and Praxair and Air Products have invested in building factories in China. According to incomplete statistics, the large international gas companies have a share of 70% in the China gases market.

What will drive growth in the future?
I think natural gas will drive the growth in the future. With the continuous deterioration of the global environment, each government has taken measures to protect the environment respectively – and as a clean energy, natural gas must really be favoured.

It is reported that the apparent consumption of natural gas in China (domestic output coupled with the added import volume) is 35.14 billion m3 in the first four months in 2010, which is 22.8% higher than the same period of last year (2009). China has rich sources of natural gas and the introduction of natural gas from neighbouring countries has provided a big guarantee for the development of natural gas.

In addition, with the rapid development of the natural gas industry and cryogenic liquid gases, there is a strong opportunity for the development of the related storage and transportation equipment, such as high-pressure tube trailers, cryogenic tank trucks, LNG tanks, and other such gas stations.