CIMC ENRIC

Source: CIMC ENRIC

Back in December 2010, we pointed out that China’s industrial gas market had a value of around $3.9bn and had become the third largest market in the world.

This market is expected to continue to grow at an average growth rate of 15% and is expected to surpass Japan.

In such a large industrial gas market, transportation, the storage and distribution of liquefied gases play very important roles. With the momentum of development in China’s market, the demands for storage and distribution equipment are also growing accordingly.

China International Marine Containers Group Ltd. (CIMC), the holding company of CIMC Enric Holdings Limited, started to explore this opportunity as early as 1999.

In 2002, CIMC introduced ISO tank containers from the UK and started mass production and two years later, in 2004, acquired Zhangjiagang Sanctum Cryogenic Equipment Co. Limited (Sanctum) and marched into the cryogenic distribution and storage equipment industry.

In 2007, the company acquired Enric Energy Equipment Holdings Limited, including its four subsidiary companies, and through this acquisition CIMC Enric was provisionally born. But its current incarnation did not fully take shape until 2009.

Following that acquisition in 2007, the company entered the high-pressure storage and distribution equipment industry, and at the same time entered the field of storage and distribution equipment manufacturing, the industrial gas industry, and the natural gas industry.

From 2008 to 2009, CIMC carried out a capital integration of related businesses, injecting the group’s subsidiaries Nantong CIMC Tank Equipment Co. Ltd, Sanctum, and the European operation HOLVRIEKA into the Hong Kong listed company, Enric Energy Equipment Co., Ltd – and officially renamed it CIMC Enric Holdings Limited (CIMC Enric).

Now, as a multinational and diversified manufacturing group of storage and distribution equipment, what is CIMC Enric’s view of the China market – and what other plans does the group have? gasworld discussed a successful business strategy with Mr. GAO Xiang, Executive Director and General Manager of CIMC Enric.

Gao first introduced to gasworld the main business activities of CIMC Enric, “CIMC Enric is currently engaged in the design, manufacturing, project integration and EPC service of distribution equipment, storage equipment and process equipment for the energy, chemicals and liquid food industry.”

“CIMC Enric’s domestic subsidiary companies that are involved in the business of industrial gas equipments include Shijiazhuang Enric Gas Equipment Co. Ltd, Zhangjiagang CIMC Sanctum Cryogenic Equipment Co. Ltd, Nantong CIMC Storage Equipment Co. Ltd, and Enric (Bengbu) Compressor Co. Ltd.”

“We have manufacturing bases in cities like Shijiazhuang and Langfang of Hebei province, Bengbu in Anhui province, Jingmen in Hubei Province, Nantong and Zhangjiagang in Jiangsu province, and even Emmen and Sneek in the Netherlands, Randers in Denmark and Menen in Belgium. We have a comprehensive energy and chemical equipment product line such as industrial gas vehicles, storage tanks, gas cylinders, ISO tank containers.”

“Our high-pressure storage and distribution equipment, cryogenic storage equipment, and medium pressure storage equipment are widely used for industrial gas, compressed natural gas (CNG), liquefied natural gas (LNG), liquefied petroleum gas (LPG) and chemical materials.”

“At the same time, we can provide EPC service based on the integration of key equipment, such as hydrogen filling stations and gas filling stations (LNG/L-CNG/CNG filling stations). In addition, we also provide light hydrocarbon separation and recovery equipment and heavy hydrocarbon separation units to the energy and gas industries.”

Rapid recovery
Although we are already well into 2011, there is still much talk about the impact of the global financial crisis in 2009 on enterprise and the global economy.

From Gao’s perspective, what impact did the global crisis have, and how has the recovery been for CIMC Enric? Gao said, “The industrial gas equipment and chemical materials equipment markets suffered a greater impact in the global economic crisis. But natural gas as a clean energy is getting more and more popular in industrial production and domestic life. For years, the growth of natural gas consumption in China is higher than China’s GDP growth rate.”

“Benefiting from this, our energy equipment business in the field of natural gas has maintained a relatively strong growth. For the food and beverage equipment business, since it is closely related to the basic needs of livelihood of people, the market is stable, and therefore business is roughly in balance. In general, the total revenue of CIMC Enric in 2009 reached 3bn Yuan. With the global economic situation improved in 2010, China’s GDP maintained a high growth of approximately 10%, and the overall sales revenue of CIMC Enric in the first half of 2010 increased 23% on a half-year basis.”

“The overall business has enjoyed a rapid recovery and development. Regarding the operating income of CIMC Enric, the chemical equipment business, with industrial gas equipment as a major sector, contributed about 22%, natural gas equipment about 59%, and food equipment about 19%.”

Growth and prospects in China
In view of a market with rapid economic growth, Gao believes that the future direction of the China market is the transformation to low-emission and high environmental protection industry; in particular the LED, solar energy industry and natural gas industry will all have a rapid development.

Geographically, the economic development with the Yangtze River Delta, the Pearl River Delta, and the Bohai Sea as the bases will continue, he explains, whilst western China (with Chengdu City as the core) also poses a huge potential for market development.

The major international gas companies are seen to be developing their businesses with full swing, while China’s domestic gas companies are also growing – so it is evident that the industrial gas market is very promising.

In recent years, the industrial gases business in China has experienced rapid development. Growth of industrial gas in sectors like the traditional iron and steel industry and chemical industries, electronics, defense, medical, food, and environmental protection, and secondary exploration of energy, may even exceed the linear growth relationship with GDP growth – providing an immense driving force for the demand growth of industrial gas equipment.

Gao holds the same optimistic view about the natural gas market and offered, “As for natural gas, within the next two to three years, with the continued construction of the second West-East line and the Central Asia Line B, the number of coastal LNG receiving terminals will be increased to six from the three already in operation, and the domestic demand for natural gas transmission and distribution, storage, and transportation will reach historic heights.”

“According to market forecasts, if all the domestic LNG terminals, either completed or still in planning stage, meet the design production capacity, the import of LNG supply to China will be more than five times as in 2010. The growth of industrial gases and the extensive applications of natural gas will provide CIMC Enric with unlimited business opportunities and great development potential in the key equipment manufacturing, project integration and engineering service.”

Competitive advantages
The growth of Chinese industrial gas market is evident to all, lending itself to the rapid development of the equipment manufacturing industry. Therefore, many companies have expanded their production capacity and product lines, and many new companies are emerging.

With such competition in the market, how does CIMC Enric and its subsidiaries maintain and even enhance their competitive advantages? Gao replied confidently, “As the manufacturer of key storage and distribution equipment for industrial gas, our core competence lies in our comprehensive capability of providing total solutions for industrial gas customers which include equipment manufacturer, project integration, and EPC service.”

“CIMC Enric is now one of the very few corporations who are providing such comprehensive procurement service and systematic solutions in the world. This core competence is clearly reflected by the strategic overall corporations between us and many well-known international gas companies.”

Continuous R&D and innovation has brought infinite impetus to the development of CIMC Enric. Gao noted that over RMB100m had been invested into R&D and technical innovations. One subsidiary, Sanctum, has obtained 30 national patents and nine are under approval.

Moreover, CIMC Enric subsidiaries have been engaged in compiling several national standards for industrial gas equipment, and have also established enterprise standards for new types of products that are not yet available in the national standards.

“Of course, our extensive marketing & sales network and comprehensive after-sales service also contribute to our core competence,” Gao added.

Future prospects
Bringing a conclusion to our interview, we discuss the goals of CIMC Enric in 2011 and beyond. Gao elaborated, “CIMC Enric adheres to the development strategy of ‘Sustained External Development, Consistent Internal Optimisation’.”

“For the target markets, from a strategic perspective, we need to pay more attention to overseas regional markets, especially in emerging markets: for example, the exploration of markets in the regional markets such as Middle East and Africa for cryogenic storage and distribution equipment, and development of high-pressure storage equipment business in the North American market.”

“Our vision is to become a leader in the manufacturing of energy, chemical and food equipment and system solutions. We will continue to strengthen our capability in the manufacturing of key equipment for energy, chemical and food industry chains, project integration and engineering services, to develop our engineering services business vigorously, and to promote the transition of the company from a manufacturing company to a comprehensive manufacturing and engineering service organisation.”

“In addition, we will expedite the establishment of a global operations network and R&D platform, improve our R&D capability continuously, enhance our core competitiveness, and to realise industry chain extension through strategic measures such as independent research and development of products, forming joint ventures, cooperation, and mergers and acquisitions.”

As for the industrial gas equipment business, the development strategy of Enric, it seems, is to build a global operating platform of industrial gases. The company will continue to foster the capability of continued growth of industrial gases, and strive to be a leading manufacturer of integrated key equipment and system solutions for the global industrial gases industry in the global market.