Changing China

Giant on the move

Where others won’t go

August 31, 2009

Chinese mining companies are expanding overseas because they are cost-effective and willing to work in dangerous and risky areas where others are unwilling to go, Yang Junmin, vice general
manager of Beijing Sinodrill, asserted at the Reuters China Investment Summit.

Some critics accuse Beijing of supporting corrupt regimes in Africa, the Middle East and Latin American, where Chinese companies are investing aggressively to secure access to raw materials to fuel the country’s rapid economic growth.

“If we could find an African company to do the work, nobody would need a Chinese company,” Yang said. “Africans are very impressed with the work we do there.”

“It’s a simple matter of economics,” he said, pointing out that Chinese companies are also willing to take on risks of working in countries such as Afghanistan.

Sinodrill still relies on the domestic market for 80 percent of its exploration and drilling services, but the contribution from Australia, Southeast Asia, Africa and the Americas is growing fast.

The company also has a lower cost structure than foreign companies looking to penetrate the Chinese market.

“Foreign drilling teams who come to China to work need at least one trip back to their home country every two months,” he said. “Their costs are very high.”

Photo Caption: Yang Junmin, vice-general manager of Beijing Sinodrill, speaks during the Reuters China Investment Summit. REUTERS/Christina Hu

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