Case Studies of Australian Businesses in China
CEM International is a diversified Melbourne based firm, principally a manufacturer of cryogenic pressure vessel tankers and insulated vessels to store and transport liquefied gases. The company employs 65 people at its Coolaroo manufacturing plant, supplying 45 per cent of the Australian market for transportable liquefied gas pressure vessels.
In 1995, after researching the Chinese market and negotiating for two years, CEM International entered a 50-50 joint venture with state owned Changzhou Energy Equipment Factory in Jiangsu province. The operation manufactures static and transportable cryogenic pressure vessels and special purpose liquefied gas road tankers, mainly for the local market. The venture became profitable from the second year of operation and now is the major supplier to multinationals including Linde, Praxair, Air Liquide and BOC, as well as many Chinese gas suppliers and consumers. By 2002, the venture held approximately 15 per cent of the growing Chinese market for cryogenic pressure vessels and now is moving into the high purity gas storage sector, an important part of China's fast-growing semiconductor manufacturing industry. Due to partner financial difficulties, CEM International is now the sole owner of the Changzhou manufacturing venture.
The company learnt valuable lessons in its start up period. It undertook tough negotiations to establish the venture, had to deal with a sometimes rigid labour and bureaucratic environment and found it had to be very patient in doing business and assessing differing partner expectations. CEM International also emphasises the need for the local Australian board to strongly commit to a venture if it is to succeed in China. Despite a recent increase in the number of competitors, the company is considering expanding into export operations from its Changzhou base.
Source: CEM International, 2002.
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