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Inco follows the money east

Continued from Page 2

In Dalian, Inco has teamed up with a property developer who owns 3.5 per cent of the joint venture and has contributed locally developed technology. Inco owns the remainder, both directly or through a South Korean joint venture. Mr. Goudie says the Dalian venture should make money in its first year on $35-million in sales.

But it is not all smooth sailing. Mike O'Sullivan, project manager in the Dalian plant, says the paperwork required to serve the myriad layers of Chinese bureaucracy is 20 times greater than in Canada.

Instilling a culture of worker safety has been another huge challenge. Many of the construction workers, he says, had never tried on steel-toed boots or hard hats. They thought nothing of scrambling up a rickety ladder. The toughest thing is to get workers to see safety as a team responsibility, he says, and to look out for the mistakes of colleagues.

But the greatest danger to Dalian comes less from on-the-job perils than from rivals or even partners. One Canadian businessman with long experience in China says the key question is: What is so special about the plant's processes that Chinese producers can't perform them on their own?

The risk, he says, is that Chinese producers will study the operations and nickel battery formulations, and simply duplicate them. The banks provide easy credit for local companies, allowing them to overproduce and flood the market with low-cost substitutes. In China, the aim is not always to make money but to mercilessly drive down unit prices, the businessman says. Inco could wake up one morning to see its returns wiped out.

Inco managers don't dispute that they have to monitor the Chinese producers, and there are always fears that they will be undercut. The theft of intellectual property frightens every Western company that ventures into China, in whatever sector.

But the more Inco learns about China, the less risk it takes on in tackling anything big in the country. To launch the Dalian plant, the company pulled in members of its management team in Shanghai. It brought Mr. O'Sullivan, an experienced project manager, from its Indonesian operations, where he had spent six years.

"For anyone who hadn't worked in the Third World before, this would be a very difficult place to do business," Mr. O'Sullivan says.

But Inco can boast a corps of managers who have earned their stripes all over the world, in New Caledonia, Indonesia, Labrador and Shanghai. Many are now learning the ropes in Dalian and will be battle-ready when the next project calls, or the next hot market.

"We are nickel and we're proud of it," says Scott Hand. "We want to be the leading nickel company in all aspects, and so we have to go where the markets are."

And at this moment, that is clearly China.

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