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8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 1/23
FuelCell Energy in China:
Introducing Clean Coal Energy to
the Chinas Power Generation
Written and Prepared for FuelCell Energy Inc.
United States of America
Western Connecticut State
University (WCSU)
Cardellino, Marco
Crocco, Cristiana
Guedelha, Jessica
Ly, Freddy
Nosal, Laurel
The Peoples Republic of China
SIAS International University
(SIAS)
Yang, Yang (Vicky)
Xu, Jing (Ariyo)
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 2/23
RESEARCH QUESTION
What strategic steps should FuelCell Energy,
Inc. undergo to partner with Clean Coal
Technology providers and be a part of the
solution to the Chinas energy crisis and to the
Chinas environmental situation?
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 3/23
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 4/23
FUELCELL ENERGY, INC.
MISSION STATEMENT
We are a world leader in the development
and production of stationary fuel cells for
commercial, industrial, government and
utility customers
VISION STATEMENT
We believe our fuel cells will play animportant role in helping to solve the
worlds crucial energy challenges
Fuel Cell Module
Mechanical Balance
Of Plant (MBOP)
Electrical Balance
Of Plant (EBOP)
Fuel Cell Module
Mechanical Balance
Of Plant (MBOP)
Electrical Balance
Of Plant (EBOP)
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 5/23
FUELCELL ENERGY, INC. IN CHINA - INTERNAL FOCUS
CHINAS BUSINESS PRACTICES
Unfamiliarity with negotiationtechniques
LIMITED INTERNATIONAL PRESENCE
South Korea, Japan, Germany, Canada
PRODUCT COSTS
High cost structure / No economies of scale
FINANCIAL STATUS
High dependence on external funding
for price competitiveness
Unable to achieve breakeven
WEAKNESSESSTRENGTHS
BRAND EQUITY
Strong current reputation in SouthKorea based on trust and reliability
INTELLECTUAL PROPERTY
48 Domestic patents and 84
International
PARTNERSHIPS
Reliable International partners
RESEARCH & DEVELOPMENT Technologies that expand Direct
FuelCell® (DFC®) market applications
Support next generation product
development such as planar solid oxide
fuel cell (SOFC)
TECHNOLOGY
24/7/365 Servicing & Reliability47-60% Fuel efficiency with DFC
systems
TALENT
Expertise in the technology /
maintenance
Expertise in the industry
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 6/23
KEY FOCUS
Chinas Environment with focus on energy
consumption, emissions and environmental drivers.
CHINAS ENVIRONMENT
What strategic steps should FuelCell Energy, Inc. undergo to partner with Clean
Coal Technology providers and be a part of the solution to the Chinas energy
crisis and to the Chinas environmental situation?
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 7/23
CHINAS ENVIRONMENT
( 117 %
(57
%( 234 %
Source: The US-China Business Council (www.uschina.org/statistics/economy.html), Datamonitor, Industry Profile 2009,
E.I.A. International Energy Annual 2006
8/3/2019 Fuel Cell Energy l China
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CHINAS ENVIRONMENT
Economic GrowthIndustrialization
Modernization
Pollution driving the need for Clean Energy
Government Solutions
11th Five-Year Plan
Stimulus Package ($587 Billion U.S. Dollars)
Alternative Energy (Non-efficient)
Need for Clean Coal Energy (Consumption of 3 Billion tons of
coal annually in energy production)
CHINAS KEY ENVIRONMENTAL DRIVERS
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 9/23
KEY FOCUS
A global look at energy consumption;
Segmentation of energy market in China;
and Clean Coal technology.
SEGMENTATION OF THE ENERGY MARKET
What strategic steps should FuelCell Energy, Inc. undergo to partner with Clean
Coal Technology providers and be a part of the solution to the Chinas energy
crisis and to the Chinas environmental situation?
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 10/23
SEGMENTATION OF THE ENERGY MARKET - GLOBAL
70%
20%
6%
3%
1%
0%
24%
39%
2%
25%
8%
1%
29%
35%
6%
24%
6%
1%
Coal
Oil
Hydro
Gas
Nuclear
Other Global Energy Consumption: 2009
World
US
China
8/3/2019 Fuel Cell Energy l China
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SEGMENTATION OF THE ENERGY MARKET - IN CHINA
48%
52%
China Coal Market Segmentation
2009
Industrial
Steam
Power
Generation
9%
6%
6%
4%75%
China Electricity Market Share
2008
China HuadianCorp.
China Power
Investment
Huaneng Power
International, Inc.
Datang Intern.
Power Generation
Co. Ltd.
Other
Chinas power generation relies on 70 % coal
Huaneng Power International and Datang International PowerGeneration are the major
player in Chinas coal-fired power generation (total power configuration: 15.4 TW)
KEY FACTORS
8/3/2019 Fuel Cell Energy l China
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SEGMENTATION OF THE ENERGY MARKET - CLEAN COAL
Fuel cell technology and gasification (syngas) have potential to:
Substitute turbine powered energy
Reduce emissions(sulfur, nitrogen, and mercury) in power generation sector
by extending at the same time the life-span of nonrenewable resources (coal)
Introducing The Clean Coal Power Initiative (CCPI) to Chinas government
KEY FACTORS
Fuel Cell Module
Mechanical Balance
Of Plant (MBOP)
Electrical Balance
Of Plant (EBOP)
Solid Oxide
FuelCell EnergyTechnology
8/3/2019 Fuel Cell Energy l China
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KEY FOCUS
Key players in coal - fired power plants
and reasons for collaboration.
TARGET UTILITIES
What strategic steps should FuelCell Energy, Inc. undergo to partner with Clean
Coal Technology providers and be a part of the solution to the Chinas energy
crisis and to the Chinas environmental situation?
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 14/23
TARGET UTILITIES
HuaNeng Power International¶s Power Plants
Datang International¶sPower Plants
Quantity of Power Plants in the Province
NIMTE
MAP KEY
8/3/2019 Fuel Cell Energy l China
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Business Practices
Location
Infrastructure
Mission Statement
TARGET UTILITIES
Business Practices
Location
Infrastructure
Mission Statement
Why is FuelCell Energy a good fit?
What can FuelCell Energy offer?
How can FuelCell Energy create a strategic partnership?
How will FuelCell Energy benefit?
Where will FuelCell Energy be located in China?
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 16/23
KEY FOCUS
An external focus of FuelCell Energys opportunities
and threats in Chinas market.
FUELCELL ENERGY EXTERNAL FOCUS
What strategic steps should FuelCell Energy, Inc. undergo to partner with Clean
Coal Technology providers and be a part of the solution to the Chinas energy
crisis and to the Chinas environmental situation?
8/3/2019 Fuel Cell Energy l China
http://slidepdf.com/reader/full/fuel-cell-energy-l-china 17/23
FUELCELL ENERGY, INC. IN CHINA EXTERNAL FOCUS
OPPORTUNITIES
INTELLECTUAL PROPERTY RIGHTSIntellectual property rights at risk
in the foreign market
COMPETITOR TECHNOLOGIES
Substitute products with no
emissions (solar and wind)
POLITICALREGULATIONS
Currency exchange rate (CNY
under appreciated)
Chinas government andprotectionist policies
Chinas government prioritizes
economic growth over
environmental protection
THREATS
ECONOMICGDP growth
Currency (CNY appreciated)
POLITICAL / LEGAL / REGULATORY
Renewable energy targeted for
20% of power supply
China's government stimulus
package ($586 million dollars)
BUSINESS PRACTICES
Guanxi and long-term-relationships with local government
and partners
SOCIO-CULTURAL
Strong green movement
8/3/2019 Fuel Cell Energy l China
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8/3/2019 Fuel Cell Energy l China
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STRATEGIC ISSUES/ CRITICAL SUCCESS FACTORS
SOFC is best suited for clean coal solution
R&D and New Product Applications
Limited Commercialization (R&D Contracts)
CONTRACTUAL LIMITATIONS
Cooperative relationship with NIMTE
Research and develop SOFC technology
Build relationship and value while DOE
contracts are still in progress
New Product Applications
Suggest alternative proprietary technology
SUGGESTED STRATEGY
FuelCell Energy Team Awarded $30.2 Million Contract to Further DevelopClean Coal-Based Power Plant in Phase II of Energy Department ProgramProject to build 25 kilowatt solid oxide fuel cell stack leverages success of
Phase I prototype developed in partnership with Versa Power Systems
8/3/2019 Fuel Cell Energy l China
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It is clear that Chinas patent grants continue to grow not only
domestically but also to foreign companies.
Intellectual Property Rights at risk in Chinas market
STRATEGIC ISSUES/ CRITICAL SUCCESS FACTORS
INTELLECTUAL PROPERTY RIGHT ISSUES
UNDERSTAND CURRENT TRENDS
223,860
301,632352,406
501,786
44,142 50,150 59,57680,206
0
100,000
200,000
300,000
400,000
500,000
600,000
2006 2007 2008 2009
T o t a l P a t e n t s G r a
n t e d
Grants of Patents In China
2006-2009
Domestic
Foreign
Source: SIPO Online: Grants for Three Kinds of Patents Received from Home and Abroad Years 2006-2009
8/3/2019 Fuel Cell Energy l China
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STRATEGIC ISSUES/ CRITICAL SUCCESS FACTORS
KNOW KEY OFFICES AND REGULATORS
State Administrative on Industry and
Commerce Trademark Offices (SAIC)
Regulates many areas that are key to
businesses and is home of the trade mark
office
State Intellectual Property Office (SIPO)
Home of the patent office responsible
for patent work and foreign related affairs
in the field of intellectual property
National Copyright Administration (NCA)
Home to all issues of copyrightsincluding management of foreign
copyrights management
GOVERMENTAL IP REGULATORS IN CHINA
Guanxi approach strategy with Ningbo
Institute of Material Technology and Engineering
Located in the Zhenhai District, Ningbo, China
Study in technologies including SOFC
Possibility of feasible studies that show benefits
of clean coal technology that support FuelCell
Energys products
GUANXI APPROACH
VALUE ADDED FOR BOTH PARTNERS
Ningbo can help FuelCell Energy step into Chinas
energy market
FuelCell Energy can help Ningbo study theconcept of clean coal
VALUE ADDED IN THE COMMUNITY
FuelCell Energy will become a part of the solution
to Chinas environmental situation
This value in the community will create an
incentive for Ningo officials to help FuelCell Energy
with any issues such an IP
ADVANTAGES OF GUANXI
8/3/2019 Fuel Cell Energy l China
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Interpersonal
Harmony
Endurance
Pride, Face
Thrift, Saving
Interpersonal
Holistic Thinking
Social Status
Personal Connection
Middle Man
CULTURAL TRAINING
Guanxi approach
Define boundaries
Understand Cultural business values
Manage each impression
UNDERSTAND YOUR PARTNERS
Choose appropriate partners
Huaneng Power International Inc.
Datang International Power Gen. Ltd.
Ministry of Environmental Protection
Create a relationship value
Cultural relationship building practices
Strategic partnership
Partnership maintenance
STRATEGIC ISSUES CRITICAL SUCCESS FACTORS
BUSINESS PRACTICES IN CHINAS CULTURE
SUGGESTED STRATEGY
GUANXI
ZHONG JIAN REN
SHEHUI DENGJI
RENJI HEXIE
ZHENGTI GUANNIAN
JIEJIAN
MIANZI
CHIKU NAILAO
8/3/2019 Fuel Cell Energy l China
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CHINAS ENVIRONMENT
STRATEGIC ISSUES / CSFSEGMENTATION OF THE ENERGY MARKET
Understand key strategic issues
Understand significant obstacles
Understand critical success factors
FUELCELL ENERGY
Understand FuelCell EnergysStrengths and weaknesses in
Chinas market
Understand the coal consumptionin China and how it affects the
environment
Understand how this creates a
need for the DFC and SOFC systems
and clean coal technology
Understand why the China Huaneng and
Datang Group will be key strategicpartnerships for FuelCell Energy
Understand the potential of clean coal in
China
Understand Chinas coal fired power plant
needs for DFC and SOFC systems
It is highly suggested that FuelCell Energy begin with:
(1) Implementing cultural training, (2) Developing
Guanxi relationship with Ningbo Institute.
RECOMMENDATION
RECOMMENDATIONS