CapGemini Discovers Billion Dollar Investment Gap in Chinese Market

Tweet

In a report released by CapGemini titled "China Electricity Market Report 2006" the Chinese government seems to have underestimated the investment needed to meet consumption demands for the next decade. This under estimated and under funded energy situation, represents a significant opportunity for domestic and foreign investors. Although China has released government targets for the diversification of energy supply, and a reduction of the country's reliance on coal, the carbon-free energy targets do not accommodate the spiraling growth of the economy. Nuclear energy, hydropower and natural gas are proposed options in the diversification of China's power needs, and reduce the country's growing dependence on coal. The flaw in China's planned energy consumption levels can be attributed to the fact that the government failed to take into account energy consumption by the individual consumer in an economy that must play catch-up to developed countries' standards of living. This, in conjunction with large-scale industrial production and demand will exceed supply during the decade 2010-2020. This provides a tremendous investment opportunity for strategic foreign investors that can provide the expertise and equipment necessary to aid China and help them transform corporate governance, gain international competitive advantage and access new technologies. The majority of the investment opportunity will be found in the areas of international manufacturers, global energy players who can secure long-term contracts, international investors willing to seize M&A opportunities, and international business consultants providing services in management, software and energy saving concepts. Although the research conducted by CapGemini points to an unlikely reduction of dependence on coal in the near future, the opportunity for energy diversification, supply and expansion of facilities must become a planned objective for China in the near future as a means to accommodate energy needs for the next decade. China's policy makers are expecting a new generation of international direct investments that combine managerial know-how and state of the art technology. Foreign industrial and engineering companies should soon benefit from the expanding Chinese market. www.big4.com