China Market Entry for Cement Industry

Dissertation Writing Help on International Market Entry in China by Indian Cement Industry

Project Report on International Market Entry in China by Indian Cement Industry

Case Study on International Market Entry in China by Indian Cement Industry

The primary objective of this project is to develop a marketing plan of CemPac, a suite of productivity solutions targeted at the Cement industry, for the Chinese geography. The study further dwells into  an assessment of Chinese cement market for  a productivity solution from TCS, as a whole and draw guidelines for strategy formulation.

  

TCS today is primarily a software company, but it is moving very fast to becoming a management consultancy company. They want to position themselves to various businesses and sectors as a company that can offer technology solutions demonstrating a clear value proposition to  customers in today's dynamic business environment.   There exist a lot of barriers to this transition in the developed countries because of various reasons, which includes TCS’s own past. But China as a market presents TCS with a new opportunity to showcase our potential to the world.

The study analyse the emerging trends, opportunities and challenges in the the China Cement Industry.  It provides a detailed framework relating to market entry strategies in Chinese Market.  It highlights the need for productivity solutions in cement industry and in detail bring out the gains and benefits of CemPac software suite.  Lastly critical issues like sustainable development and innovation are discussed.

  Market Sizing & Business Strategy

Market Attractiveness

China has been the worlds largest cement producer for close to two decades and hence is a very important market by virtue of its size.

q  At present there are nearly 40 plants, which top the 1Mta capacity mark. This may not match up to the average size of large plants in developed countries but still presents a big opportunity for CemPac.

q  The growth, in terms of new capacity additions, is set to continue in the near future and thus Chinese Cement Industry is going to be a prime market for all the cement industry vendors. The Chinese government is committed to increase the average size of Chinese Cement enterprises by elimination of old and small Vertical Shaft Kiln technology plants and promoting new plants with higher capacity and modern technology.

 q  Objective of CemPac is to be the product of choice in 5 of the top 10 cement combines worldwide for mill optimization.  It is ironic that none of the top 10 cement combines are of Chinese origin inspite of huge size of its industry. The reason being the history of fragmentation in Chinese Cement Industry. But already a few Chinese Cement Companies have set upon the path to emerge among the top 10 combines in the world.

q  Importance of Chinese market cannot be done justice by measuring only its size. It is also important to note that many of the top global cement combines have either entered China or have plans in the near future. Though Chinese firms have not set their eyes on expanding beyond their homeland, this may not be very far away. Hence the increasingly global nature of Chinese Cement Industry lends it a much greater importance. This applies equally well to the equipment and technology suppliers to cement industry in China.

q  The thrust on environment friendly technology, emphasis on product quality improvement and existing economic structure with extremely poor profitability are the major factors which create the right atmosphere to sell an optimisation software like CemPac.

q  Competition in optimisation solutions in China is currently at a nascent stage as the top players have entered the market only a couple of years ago.

q  The presence of other large process industries presents a secondary market, which can be tapped.

 Role in Corporate Strategy:

It has been already mentioned that for growth of TCS’s China practice it is very critical to cater to the Chinese domestic market.

q  TCS today is primarily a software company, but it is moving very fast to becoming a management consultancy company. The objective of TCS is to   position themselves to various businesses and sectors as a company that can offer them end-to-end solutions on how they can run their business better. There exist a lot of barriers to this transition in the developed countries because of various reasons, which includes TCS’s  own past. But China as a market presents  with a new opportunity to showcase to the world their potential to offer end-to-end solutions. CemPac can pave the way for the purpose.

q  CemPac can give TCS access to the hotbed of Chinese economy, its Manufacturing Sector, via the cement and other process industries. Also the cement industry itself presents lots of opportunities to cross sell other offerings of TCS

q  Construction is one of the focus areas of Chinese Government’s economic policies and hence the importance of cement industry is well established within the Government. TCS’s role in cement industry through CemPac can be a highlight of its commitment to align with the needs of the Chinese market.

q  Selling in the Chinese market is a very relationship driven process. The relations built through CemPac can be further leveraged to gain access to target clients in other sectors. Examples can be other components of the building materials industry or the construction industry.

 Productivity Gains by implementing CemPac

The scope of this decision for us is right now limited to decide, which module amongst the CemPac suite to focus on at the initial stages. The choice is automatically reduced to the three major candidates:

q  CemPac Mill Optimization Software,

q  CemPac Kiln Optimization Software, and

q  CemPac Maintenance Management because the new modules of logistics and raw mix optimization have not stabilized yet.

The cement manufacturing based on the dry process typically requires the following three unit operations

ü  Raw Mill: Grinding cum mixing of raw materials in a raw mill to produce the raw mix product which is used as a kiln feed,

ü  Kiln: Burning of raw mix in rotary kiln to produce clinker, and

ü  Cement mill: Grinding cum mixing of the clinker, gypsum and other additives to produce cement.

  CemPac^TM Process Optimization

The process optimization (PO) part of CemPac™ suit has solutions for all the three operations namely Mill Optimizer, Kiln Optimizer and Raw Mix optimizer.

  Mill optimizer

Grinding process in a cement plant is a highly energy intensive unit operation accounting for a significant portion of the total energy consumed. CemPac^TM Mill optimizer addresses the challenge of optimizing the energy consumption by keeping the product size distribution within the target range.

The model based control algorithm and all the other components of the Mill Optimizer are generic in nature and are applicable to any type of grinding circuit irrespective of the grinding unit used.

Features

Ø  Multivariable supervisory control

Ø  Handles all closed circuit grinding (ball mills, VRMs, HPRs, hybrid circuits)

Ø  Soft Sensor for product Blaine / residue

Ø  Expert system for abnormal condition handling

Ø  Full feature training simulator

Typical Benefits

Ø  1-3% improvement in throughput

Ø  About 1-3% reduction in specific energy consumption

Ø  50% reduction in variability of the product quality

Ø  Stabilized operations

 Kiln Optimizer

CemPac^TM is based on unique new Hybrid Multivariable Predictive Control technology with a Soft Sensor for Litre weight and Free Lime control. The solution can be easily and effectively used for all dry process kilns.

Features

Ø  Heuristic approach for abnormality handling

Ø  MPC approach for control & optimization

Ø  Operator friendly - requires minimal supervision

Ø  On-line product quality estimation for control (Soft sensor for free lime and litre weight)

Ø  Product built with straight line equation method

Ø  Dynamic validation using lab data

Ø  Predicted value is based on on-line data

Typical Benefits

Ø  Specific Fuel Consumption reduction in Kilns by @ 10 Kcal/Kg of Clinker

Ø  Reduction in calcination temperature and Burning Zone Temperature

Ø  Reduce operational variations due to better control

Ø  Reduction in std. dev of calcination temp by ~0.5%

Ø  Standard deviation  of litre weight reduced by ~ 2.1%

Ø  Reduction in standard deviation of under-grate pressure from by ~3%

  Raw Mix optimizer

The raw mix optimizer is based on new control strategy to continuously control the quality of the raw mix in cement plants. It is based on the gain-adaptive model based predictive control, some heuristics, and the soft sensor.

The solution can be easily and effectively used for all dry process kilns.

CemPac^TM Maintenance

The CemPac^TM Maintenance package employs the best maintenance practices to enhance equipment life and availability. It has proven itself in cement plants, both large and small. It is easily configurable and can be operated by maintenance staff with little or no knowledge of computers.

Asset Management: Attributes, such as specifications, maintenance history, bills of material, and performance of each asset can be tracked. As components of an asset are removed, refurbished and re-installed from an asset, the asset genealogy and parent/child meter readings are tracked automatically.

Asset Hierarchy: CemPac Maintenance representation of asset hierarchy in a “tree-like” structure facilitates fault analysis and cost allocation.

Workflow Management: All maintenance activities from the initiation of a work request to the closure of the work order can be done in CemPacÔ. This includes scheduling of jobs, asset inspection and problem reporting. Progress of work orders can be tracked in real time.

Shutdown Management: Shutdown activities are taken up as projects in CemPac Maintenance, wherein the user can plan activities, their associated tasks and their attributes in the system.

Shutdown Configuration: The instances of the respective tasks and inspections are created along with every instance of shutdown. Planners need not remember the shutdown activities for shut down configuration.

Why-Why Analysis: A 4 level “Why-Why” Analysis helps to identify the root causes of failure.

Kaizen Suggestion Scheme: Users can suggest improvements for the consideration of the management.

Inventory Management: Inventory information can be configured specific to its criticality, use, location, dependency and even order status and tracked dynamically. It keeps track of the history of rebuildable spare items (for example, a pump) every time it was installed, removed, or refurbished.

Auto Mailing: This add-on service provides rapid alerts about the status of the plant to all concerned at pre-configured frequencies.

Integration with External Systems: CemPac Maintenance is integrated with AutoCAD to display design documentations directly in CemPac Maintenance. Data from OPC compliant SCADA, PLC and DCS can be fed directly into CemPac.

  Factors That Lead To a Successful China Market Entry

 

1. Prepare, Prepare, Prepare: Companies must learn about the conditions for doing business in China, cross-cultural differences that affect interaction, negotiation or relationship building regardless of the entry strategy they plan to use. These factors will impact the abilities of any company to do business in China.
2. Cultural barriers and Opportunities: Companies need to understand that effective business and personal relationships (Guànxì) are the essence of success in China. These relationships must be built and they are not disposable once a contract has been won.
3. Commitment: Companies are expected to demonstrate to the Chinese that they are committed to helping develop the Chinese market in the long term. Other foreign competitors are making this commitment and are being well received by the Chinese.
4. Understanding and Adapting to Chinese Needs: Companies that adapt their marketing and sales strategies to help the Chinese meet important policy goals are more likely to be well received. Important goals include investment, producing foreign exchange, and providing technology and western management skills.
5. Aggressiveness: Companies must pro-actively pursue opportunities, relationships and contracts in China rather than waiting to be offered opportunities by the Chinese.
6. Quality People: Companies need human resources that understand China and Chinese business conditions.
7. Flexibility and Patience: Companies must understand that the Chinese way of doing business is often slower than that in the United States or most other Western countries. It takes time to build relationships, go through intermediaries, satisfy Chinese negotiators at several levels, and obtain countless approvals from several levels of government. Companies may not achieve the fast results they may hope for, but over time will obtain much more than they expected.

  Conclusion:

For a technology company, the question isn't really "should we go to China." The question is "can we afford not to go"?

Establishing a presence in China is still a challenging experience for unwary organizations, however. The problems of growing market share or succeeding in China are unique. China is not just an emerging market like any other. Its unique characteristics and the Chinese character might explain its current outstanding success, but there is no magic about this. China has to deal with the same problems as any other emerging country. The conclusion for TCS managers and strategists is: when you think about China, see not just the chances, but also the risks.

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