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Every Cloud Has a Silver Lining----Report from CHALIECO Venezuela Branch Project Department


On this July 3, Chairman of the State Council Large State-owned Enterprise Supervisory Committee, Li Zhiqun came to make an international field study in Venezuela ALCASA and VENALUM aluminum plants on capacity recovery and expansion project undertaken by CHALIECO, praising CHALIECO to Venezuela Branch’s accomplishment in value preservation and appreciation of the overseas state-owned assets. He said, in the face of serious overseas investment risk of central enterprises, CHALIECO has been a model and example in developing national industry and constructing infrastructure in relevant countries and regions. CHALIECO is envisioned to be the practitioner and performer of the Chinese Dream, providing China approach for world development.

Such praise, they deserved. Since 2012, staffs in CHALIECO Venezuela Branch do not fear the hardship and get succeeded in carrying out an assignment, and continue to practice exploration and integration of Chinese-foreign cultures, to provide a useful template for operation of Chinese enterprise overseas projects with their wisdom.

Risk Control: guarantee for completing the project

ALCASA and VENALUM electrolytic aluminum plants capacity recovery renovation project has benefitted from “China-Venezuela Large-amount & Long-term Funds” established by governments of China and Venezuela. These two electrolytic aluminum plants with a respectively capacity of 170,000 tons and 430,000 tons were established in the 1960s and 1970s and originally built by an American, and the both had the most advanced electrolytic technology in the world at that time, and later turned into a state-owned enterprise in Venezuela. The two companies ran for forty or fifty years without any technical support has long been gone to the vitality of the past: equipments are in disrepair and resource is underutilization, the whole plant is in a semi-discontinued state.

In 2012, ALCASA and VENALUM, with the support from “China-Venezuela Large-amount & Long-term Funds”, got the chance of regaining a new life. CHALIECO, sitting on the top spot of domestic aluminum industry design and construction, was entrusted with the task to shoulder this sacred mission that symbolizes the friendship between the two countries: to reinvigorate the two symbolic enterprises in Venezuela aluminum industry with China's advanced electrolytic aluminum technology and construction experience.

From the moment undertaking the project, CHALIECO as the performer of the two projects made careful arrangements and planning for performance of the project contract, selecting elite teams to build an efficient management team, and registered a branch office of CHALIECO in Venezuela. CHALIECO put forward the goal of completing the renovation project in high quality and high standard, to build the project into a sample project made by China state-owned enterprise in Venezuela.

In March 2012, a team fighting for mission and honor, flying over the ocean, traveled far and wide to Venezuela – once the most prosperous country in South America. Hu Xinwen and Fu Wenyuan were the chief and deputy “leader” of the team.

Although they have already learned about the social turmoil in Venezuela before departure, and also made an elaborate and well-prepared plan for the difficulty of the project, however, the reality is beyond their expectations. As General Manager of CHALIECO Venezuela Branch, Hu Xinwen still remembers clearly, in the first days he came here, he learnt about the project and visited field sites every day talking with local business executives, a few days of intense work and many years of project construction experience made him deeply worried: the two seemingly ordinary enterprises in fact had many complicated contradictions: as a result of wrangling among the military, political parties and labor union, corporate executives changed frequently, and the labor union organizations established in each workshop have an entanglement of interests. Even though we are the general contractor, the content and progress of the project are not determined by us. “It cannot be done.” Even it just a sudden idea, Hu Wenxin knew that, it is far from easy to complete the first directly assigned overseas engineering project of CHALIECO. And also, it's a huge challenge to make this project that embodies the state's will-power into a benchmark and a typical project.

Fighting for national honor and enterprise brand, the project team is committed to a principle: try to avoid risk. It is the guarantee for the project team to complete the project.

Blending of thinking: every cloud has a silver lining

Political environment, social environment and economic environment in Venezuela are very complicated. The problem of implementing projects in Venezuela is risk control, and the premise of risk prevention is to well-understand a series of local policies, laws and other information. The project department first understood and mastered some valuable local information before commencement of work, laying a solid foundation in every step for project success.

In November 2011 and April 2014, CHALIECO had signed project general contracts with ALCASA and VENALUM. As expected, the contract execution was ups and downs with a tortuous process.

First, project schedule, funds utilizing and renovation content are all decided by the union of each workshop, also we have to deal with the employees who are used to be "free" - no sense of time and responsibility, not to mention work efficiency. One of the most basic gas dust removal scheme proposed by us has been rejected by them; the newly debugged extrusion equipment only running for 3 days has broken down by intentionally putting in old clothes; the owner of the Venezuela party have been writing to us for many times in renegotiating and agreeing on the scope of the contract just confirmed in February 2015, after nearly 10 months of negotiation, we‘ve finally signed the contract adjustment agreement, so that the project can continuously go well.

The whole process is filled with such accidents and episodes. To ensure execution of the contract, smooth acceptance and avoid risk of delay, Hu Wenxin and Fu Wenyuan thought about all sorts of things. Now that domestic experience cannot be copied, they have to change their mind to mix with the locals, and solve problems locally.

Everything comes to him who waits. From being uneasy in the beginning to becoming methodically later, they began to adapt to the pace and work environment here, taking a different approach to different people, and standing in the other person's point of view. Therefore, the atmosphere around them then becomes this way: several Chinese staffs were surrounded by a group of Venezuelan workers to argue strongly on just grounds with each other for just a facility or a drawing.

No complaint and just an attic faith. There is only one goal in mind: reasonably use the fund and guarantee working period, to make a smooth implementation of contract, so as to better and faster recover Venezuelan industry.

Make hard things simple: breakthrough in operability

As early as in 2012, Hu Xinwen, a newcomer to Venezuela was kindly reminded by local Chinese employees: cost-recovering is just a success here.

Five years have passed, and the project team delivered a brilliant report card: as of July 2017, overall progress of the branch company ALCASA project is 93.98%, with a payment schedule of 95.28%; overall progress of VENALUM is 51%, with a payment schedule of 70.4%, basically eliminate the risk of economic loss possible to the project in any political, economic or social environmental unrest.

Their work has been fully affirmed by the Large State-owned Enterprise Supervisory Committee, Chairman Li present special recognition to them at the meeting of CHALIECO: preserving the state property in such high-risk areas without a heavy capital loss, it is a result of strengthening risk control.

In certain circumstances, when the project funds were misappropriated, it is common to find a reason to refuse to pay. A hero is nothing but a product of his time. To manage capital risk, the project team came up with a set of methods for their work: under local regulations, build a clear and reasonable contract structure that is beneficial to collection, that is, to break down a framed contract into an operable contract, and pay off each payment at each node of the project, so as to ensure safe return of funds.

Each person in the project department has a workbook in his hand, each project node and item of receipt are clearly listed, and each item, including name, quantity, unit price, total price and payment terms has been broken down; establish separate order for each job, and the payment of each item can be clear after completeness. It plays a key role in guiding the owner to clarify the payment schedule and process.

The success of international project cooperation depends on mobilizing the initiative of the owner. Therefore, the project department attaches great importance to the communication with the owner, indoctrinating the owner with the concept of interests community in collection, motivating the owner to be active in the collection process, thus to ensure accuracy and efficiency of the intermediate links to reduce repeat in processes.

Keeping warm and friendly interaction with customer is a daily essential work in project collection. The project department staffs often interact with the owner taking advantage of the convenience condition that to be adjacent to the owner's office combining local culture and habits. A birthday party or a fellowship dinner helps them eliminate strangeness and become closely like families. Fu Wenyuan, Deputy General Manager of the branch office acted as a go-between for daughter of the owner's executive officer studying in China and won their trust, and their deep friendship also became a favorite topic.

Nowadays, for the ALCASA and VENALUM aluminum plants renovation projects, one has come to an end and another has halfway done. Even the project team is in the remote South America, people remember such a team: regardless of social instability and material shortage in the alien land, and being far away from those dear ones, stick to ideals, beliefs and their responsibility with selflessness and perseverance; write honor and dream with action, watering the flowers of friendship between China and Venezuela, and become the “guardian angel” of overseas state-owned assets value preservation and appreciation.