Powerful surge for success

State-owned enterprises are often too preoccupied by how much money they think they are going to make with a proposed project, rather than thinking about critical management and operational details, Ren says. While that approach may work in China, its shortcomings are obvious in regions like the Middle East and North Africa.

"Egypt sits at the crossroad of two global hotspots, and we need to concentrate our limited resources on making the products that the local market needs most."

Gas-insulated switchgear substations, which are regarded as superior to switchgear that is insulated in other ways, but which are more expensive, are now XD-Egemac's signature product.

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"We make switches here and heavy transformers back in China, and have the transformers shipped here and sell them in the whole region," Ren says.

Last year XD-Egemac won tenders for three big projects in Egypt, two transformers and a gas-insulated switchgear substation, worth about $210 million.

The company says its turnover last year was 50 million Egyptian pounds ($7 million), and that it expects that to double this year.

XD-Egemac's presence in Egypt has greatly influenced the regional market, Ren says.

"Before we changed our approach, companies from Europe, Japan and South Korea dominated the switches and transformer market. We now outdo everybody on cost. Egyptian electricity operators and SOEs are able to save a lot of money in many of their projects when they buy from us."

Ren is confident about his company's future in Egypt. One reason is the country's market reforms in the energy industry.

After the government reduces subsidies for natural gas used to generate power, power prices will rise, he says, and increased profits in the industry will spur the demand for electrical transmission equipment and transformers.

"In China, the government subsidizes coal used in electricity generation. That hobbles growth in the power industry. Market reform in the power industries of both countries is not only necessary but will be of immense help to their economies."

In such conditions, the power industry stands to make bigger profits and to put existing generating equipment, a lot of which has been idle for a long time, to better use.

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