Bruce D. Schlueter

vice-president and China managing director, Westinghouse

A1:

In my view, rising costs are an outcome of China's endeavor to accelerate its transformation from an export-driven industrial based economy to one that is more focused on an innovation and consumption/services driven growth model. China will continue to export but would like to shift to more high value exports in order to achieve sustainable growth as part of a "new normal" economic environment.

One of the Chinese government's approaches is to encourage high-tech investment and promote cooperation in innovation. High-speed trains and nuclear power plants are specific examples of exports that China is targeting. And the nuclear energy business benefits from this initiative as it includes higher value-added manufacturing. It also aligns with Westinghouse's vision as an innovative company focused on energy.

Westinghouse Electric Company is very committed to China's nuclear market. We have over 70 years of history in the Chinese market and will continue our investment in China through the introduction of cutting-edge nuclear products and services and cooperating with Chinese companies to meet China's nuclear development objectives and to meet our Chinese customers' needs.

A2:

The nuclear power industry is influenced by the policymakers and the government's energy strategies with a relatively small group of companies as major global players. We have a global business and account for currency fluctuations in all markets that we've served. But currency fluctuations do not modify our commitment to our customers in any market.

The only linkage between the depreciation of the yuan and our business in China is when we do cross-border transactions. For me, the greatest hedge against currency fluctuations is to localize our delivery as much as possible, which is our strategy here in China.

A3:

The policies that the Chinese government has rolled out to support investments has been helpful. We have benefited directly from these policy changes with respect to one of our joint venture investments. Continued progress toward fair, consistent and transparent policies for investment, IP protection, rules and regulatory practices will improve business efficiency and competitiveness as China continues on a path of economic reform and sustainable development.

A4:

Our greatest challenge is localization and adapting to a challenging business environment that is constantly evolving as China continues to evolve. Our global strategy in Asia in general and China in particular is cooperation, collaboration and co-development.

In China, this delivery model can be through our wholly foreign owned entity in Shanghai, through one of our joint ventures or through other cooperation models. The delivery model may change depending on the product or service, but our challenge is to minimize the number of models for improved efficiency while still maintaining the flexibility required for this market.

A5:

Major Chinese nuclear energy enterprises have aspirations to compete in international markets. We understand China's emphasis on their "Go Abroad" strategy as the domestic companies turn their focus overseas to find new opportunities, with nuclear technology being one of the key components of this strategy.

The global nuclear power industry has very high standards for quality and safety, and Chinese companies must gain that reputation through continued safe operation of their domestic plants and developing internationally recognized suppliers.

Many countries want to see a licensing pedigree from regulators in countries with established nuclear programs, like the US, France and the UK, before they will agree to build a particular reactor in their country. It will be for China to continue to develop an internationally recognized nuclear program. So when they say their plant is licensed in China, it means it is equivalent to being licensed in the US, UK or France.

Over the years, there has been a lot of accumulated knowledge, learning and experience in US, France and other countries. When nuclear technologies from these countries have been introduced in China, the nuclear safety culture and quality systems have also been introduced. China's nuclear program has gained from the lessons learned from other experience countries and incorporated these lessons into their program. However, it takes times to internalize a robust internationally recognized nuclear program.