Global Alliances

Fortnightly Magazine - November 15 1997
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DRIVEN BY ECONOMIC GROWTH, INDUSTRIALIZATION and privatization, worldwide demand for primary energy could double by 2020 (em requiring one 500-megawatt power plant to be built every 3.5 days to meet that need. Much of this growth will occur in Asian countries, most notably China, Thailand, India, South Korea, and Indonesia. China alone is expected to increase electric generating capacity by 15,000 MW per year at a cost of about $15 billion annually.

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International players such as ABB Energy Ventures, AES Corp., Enron, and most major oil companies have already gained a foothold and valuable experience in Asian power markets. Armed with strong cash flows from domestic operations, many formerly risk-averse U.S. utilities are now seeking to join the fray and capture some profits.

Although the opportunities are vast, competition is strong. Tight margins have increased barriers for U.S. firms. One common way to enter Asian markets is through formation of alliances with established Asian companies. These alliances allow U.S. companies to enter foreign markets with the added benefits of sharing resources and reducing risk.

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