The Chinese are getting into mining, their arrogance and lack of ability are hindering the industry in ways you could only imagine. What they should be doing is acquiring projects then recruit and select the best talent to manage these projects based on competency and not misplaced nationalism.
They don’t know what they are doing, everyone knows that and one of the first moves they make is to get rid of the expats on the job. Whilst they believe they are superior in every way, I am enjoying watching them bumble their way through like an Inspector Cousteau clone. They do not start up greenfields projects, they purchase (usually with government assistance) existing projects, mouth off about superior management then turn the projects around. I love meetings with them, they will only trust the word of a Chinese expert (who is usually anything but) and disregard what any non-Chinese person says.
When I request the qualifications and experience of these so-called experts I find that they are nowhere as qualified or experienced as the personnel they replace. They are cheap, that is true – really, really cheap but one has to look at the value they generate for the firm on a cost per unit basis. All of a sudden, this low cost labour input may have worked in the low value added manufacturing industry. This is not replicating well in the higher technology mining business where you need to analyse outcomes based on cost v output.
Now when I say turn the projects around, I mean they turn a profitable project into a loss-making business venture. They then have two options, they either realise their mistake and rehire western expats to make the project profitable again, sell the project for a loss and there is a third option. They can close the project down and write the whole project off as a loss.
While a decent business enterprise is follow Chinese mining companies around and purchase their operations cheaply, it doesn’t necessarily work like that. They run the plant and equipment down so poorly that it isn’t worthwhile to repair, enormous capex is required, the supply chain is degraded and non-operational, supplies are wary and businesses damaged.
Community engagement, the environment, safety and sustainability issues; well, you can forget about that. This fixation with driving costs down at every opportunity is the heart of the problem. This short-term term thinking is damaging the long-term prospects of the business. Sure, all businesses must control costs but investigate the internal environment, map the value chain for efficiencies and derive a sustainable competitive advantage based on core competence. In short, learn and replicate established business practices, create a lean organisation and reduce waste.