After working for some of the world’s largest projects for over 20 years, there isn’t much that Patrick Tai, Finance Director at CNOOC and Shell Petrochemicals Company Limited (CSPC), hasn’t seen or done where finance is concerned. Here he outlines the factors that have led to his success and explains how he plans to take CSPC’s finance department into the future.
CNOOC and Shell Petrochemicals Company Limited (CSPC) was established in late 2000 as a 50:50 joint venture between Royal Dutch Shell Group and its Chinese partner, CNOOC. It has built and now operates a world-scale petrochemical complex in the Daya Bay Economic and Technological Development Zone, Huizhou, Guangdong Province.
There isn’t much that Patrick Tai, Finance Director at CNOOC and Shell Petrochemicals Company Limited (CSPC), hasn’t seen or done in over 20 years of working in finance for some of the world’s largest projects ran by petrochemical companies. Throughout his career, Tai has worked in a variety of roles at different stages of the business cycle, gaining a complete view of the impact finance has on an organisation.
However, Tai notes that one experience he was lacking until recently was the opportunity to work in the start-up phase of a company where the focus is on vision, change management and laying the foundations of future success. The “golden opportunity” to work in this environment came in 2015 when CNOOC and Shell announced an expansion of its already sizeable joint venture in China. This saw CSPC’s plant in Guangdong Province double in size, making it the biggest single site ethylene cracker in Asia. It will also become the largest petrochemical facility within Shell group.
Because of the expansion, Tai’s job changed overnight. He explains that prior to the announcement he had been managing the ongoing operations of a stable business, “keeping it ticking over”. Then, almost straight away, the focus was on sourcing new funding and reviewing all of the existing processes in finance. “It was like working for a completely new company,” he says.
This gear change could not have come at a better time for Tai, who was seeking a new challenge. “After hearing everything that was required to deliver the project I was happy to stay after being asked by Shell to continue working as Finance Director as CSPC,” he says.
Today, Tai is a crucial member of staff at CSPC, leading the six divisions – Treasury, Financial Control, Corporate Planning and Budgeting, Contracting and Procurement, Taxation, and Internal Audit – and 80 staff that constitute the finance function. More than just a “finance guy”, Tai is also part of CSPC’s overall management team, overseeing company strategy, operations and corporate governance.
Tai notes that whilst such a wide scope of responsibilities is rewarding, it does bring its challenges, most notably finding enough hours in the day to do everything. To overcome this, Tai has worked hard to build a finance team that is more than capable of handling the day-to-day operations, headed by highly competent managers who run the six divisions.
With the routine operations under control, Tai can spend most of his time looking at the bigger picture and driving the strategic direction of the finance function. “Currently, I am working out how we can upgrade and expand the usage our ERP system to improve workflow across the organisation,” he says. “Other big areas of focus include streamlining our procurement processes and building a robust credit management framework so that we can facilitate commercial efforts in selling to new customers while keeping the risk at bay once the expansion of the plant is completed.”
Tai is also aware that CSPC’s expansion gives him a unique opportunity to review the overall impact that finance has on the organisation. Reflecting his belief that finance should be an enabler of business, rather than an inhibitor, Tai is looking to remove certain control points in such a way as to allow the business to operate more efficiently without taking on additional risk. “This is a way that finance can add genuine value to the business and be an enabler of business growth, rather than just a gate keeper,” he says.
Tai’s management philosophy has been tightly honed over a career spanning more than 20 years. He started his career in Hopewell Holdings Limited which was the pioneer in China’s infrastructure projects. Then Tai moved to the Project Finance desk at ANZ in Hong Kong and Singapore. In this role, Tai was largely responsible for the execution and origination of advisory, with a primary focus on China.
The China project development exposure and his banking experience saw Tai gain a reputation as a structured finance guru. As a result, Shell approached him for a short-term project in 2001 that would see him lead the finance team in its negotiations with banks in China. The award winning landmark deal was the largest private sector financing in Asia. As is often the way, one opportunity led to another and 18 months later Tai was still with Shell, working in Beijing and then London as a Senior Advisor in the global M&A and Financing team.
In 2005, Tai moved back to Hong Kong, managing the group’s M&A and portfolio projects in the region as Shell’s Asia Downstream Portfolio General Manager. “I enjoyed this business role,” says Tai. “While my previous finance roles tend to provide finance advice, in this role I worked with teams of in-house experts from across the organisation and I was fully accountable for the success or failure of a particular deal.” It was at this stage that Tai began to take a keen interest in areas of the business beyond finance, realising that this could offer him the chance to continue his climb up the career ladder.
“Whilst I was working in treasury, I looked for opportunities to participate in several cross-functional projects unrelated to finance, like people strategy. The management committees were pleasantly surprised to see ‘finance people’ taking an enterprise-first mind set to deliver value to the business as a whole, not just to one department.”
This desire to learn about the business was one of the catalysts for assuming the corporate treasury role for CSPC in 2008. “Having been largely focused on transactions my whole career, the move to treasury was appealing because it gave me the opportunity to see the real business and the impact I was having on the bottom line,” he explains.
However, before Tai could learn more about the business, there was a more pressing matter – managing the impact of the global financial crisis. “Petrochemicals was badly impacted by the crisis,” he says. “I was barely in the treasury role before I was having to put together a finance response plan and negotiate with banks on various financing and refinancing efforts to guide CSPC through the turbulent days. It was an interesting introduction to the world of corporate treasury!”
Tai has fond memories of his time working in corporate treasury, especially because it went beyond day-to-day cash management and exposed him to areas such as insurance and risk management. This, Tai believes, helped him make the step up to Finance Director. “Any role in finance requires strong fundamentals,” he says. “However, to be considered for those strategic finance roles you have to think beyond your departmental boundaries and transcend the business.
“Whilst I was working in treasury, I looked for opportunities to participate in several cross-functional projects unrelated to finance, like people strategy,” he says. “The management committees were pleasantly surprised to see ‘finance people’ taking an enterprise-first mind set to deliver value to the business as a whole, not just to one department.”
Tai believes this is not always second nature for corporate treasurers – especially when they have a lot of work to do in their own departments. He therefore encourages treasury professionals who wish to become Finance Director or CFO to put their head above the parapet and stretch beyond their comfort zones.
Whilst Tai has become a bit of a financial all-rounder, his speciality is fundraising. This is exemplified by the work that he began as treasurer and has since carried on as Finance Director in partnership with the new treasurer. Tai led a small core team to close a non-recourse project finance deal within record speed of four months from RFP to signing – most notably the deal was concluded without any external financial advisor. This work has not only seen CSPC achieve the most competitive commercial terms amongst any corporate in China, but has also seen it receive external recognition, in the form of an Adam Smith Award from Treasury Today Asia in 2016.
Tai explains that CSPC’s exceptional operational record has helped finance achieve these results because it “makes the company a desirable investment opportunity for the banks”. He also stresses that treasury must be pragmatic and create optionality by diversifying funding sources. “It would be very risky for us to rely on one tranche of funding,” he says. “We have therefore worked hard to make sure that we have several competitively priced debt facilities at our fingertips when we need them.”
This is an ongoing job for the finance team. “One issue that I see many companies have is that they only focus on debt when they need it,” Tai adds. “We work on this even when times are good so that we can call on it when we need to.”
This work has proved especially crucial in recent years as China undergoes its great shift from a manufacturing hub to a consumer and service-based economy. “This has created a lot of volatility in the market,” says Tai. “As a result, some tranches of funding have dried up or become costly. This hasn’t been an issue for us, however, because of the work that we have put in over the past eight years to diversify our funding sources.”
For a company as capital thirsty as CSPC, the cost of borrowing can be the difference between boom and bust – so Tai is not complacent. “We continue to benchmark ourselves against our peers to ensure we are staying competitive,” he says. “Internally, there is also still plenty of room to optimise and ensure that we are getting value for every dollar.”
Tai’s desire to get value for every dollar extends to his views on how finance teams should adopt technology. Indeed, with so much activity happening in the market, he feels that it can be easy to adopt technology that does not necessarily fit the business. “We are not overly adventurous in our use of financial technology,” he says.
That said, Tai notes that in 2018 he wants to begin to learn more about the growing fintech ecosystem and join communities so that he can keep track of the latest developments. “We are probably never going to be first movers,” he says. “We will only try something once it has been proven, otherwise it might do more harm than good. I am conscious, though, that this is the direction the industry is moving. It is therefore the job of a good Finance Director to stay abreast of these trends and ensure the business doesn’t get left behind.”
In the short term, Tai expects that the use of more technology will give CSPC the chance to make better use of its workforce. “If we can free our staff up from having manual processes, then they will be able to focus on more value-adding, strategic work,” says Tai.
With the expansion of the CSPC plant nearly complete – it is on course to be fully operational later this year – Tai has reached a critical juncture in his tenure as Finance Director. “It is now time to work with the management committee to shape the vision of the company for the coming years,” he says. “We must keep our eyes firmly on the future and push forward to achieve our vision of becoming the best petrochemical plant in China.”
It is a job that Tai is excited to see through. Still passionate about working in finance, he is also invigorated by the work/life balance that he has built. “My current role doesn’t require much travel or late-night calls,” he says. “I can therefore focus my mind when I am in the office and work with my teams face-to-face and get things done.”
Outside of the office, Tai dedicates one day a week to playing golf. “Spending time in the open is the best way to achieve peace of mind and forget the rather less-peaceful petrochemical plant in Guangdong where I spend the rest of my time,” he jokes.