Greg Baker/Associated Press
A cyclist rides past cooling towers at a power station on the outskirts of Beijing in this file photo.
Nothing is ever certain when doing business with China, home to the world's fastest-growing economy.
Monroeville-based Westinghouse Electric Co. learned that lesson again this month as reports emerged about a potential change in location for two of the four nuclear power plants the Chinese asked it to build during a high-profile ceremony in Beijing in December. Now it appears French rival Areva SA may build two of those reactors in the southern part of the country, near the South China Sea, while Westinghouse may be asked to build all four of its reactors along China's eastern coast instead.
Graphic: China nuclear reactor sites
The switch, if it holds, is a major victory for the French government, which controls Paris-based Areva, and it may be the result of lobbying by French President Jacques Chirac, who was in Beijing last fall, and Areva Chief Executive Officer Anne Lauvergeon, who was in China at the end of January and signed a "preliminary agreement" with the Guangdong Nuclear Power Group Co., according to the China Business News.
Westinghouse is not concerned about the potential change to the multibillion-dollar contract. Spokesman Vaughn Gilbert said the company still expects to have a four-plant agreement signed this month.
"The four contracts we signed ... in December are completely valid," he said.
As to the final location of all four plants, "that's where there is some confusion," he said. The Chinese "may switch the locations around, but we are getting four, we will build four plants. Anything that may or may not come out is in addition to the four."
The Chinese nuclear deal is expected to generate as many as 5,000 U.S. jobs for Westinghouse, many in this region, where the company already employs 3,000 and may add 2,000 -- in part on expectations of the four Chinese plants and 12 other U.S. plants -- through an expansion of its research facilities either in Monroeville or Cranberry.
A Westinghouse decision on the local research expansion could be made as early as today, when its board meets on the issue.
There has been no official confirmation from the Chinese government about the switch in locations or the addition of two more plants for Areva, which appeared to lose out to Westinghouse last December.
The cloudiness is characteristic of what it is like to negotiate with the Chinese, "who are constantly making adjustments as circumstances warrant," said Louis Schwartz, president of Squirrel Hill-based China Strategies, which advises U.S. companies on how to do business with the world's largest nation.
Other Pittsburgh-area companies have learned that lesson in the past, sometimes painfully.
PPG Industries built two Chinese glass plants in the 1980s and early 1990s for $200 million only to learn the Chinese would not allow the company to sell its glass within the country. The Fortune 500 firm eventually sold its interest in the two plants and took a $102 million charge.
"What the Chinese are doing with Westinghouse is not surprising," added another Pittsburgh-based negotiator who deals frequently with the Chinese on behalf of local companies and requested anonymity. "They are masters at playing one company vs. another and that is part of how it works."
Political concerns also could be at play here.
Trade between China and the European Union rose more than 25 percent last year, Mr. Schwartz said, and China recently overtook the United States as the Europe's No. 1 source of imports. As an emerging world power, China is just as likely to give big airplane contracts to Chicago-based Boeing as it is to European aircraft maker Airbus, which is based in Paris.
"You really have to look at the whole range of relationships that might have impacted that decision," said Mr. Schwartz, of China Strategies. "Certainly, awarding a couple of power plants to the French might do something to make French authorities more amenable to the Chinese when it comes to other issues.
"It is not unusual for the Chinese, on the large high-profile big ticket items, to spread the wealth around the globe."
The French re-emerged as the potential builder of two nuclear plants last month, according to an article in the China Business News, which is a joint venture of Shanghai Media Group, the Beijing Youth Daily and Guangzhou Daily. The article was posted Feb. 7 on a Web site called the China Power Equipment Information Net.
A Chinese nuclear power "insider" quoted by the news service said Areva had been selected for two nuclear power plants in Yangjiang, a southern Chinese city about 150 miles west of Hong Kong, near the South China Sea. The source justified the decision to select Areva by saying that Westinghouse had a "simpler and safer design," but due to a long period of successful cooperation between the French and Chinese at another nearby nuclear plant, there would be no need for a "new adjustment process" as would be the case with Westinghouse's AP1000 technology.
The same source indicated that Westinghouse now would build two plants in Sanmen, about 150 miles south of Shanghai, and another two in Haiyang, a city in China's Shandong province. "Commercial negotiations" with Westinghouse, the news service reported, began on Jan. 15. The Wall Street Journal reported yesterday that another option is for all four Westinghouse reactors to be built in Sanmen.
Regardless of what happens, Westinghouse and Areva most likely will have to face each other again in China. The country wants to build more than two dozen reactors in the next 15 years to meet a target of receiving 4 percent of the country's energy from nuclear power, up from 2.3 percent today.
Much of the country currently is powered by coal -- a cheap but dirty material that has contributed to China's widespread pollution problems.
A Westinghouse spokesman said yesterday that the company continues to talk with the Chinese every day as the two sides hammer out a final four-plant contract. Mr. Gilbert admitted there had been "indications" elsewhere that the French might win two plants but "it caused no problems here at Westinghouse. It was not something that surprised us or has any impact on the four plants."
Still, he could not confirm that a change in location had in fact been made for two of the four Westinghouse plants. "Things we are told in commercial discussions are not things we would necessarily make public," he said. If there is a change, "it is up to the Chinese to discuss."
Dan Fitzpatrick can be reached at firstname.lastname@example.org or 412-263-1752.