Fuld War Game 2010: The Battle for China's Smart Grid (Event Overview)

Strategic intelligence firm, Fuld & Company, runs 6th Annual National War Game and offers predictions on China's Smart Grid

The Annual Strategy War Game National Championship, "The Battle for China's Smart Grid," was organized by Fuld & Company on April 28, 2010 in Cambridge, Massachusetts. IBM, Siemens, GE Energy and Cisco were represented by business students from Northwestern's Kellogg Graduate School of Management, MIT Sloan School of Management, University of Pennsylvania's Wharton School, and Yale School of Management. Most of the students have worked in energy, technology and/or in China. Last year, the War Game was on "The Battle for Healthcare Information". Fuld's public War Games have made successful marketplace predictions each year.

With 30-plus executives from energy and technology giants GE, IBM, Siemens, Hewlett-Packard and others looking on, four leading business schools yesterday participated in a war game to stress test the global strategies of these firms in competing for China's $100 billion Smart Grid — only to encounter obstacles that had nothing to do with their companies' technological prowess and everything to do with how they work with and within China.

Through rapid-fire arguments, interrogation by an expert panel of judges, as well as questions from the corporate observers, "The Battle for China's Smart Grid" War Game revealed many obstacles that many observers admitted that their companies must acknowledge and overcome if they are to win a piece of the $10 billion-per-year funding China has offered. These predictions included: 1) To fully take advantage of the emerging opportunities regarding the "smart grid" in China, Western companies, such as GE Energy, Siemens and Cisco, may have to sell a stake in their business. 2) Western companies need China to take on the world. 3) Standards setting and the capability to manage the buildout process represented by companies such as IBM may trump China-legacy firms such as GE and Siemens, selling technology and hardware into the Smart Grid.

The other elephants in this Smart Grid room identified by the judges and the teams playing out their roles included China's concern about its own security in preventing others hacking the country's system, as it hires Western firms who have the technological prowess to build out the Smart Grid. Another elephant that Western companies have underestimated is capacity. The grid needs to add enormous transmission capacity at the breakneck pace China will demand. China's acceptance or nonparticipation in carbon pricing will also speed or slow down the expansion of the power grid.

"With a potential annual value of approximately US$20 billion over the next five years, the onset of the Smart Grid initiative in the PRC represents one of the largest, most strategically important global business opportunities for the coming decades," commented Denis Simon, professor of International Affairs at the School of International Affairs, Penn State University and senior China advisor to Fuld & Company. "Not only will the Smart Grid project define a potentially new, transformational economic trajectory for China in the energy field, but it also may serve as a catalyst for changing the rules of the road in terms of the way firms compete and cooperate across the global commercial landscape."

All four teams worked hard to identify how the firms they represented in the War Game could add enough value to the Smart Grid initiative in China to earn profits for their companies. They recognized the need to enter into strong partnerships with Chinese and potentially other Western firms in order to bring a successful package of products and/or services to the table.

For more information on this war game or about Fuld & Company, please visit www.fuld.com.

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