James M. BROCK PE                       
           
 

Jim Brock is an independent advisor to the energy industry.  He advises boards and first-tier managers (those who report to boards) relative to choices in investments and the implementation of change and oversight (corporate governance) systems in ventures in the coal, oil and power industries in China.  His clients include US Fortune 500 and International Fortune 1000 companies.  He is a senior advisor to Cambridge Energy Research Associates, a leading US energy consultancy, and also advises Anglo Coal, a subsidiary of Anglo American PLC in the implementation of their Xiwan coal-to-chemicals project in the Shaanbei area of Shaanxi province.

Brock has lived and worked in China since 1992.  His experience includes four years as CEO of a joint-venture (the major investor of which was the Bank of China), five years as the chief representative of the Chinese subsidiary of a major US power company and five years as an independent advisor.  A professional engineer, prior to moving to China Brock worked in the design and construction of industrial facilities and in venture capital.

Brock is a governor of the American Chamber of Commerce China , has chaired (or co-chaired) the AmCham China Energy and Power Forum for the last eight years and is a member of the China-US Mediation Centre's (CCPIT) Panel of Neutrals.  He also represents AngloAmerican on the EU Chamber of Commerce Energy Working Group.

  
James M. BROCK ： I work with Cat Seraph chemi-energy. I prefer not to give opinion from Seraph. I will give my own opinion. You can call me as an individual, but for energy point of view, Seraph doesn't interview. Because Seraph is a public company, does mainly science work. We about publish generally. I am happy to answer any question, but I don't know my opinion works or not.
Seraph is a public company. So when they give opinions publicly, to investors, all people at one time. That is the policy of company. Public companies usually give opinions by release in writing.Your English is much better than Chinese.  I can read, but my spoken Chinese is not fluently.

Invest Beijing: I am really appreciated that you take your time for an interview. Especially in terms of economic and trade relationship, China and the United States are very close. American Chamber of Commerce has done a lot to promote economic and trade ties. The moment we came here, we saw this gate. You know the design of this door is very intimate. It is very strong Chinese style.

James M. BROCK: This door is interesting because it goes both ways. When you open this door, it opens in both ways. We always talk about Win-Win. I was in an American company and the name was Robat. I think it is a very good door for Chinese American relations. There are always two ways to the questions two ways, there are always two ways to look at the things.

Invest Beijing: so, as far as we know that you have been in China since 1992 and we can say that you are 'Lao Peng You(old friend)' to China. What about your perspective view on the relationship of China and America?

James M. BROCK: Interestingly, you have in China a large number of America living like myself. China is my home. Now, I have a difficulty an answering the question: what is happening in China? Why the energy is used in this way.  I say:  we are using energy in this way .What do you mean by we? well, I live in China. China is my home. I consider myself as part of China. I don't expect to leave China. I will stay in China until someone from the government say that you have to leave China. As many Chinese have made America their homes. I think that there are increasingly number of Americans who make China their homes. We consider we belong here. We play a part of Chinese system as when we see the United States. We look at someone who looks like a Chinese. We don't necessarily consider that he is not an American. I think people will realize that someone doesn't look like Chinese, that doesn't mean that he doesn't make China his home.I would say, there are over 2000 individual members of American Chambers of Commerce. I would say at 15% of them are considering China as their homes. They don't expect to leave. They have bought their houses here. Probably they expect to live in China for 20 years. So I think more and more Americans are thinking they are part of the society. I think China is good place to live and things are getting better and better all the time. That makes China an interesting place. For my own view, the rest of the world seems boring when I was traveling somewhere in Europe. I found it is not interesting since my third job was not related to China. I had a company in Europe, America, Africa, places outside China, but every time I look at my move to Europe and America, it is not interesting. China is interesting.

I am from Hawaii, which is interesting because 65% of people living in Hawaii are of Asian background. We went to Hawaii when you saw local people; we would say "oh, we're foreigners".

Many Chinese, many Japanese, Philipino. I look like a foreign devil there and I look like foreign devil here. I am telling that I am a real foreign devil. We speak native language in Hawaii, more than half of the population speaks two languages: Pilipino, Japanese Chinese or Hawaii. We have our own language called pigeons of mixture of many languages. There are many languages in Hawaii. If you go to Hawaii, you will find some shops speak Chinese.

Invest beijing: in my personal view, the reason for American development so fast is that the American culture is an easy to accept, to contain, easy to accept other cultures. In the history of China, we were easy to containable and accept other cultures, but during the period just before liberation, China became a country looked to other countries. But, since the opining and reform, the situation is increasingly improved. That is why we say that we share similar point of view in terms of culture and both Chinese culture and American culture are easy to contain.

James M. BROCK:There are many similarities between Chinese and American culture. Compared to Europe culture, both cultures believe that any can become senior or high by way of taking exams. In America, Abraham Lincoln studied laws by himself; even he could not afford a pencil. But he became a president. This tradition is very common in China and the United States. As compared to Europe, whatever your father was, you are committed to become. I think this is the concern of class society. The idea, in China, that family goes through 3 generation, they made money and became wealthy and then became poor. There is a cycle. We have the same understanding. I also think that American and Chinese have the same regard of people who work. Even if you have money, if you don't work or produce anything, it is considered to be a waste of your life. So, that is a strong tradition in the United States also in China. We tend to look down to those people who don't make contribution, who don't work. There are many similarities between United States and China, actually these go back a long way.United States is a country based on really revolution. From the time of American Revolution, it is a really short time by Chinese standard. Today, we have an understating if not trust big government, not trust big systems. China also has the same tradition idea that founders of dynasties are tended to become from peasants like Ming Dynasty or Han Dynasty. We believe that you rebel doesn't automatically given to right to rule. In Europe or Japan, people are classified with royal right by what you are born. I think this a big difference with what China and America share. There are many other cultures. There are many other traditions.

Invest Beijing: Would you please give us some highlights on the role of American Chamber of Commerce in promoting Sino-US economic and trade  cooperation?

James M. BROCK: we have one thousand corporate members and 2000 individuals. Our goal is to make their businesses successfully. We do this in a number of ways. One way, we try to represent views and interests of our members, to the governments of the United States and to the government of China, to facilitate the understanding of two governments, to facilitate their ability to do business in China. We do not represent Chinese enterprises to do business in the Untied States. They have their own relationships. I concern about our own member companies that are here in China. We believe that best done by applicating a fair and transparent system. So we try our best to look forward a transparency.

      We provoke Chinese government and American government to . We also facilitate interactive of our numbers to each other and so we enable them to meet each other at networking events. Also, we have a large number of programs every week. Actually we have 2-3 programs for our members. These maybe educational meetings, exposed to aplicate technological meetings, maybe meetings with Chinese government officials and American government officials. We also host people who come here from the U.S. like some CEOs who come over to China want either to meet our members or to get an access to Chinese government systems. We will arrange that. In addition, we have forum, we call it Industrial Forums. The member companies who have similar interests might meet and deal with their business. I chair the Energy Forum. We have about 130 companies which are acting in energy industry. They have their industry forum. There are forums in advertising, insurance, banking, Olympic, etc.
      We are very much member-driven organization. So we have a staff, a very small staff, organize all activities for members. For example, the forums, the companies themselves would bring up issues they want, hold meetings they want. Some of the industry forums are fairly closed, meaning that they are among themselves, and some of them might be fairly open. They would like to hold meeting of marketing. The forums are basically organized to suite the industry.

      In some cases, the forums are facilitative, meaning that primarily focus on helping their members to be more successful in business. Some forums are much more connected to networking, to facilitate people to meet, or promote their activities. We have wide range of activities. We also have relationships with Chinese industry associations. We provide, encourage our members to participate activities of other organizations.
     
      We have a large number of members who deal with mediators of China, such as CCPIT, and we have a legal group who work with the association of Chinese lawyers. And I am the mediator of Sino-U.S. business mediation committee. We often help connection with those associations. We also have relationships with other foreign chambers. We frequently hold talks with Euro pen chambers, Japanese chambers, Korean chambers of we regularly have joint events, and we also meet with other chambers. And there might be a golf tournament. Sometimes, We usually jointly meet with Chinese officials when questions might arise, like new tax laws or news comes out. When Chinese government entitles order new laws, they may come to us ask opinions from us to know the reacts of our members to see if there may be some changes or look at the impact of the standard might have.

     We have more than 1000 corporate members with more than 2000individuals. What happens is that one corporate might have more than one active person, like large corporate: Motorola. They have 10 individuals. Small companies might only have one. So we have 1000 formal members, and we have 2000 individuals who actually represent those business. It is just about every industry. We have large companies, such as Boeing, or Microsoft, very large companies we have down to one person. We have every range and size of companies. We have medical, we have advertising, we have lawyers and we have accountants, every type of manufacturing.

      We have all kinds of members. Beside Beijing, in Shanghai, Guangzhou, we are officially chamber to this country. There is 1000 companies based in Beijing. This is Beijing based chambers. It is national level in Shanghai. We have more than 2000 members in Shanghai.
  
      Resource and energy companies, we have 130 companies who are active in energy and natural resources. They would be divided equally into 3 groups, producers, for example: gas electric power, oil producers for instance, equipment providers and their consultants, such as lawyers, engineers who advice those companies. So in the energy industry, there are 3 kinds of producers-oil gas electric power, that type of things.

Invest beijing: just now, you talk about American Chamber of Commerce would give some influence a procedure of local government administration?

James M. BROCK: actually, we contact with some agencies of local government. We are doing this on both sides. We have legislation committee which deals with American government or in the Chinese government side. For example, when the monopoly law was considered, we would give a draft as the comment on how we consult the impact to our business. This is the contract law, we also had our opinion, also on taxation charge. We would like to know how that will influent the implement the contract. Sometimes, they listen to us. Sometimes, they do not. They often ask us for opinions.
    
      Also, Americans are not known for being weak. We are quite forward to our views. Every year, we produce this white paper and then we write this and give this to American government and Chinese government, expressing our concerns on what might be improved in the system. Each year, we would meet every ministries and agencies of Chinese government and exchange views. This is written by our members. This member produced document.
  
      Our forums of every industry are asked to draft one chapter, one of our forums is called "Beijing Forum", which deals with how to do business in Beijing. There is one chapter about investment, business in Beijing in particular.

Invest Beijing: can I ask your comments on Chinese authorities, laws and regulations closely related to foreign enterprise.

James M. BROCK:I have lived in China for a long time. So I may have become to Chinese. I have a lot of Chinese friends when I first moved to China. I really didn't see many foreigners. I don't find Chinese government and legislations particularly difficult to work in. I personally spent a lot of time in rural areas. I traveled more than half of the time. I find Chinese mayors, governors are easy to meet, and easy to deal with. I think all legislations have a difficult time. I think that Chinese politicians like American politicians are applicants in this. The Chinese procedure of passing laws is different from that of American. Most Americans don't understand that process. It is not transparent to them, they don't understand the rules of every ministries. They don't understand professionalism in Chinese government system. They stay there while life, when you meet a mayor, he has been in authority for a long time. In the U.S., we vote a mayor. He might be a normal citizen or an actor. He might have no experience in government at all. And so it is quite a different system. There are advantages and disadvantages of both systems. The advantage of Chinese system, off course, is the professionalism. The mayors, governors, are in fact very professional, well trained and very confident. At the same time, they have not been ordinary citizens. It has been a long time since a mayor was a farmer of a Chinese city. They don't become a mayor, they don't become a governor. I find Chinese system works very well. For the issues that we have, we concern about the changing rate of China, that how fast things will change. The difference is the balance.
          China is growing so fast. So it is difficult to control, we have to face the changes which are difficult to access. Things happen, like short of electricity power, luxury buildings. It is not easy for Americans to understand, because U.S. grows slowly. We consider that growth is rapid at 4% a year. You doubled our growth rate in 20 years. China is growing at 10% a year, that means we doubled our economy in 6 years. So it makes governing quite difficult. I think these issues will be with us in the next 10-20 years until the living standard has been much improved. China will keep growing. Then I think those difficulties will be with us for another 10-15 years. And I think that China's growth will slow down, which will be similar with that of U.S.
      It is a complicated question. I don't know how to answer.
     

Invest Beijing:  I wonder if you can provide us some data which can show American investment. It has played an important role in local economy.

James M. BROCK: I think in the beginning of the White Paper, we have some documents and materials over there. I think there are a lot of misconceptions about why foreigners come to China, and particularly American companies come to China. There are some companies who mainly produce for export, but that is for climbing number. And particularly in Beijing area, that is not the main reason for being in Beijing. Most of the foreign companies are here in Beijing to be part of economy. They represent either technology, or products they are trying to sell into Chinese market and serve Chinese market. A big example will be Boeing, you know. They are here to sell airplanes to Air China. Increasingly, they want to produce as well as import. So they do both. Motorola is a good example, they sell their products in Chinese market as well as some other markets. Increasingly, the products are designed here, built here and sold here. There are issues that arise. For example, the issues of trade balance, which I think is a big problem between U.S. and China. Because right now, our primary concern is to sustain steability. But right now, it is disbalanced. We are trying to make the balance as less as we can. I think there are two ways of doing that. One way is that for Americans to be better selling products to China. The other is to try to improve the openness of the market. That is possible to sell into China. China is going to a transition of the market economy, many elements in the economy that have not yet fully opened. So that is moving to that direction. Our members are certainly interested in that. Some of the elements that are related to that is the transparency or the openness. It is very difficult for foreign companies to work in the environment like China. The language issues, there are traditional pattern of buying are difficult. I think this is difficult for Chinese companies, as well as foreign companies. For foreign companies in particular, the issues of transparency, the walls are being tried out, that to open, that we can get an access to the market. Some issues that we are trying to work out. We have to be quite bound. I mean that honest and realistic. But you know, we have to recognize that you can always make things better. The majority of our members believe that China is the best place to do business. So it is not simply a matter of complaining. "We don't like this, we don't like that." In fact, our member, many of them say that China is one of the best places they do business. It is a good environment at the same time, it can be made better. We are always trying to improve the relationship and environment. I work in energy sector, for example, we don't have some of the problems that you may have in some other sectors. For example, IPR. IPR is a big problem in some sectors. Like medicine, food, music, movie. For example, there are fake medicines. It is a problem for everybody, whether Chinese or American companies. Food products are not what they say they are, or like baby powder problem happened in Anhui two years ago, you k now. These issues are serious. In energy business, we don't have, like gasoline. There are not much problems there. But the energy business does not open to us. Only three companies that sell gasoline, you know, PetroChina, Sinopec. So we would like to see more openness. Again, we have to be honest, most of the countries in the world are not open. So China is better than the average countries. I mean that most countries in the world are closed. So if you talk to an American energy company, they will say that "I am not going to complain. This is a better place to do business than in Nigeria, this is a better place than South Africa to do business. At the same, can it be made better than it is now? Yes! Our companies would like to be able to drill, if there is not enough oil, we could do exploration. Now we can not. We can not exploit in the area where PetroChina is. We would like to have more access. Because the answer is yes. Is there something bad? No, we simply say, it could be better, particularly in the energy area. We have our efforts in energy area, for example, when China is to protect Chinese companies. Again, in much of the world, this is true, in Europe, in South Africa, for example, there is a lot of protection for local companies. At the same time, if we are allowed to deal with projects we feel we could make contribution. So we would like it to be opened, more openness. And again, what my concern is that people not take as a complain, as a statement. I think it could be better. That will be benefit if things are more open. We have the same issues, off course, in the U.S. We work in trying to make U.S. open as well. We recognize that it is very difficult for Chinese companies to do business in the U.S. as well. They have language issues to deal with, they have patterns that have to be dealt with. But，the U.S. generally has the open society.  We do try to influence people to increase that openness.
 
Invest Beijing: You have known that this year the Chinese government has just passed the "11th Five-Year-Plan", and within the "11th Five-Year-Plan", an economic cycle which is focused on Beijing, Tianjin and Heibei Province will be formulized in next five years. Within this economic cycle, Beijing will play the key role. So, there will undoubtedly be a lot of business opportunities bringing to foreign companies. So, in your own point of view, what opportunities will be offered to American enterprises?

James M. BROCK :I think the growth of extended of Beijing Community, including Tianjin, and Hebei is a big core door. We do see this as a major force center in Chinese economy, an increasing number of our members have operations in Tianjin, as well as in Beijing. We have an active sub-chapter in Tianjin now. We have larger members, such as Motorola, who have large manufacturing facilities in Tianjin, as well as in Beijing. We think this is a growth center. Beijing, Tianjin and Hebei are the footprint, also a growth base to expand into Northeast, and also into West of. So we see activities of our members, as well as expand to the east as the central government move there. We frequently send delegations from Beijing to Tianjin, and to other areas within Northern China in particular. I think that the growth of this area is going to center on some critical industries, the growth of  oil or energy sector, because it is very important. That is the one I am most familiar with and I see a lot of activities to focused on the Bohai Bay, and a chemical plant which has moved out of Beijing and moved into Tianjin, Tangshan, and those areas. I think the balance will come from that is important. Environment is important to Beijing. A big unit of Shougang will move to suburban area. Also, infrastructure has become far more important. We now look at Beijing that everything is within 6 ring roads, but we have a much bigger urban area. I know, in year ago, people went to Tianjin really a long way, now in the morning you can go there for a meeting and come back in the afternoon. Because of the transportation system. Transportation has been improved, infrastructure has been improved. This base does have some issues, particularly water. I think another issue is the quality of urban center, preserving the architecture, preserving the styles, the identities. As I said, Beijing is my home. I don't expect to leave. Beijing is my favorite city. It is the place I am going to live. As I have said, we have a Beijing Group that is focus on quality of life in Beijing and system generally, the cultural life, the environment, schools, hospitals, the entire system.

Invest Beijing:  So, just now you have mentioned that Beijing is developing very fast during the last five years. The rapid growth and development will be a problem. The problem is the energy. Beijing is a city which is very short of energy. And what solutions should Beijing take, what measures should Beijing take in your point of view?

James M. BROCK :The primary concern of in the next 10-20 years is the issue of energy needs. as the living standard rises. The ideas of new technology are new conservation. Beijing in China generally, as a whole, doesn't use a lot of energy compared to other urban centers in the world. We actually use less per person. But, again, it doesn't mean it could not do better. As in the case of water, I think, every Beijing citizen looks around in the morning to see somebody is wasting water. I have the same problem in energy. You can places where we could save energy. We need to deal with building standard so the buildings become more efficient. We need to give control to people so they have the ability to shut off the lights when they leave their rooms. So they have the ability to control. Part of that issue is knowledge, transparency. So that you know how much water you use, how much energy you use, being able to save the energy. We are going to have a related problem. Off course, that is the transportation. Because, as the living standard arises, people become to want their own cars. We have limited space amount of space to build roads, we already have a parking problem Beijing, That you drive somewhere, finding a place to park your car is a difficulty. Even, cars to be parking is becoming a factor. You spend RMB5 to park your car for one hour, if you park your car in a longer time, the parking fees are becoming expensive very fast. I think we used to have the idea that it didn't matter because the companies will pay for the car parking. But increasingly individuals in Beijing pay for  parking fees. This becomes a cost issue. I think the fee is a conservation, we need to cut our use. We need use modern technology. There are technologies in the world which have not been used in Beijing in particular or in China generally. For example, there is a ground heating which use ground water to cool or to heat a building. These are becoming important in other places of the world. We need to consider it here. Beijing has a low percentage of solar water heating compared to some other cities in China. We have not encouraged that very much. We haven't gone for large commercial solar water heating system that is much we could have. And again, we back to the saying, we could do it better. We should have more solar water heating, we should have more solar electric, we should have more of those conservation. So I think those are opportunities for Beijing city. We also deal with some other issues like environment. If we conserve water, if we conserve energy, we could protect our environment, we could have less water pollution. I think an also a fact that in Beijing is the construction. It is interesting to see after the Olympics, the construction in Beijing continues to be as big as it has been done. We construct buildings very very fast. Lots of the construction all over the city.  One has to ask whether, I know we have buildings for Olympics. But after Olympics, when we have that low, or construction goes down. Whether should construction come back as a big force for Beijing.  Maybe, we should slow down its development a little bit. And this is the question which goes up.

Invest Beijing:  Are there any members from American Chamber of Commerce who is socialized in energy to cooperate with Beijing based firms or enterprises?

James M. BROCK :We have a lot of members who are active in cross entire energy, including renewable energy, alternative energies. I don't want to name the companies, but I do sure that some companies are active in design, as well as construction materials, as well as different kinds. Two friends are working in Beijing in this field.

Invest Beijing:  We know that you are working in Cambridge University in energy research. Are there any issues which you study are related to China. Any Chinese issues are interested by you?

James M. BROCK: Actually, I did research this issue on global level. So, most of my research is outside of China. Actually, I working in a think tank in associated with Boston Group. I happened to live here, but much of my work is else where. So I don't have these big matters.

Invest Beijing:  You used to work in west of China, that is Shanxi Province.

James M. BROCK:  I buy a number of companies in certain industries, coals, liquids, chemicals into a certain product to replace oil. I do a lot of works in Shanxi, inner Mongolia. Again because of its growth rate. Our energy is doubled very 10 years. So we have a problem in China that has a difficulty. In most countries, energy is flat, level, or tax dropping. China is doubling every 10 years. Ten years ago, China was so sufficient in oil that we didn't need import. Now we import over 40%. And that is a trading balance problem that China has to address. So we have new technology to make fuel from Chinese sources in particular. Some fuel from corns, from soybeans. China has already produced many fuels from biomass, actually more than any other country in the world. So China has used many different sources, but they cover the growth problem that other countries don't have. The other is that, it is also a great opportunity. In most countries, if you want to invent some new fuel, to sell that fuel you have to replace something else. In China, if you have a new fuel, we will have new needs. For example, we doubled number of our cars, we can have our cars to use new fuel. That doesn't exist anywhere in the world. And we don't have to replace something. So it is the advantage. Chinese government has a lot to do in this area. China is developing Di-ermie, Di-menthol, which are not used anywhere in the world. Some Chinese companies are producing those fuels. They are very clean, they have no pollution.
They are very good fuels. We have methylone. China is the largest methylone in the world. New fuels from the coal, like Shenhua project, and other projects, will produce a new diesel that is pure white, like water, no pollution. So I mean there are new fields of fuel coming from coals. So this can be in China, it can be done in other places in the world. Because, if we produce that fuel, for example in Japan, in order to sell it. You have to substitute something else, because they are not growing. But in China, we are growing. We need new fuel. We can build new system. That is the advantages we have. It is very exiting.

Invest Beijing: We are very happy to have met a real expert.

James M. BROCK: May be I not a good interviewer for how to understand AmCham, because I don't have so much work.

Invest Beijing: We would like to invite you to attend a special seminar on energy issue, in order to offer your expertise and suggestion to our government officials?

James M. BROCK:  We are open to consider of that. We are very interested in that seminar, particularly the question of investment. Because we are working in energy field, most of energy companies are very large. But we have some members of energy companies are smaller. Particularly, many energy companies have their headquarters here, but their investments are somewhere else, Shanghai, Shanxi, or other places in China. Because you don't produce energy in the city, but we do have a lot of members who are active in commercial activities, real estate, construction. They are much more active in the city. I think we probably will have a very reception in the meeting

Invest Beijing: Most of the American companies are satisfied with the investment climate in Beijing as far as you have known?

James M. BROCK:  I think generally yeas. Most of our companies would have the same question that Chinese companies would have. We have the same kind of concern on changes of tax laws. For example, specific in Beijing, the issues would be no different to the country as a whole. Beijing city government is one of the most open governments in China. They are very easy to access. But there are many changes and uncertainty. We worry about, I would say that many Chinese companies would also worry about. There are many changes, to rent an office is very expansive in Beijing. It is not cheap, especially you want to start a business. Visa issues are the same problems which American enterprise and Chinese enterprises have. If your company is not a really big company, like a big state-owned company, you will have difficulty in borrowing money from a bank. American companies will also have this problem. Many issues are coming up in  our White Paper. We believe that those problems are the same with Chinese companies as well as American companies. We raise the questions. It is common problem. The tax issue, for example, is in favor of unified system. We concern that how fast they will change the system, and how the change happens. Because for business started, either foreign enterprises or Chinese enterprises, if we start our business in a free trade zone, the tax rate will be 15%.  And they are changed to 25%. That is a sudden change. Whether a Chinese company, or American company, is going to pay 15%, all of a sudden, the tax is going to 25%. That is a hurt. So, obviously, if the government wants to decide we are going to 25%, ok, we will go to 25%. But we concern that how fast the change might happen. Whether it shouldn't be a gradual transition, so that people can make the change. If you take it all in one time, it is going to be difficult. I think that is true for any company. It does not matter whether a Chinese company or American company, we don't get hurt any less or any more.

Invest Beijing: There is something to do with the business cost in Beijing, especially for investors. As far as we know that Beijing is in making formulating laws and regulations, even "Invest Beijing" magazine will have a special focus in next issue which is related to investment cost.