Foreign wind power firms struggle to succeed in China
Despite joint ventures with local wind power firms, overseas turbine makers have found the business environment tough on the mainland
Overseas wind turbine makers have seen their market share on the mainland shrink and two Sino-foreign joint ventures have either ended in divorce or struggled to flourish in the world's largest wind power market.
Industry executives said their troubles were partly due to aggressive capacity expansion by local firms that focused on short-term volume and market share gains at the expense of long-term, sustainable development.
"The biggest problem in the mainland market is the lack of a system [to ensure] quality development," Liu Qi, the deputy general manager of Sino-foreign joint venture Shanghai Electric Wind Energy/Siemens, said at last week's China Wind Power conference. "After a round of expansion speed and volume chasing, some producers lacking in product quality have already disappeared."
He said the mainland market could draw on the experience of developed markets, where banks and insurance firms acted as key independent parties to help ensure wind power projects delivered on their power output and revenue targets.
On the mainland, many projects were based on relations between firms and governments, he said, without being subjected to stringent economic scrutiny.
The mainland's product quality certification system also had a lot of catching up to do in terms of verifying compliance, Liu added.
New production capacity has seen turbine prices fall from over six million yuan (HK$7.6 million) per megawatt to under four million yuan in the past few years, resulting in low industry profits during 2012 and most of last year.