Yingli keeps dream alive amid industry turbulence
Most of the streetlights in Baoding, Hebei province, are powered by solar energy. [Photos Provided to China Daily]
Though the sun seems to be setting on the global solar panel industry, it is still shining bright for the industry in the "solar city" of Baoding in Hebei province. The industry has been going through a rough patch recently after a glut of solar panels depressed prices and forced some US companies to seek bankruptcy protection. But in Baoding, the solar achievements are often equated with the resounding success of New York Stock Exchange-listed Yingli Green Energy Co Ltd.
Starting off as a small local startup in 1987, Yingli is now the second largest supplier of solar panels in the world after Suntech Power Holdings Co Ltd.
"During the 12th Five-Year Plan (2011-2015), the Baoding High and New Technology Industry Development Zone will be promoted as a destination for new energy industries, particularly solar energy companies and professionals," says Sun Jinbo, director of the administrative committee for the zone.
Established in November 1992, the new and high technology industrial development zone is one of the 56 national development zones that have been approved by the State Council, China's Cabinet.
New energy industries represented by the solar energy companies are expected to account for more than 30 percent of the zone's growth in sales and industrial output every year till 2015.
"Most of the global solar energy companies are suffering from inconsistent policy incentives," says Liang Tian, public relations manager of Yingli when asked about the state of the industry.
"However, this is not only a challenge but also an opportunity for us," he says.
Liang says the problems for the industry began after several nations decided to rejig their new energy strategies particularly for wind, solar and nuclear. Some nations also tweaked their policies for the solar energy industry in such a way that high subsidies became low subsidies while quantity-based subsidy was replaced with quality-based subsidy.
"Such policy influences will not last as demand is still robust despite the wait-and-see attitude from customers," Liang says.
Exuding confidence in the company's future plans, he says "tomorrow is getting better" is the motto for the Yingli annual client conference this year.
"We have been able to achieve considerable cost reductions this year across all value chains," Liang says. "At the same time, technological breakthroughs have also helped Yingli score over others in the highly competitive marketplace."
The company gained an edge after its in-house polysilicon manufacturing technology called Fine Silicon started commercial production in August last year with annual production capacity now at around 3,000 tons.
"When Yingli started making solar panels in 1998, there was hardly anyone who could supply solar energy cells in Baoding. The situation forced us to develop the entire value chain and it has become our advantage now," he says.
Workers at Yingli Group's photovoltaic manufacturing plant in Baoding. [Photos Provided to China Daily ]
But the global slowdown has also forced Yingli to realign its marketing strategies. The company, which was one of the sponsors for the football World Cup in South Africa last year, is not only focusing on improving its product quality but also scouting for smaller orders in the mature European markets, Liang says.
"European clients purchase our solar panels by kilowatt instead of megawatt," he says. "The market slowdown is good in the sense that it will lead to industry consolidation and realignment of market shares," he says.
At the same time Yingli is also looking at new growth avenues in emerging markets like Latin America and Africa and developing marketing strategies for brand awareness in these regions.
After introducing the first Chinese commercial display during the FIFA World Cup South Africa in 2010, Yingli has now signed an agreement to sponsor the event in Brazil in 2014 and will increase its advertisement spending.
It became the official premium partner for German soccer club FC Bayern Munchen in January this year and in June teamed up to be one of the sponsors of the US national soccer team till 2014.
The company plans to increase shipments of solar panels by 65 percent over last year to 1,750 MW, Liang says.
However, the European market will still be the main draw for Yingli, as nearly 82 percent of the company's sales came from that region last year. The US and China markets together accounted for 17 percent during the same period, says a company release.
This year, Yingli expects sales from China and the US to reach 30 percent while the European market share may fall to 65 percent.
"Baoding does not have many natural resources, but it has abundant human resources and complete industry chains," says Zhang Hui, from the administrative committee of the high and new technology industry development zone.
There are as many as 11 universities in Baoding, including the North China Electric Power University, rated the best electrical power college in China.
According to Zhang, Baoding has been an industrial base since the early 1950s, and an integrated industry cluster was always present in the city.
Zhang has been working with the industry development zone for more than six years and says that more than 60 solar energy companies now have units in the city.
"Yingli's development has brought many opportunities for smaller energy companies that focus on upstream or downstream segments of the value chain like solar energy traffic lights to flashlights," Zhang says.
Apart from the integrated industry cluster the city has also been a pioneer in China for the use of solar energy.
All the 102 main crossroads in Baoding have solar powered traffic lights that help in energy savings of over 1 million kilowatt hours every year. Most of the roads in the city are powered by solar energy with as many as 700 street lamps on 37 roads.