To open research and development centre in Tianjin

Suzlon Energy, India's largest wind turbine manufacturer, on Friday appointed a new Chinese CEO, part of a wider strategy to localise for a market it has, so far, found difficult to enter.

Suzlon, which has invested more than $300 million in China over the past five years, has now a 3.4 per cent market share. It has struggled to compete with bigger Chinese players, who have cornered around 80 per cent of the wind power market, and Western firms like Vestas and GE. The Suzlon Group is now ranked eighth in the fast-growing wind sector here.

Suzlon Energy Tianjin's new CEO He Yaozu, who is the first Chinese to head a foreign wind energy firm here, told The Hindu in an interview on Friday the company planned to focus on research and development and localising its services, as a strategy to expand its footprint.

“Right now, the perception in China is that Suzlon is an international company, but Suzlon China is a Chinese company, with Chinese manufacturing facilities, Chinese staff and a Chinese supply chain,” he said. “Now, the last piece is installed, a Chinese CEO.”

“Going local”, Mr. He said, was crucial in the domestic player-dominated China market. The company would position itself as a firm “with German technology, but China prices.”

Mr. He's entry comes at a tough time for foreign players in the wind energy sector here, which is the world's fastest-growing. Domestic firms' market share has steadily grown, from around 30 per cent in 2005 to above 80 per cent last year. Part of the reason is that the market has been price sensitive, with a short-term focus on expanding installed capacity.

“For Chinese companies, the cost structure is low, volumes are high and localisation is high,'' Suzlon Energy Chairman Tulsi Tanti told this correspondent during a recent visit here. "So the overall cost for them is quite low." For foreign companies, however, the cost structure was higher, in part because they followed higher quality standards.

But Mr. He said he believed the Chinese market was now maturing with an increasing emphasis on quality, against the backdrop of a shifting policy focus from rapidly increasing installed capacity to sustaining electricity generation. “If you buy a turbine that lasts you for 10 years, 25 per cent of its lifetime is under repairs,'' he said. “If you pay a little bit more, and you have a turbine with a 15-year life-cycle and 95 per cent reliability, it doesn't take a rocket scientist to figure out the economic returns.''

Suzlon plans to open a research and development centre in Tianjin, a port city near here, next year.

The company is also unveiling two product-lines to cater to the China market, Mr. He said. As part of its going local initiative, it will also launch value-added services, including providing consulting and financing support to foreign companies which are looking to set up wind farms here.

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