The fight for the Chinese wind market

A lot of things are happening on the Chinese wind market these days. The largest wind turbine conference on Chinese ground so far, China Windpower 2010, opened today and at the opening session the Danish ambassador Friis Arne Petersen said that he sees a “very promising future for the industry in this country.”

Not only for the international wind turbine companies, but also to a great extent for the Chinese manufacturers such as Goldwind, Sinovel, and Dongfang. The three companies are doing so well that they last year made it into top 10 of the largest wind turbine manufacturers in the world – by almost only putting up wind turbines in China. That says a little bit about the opportunities in the large country and at the moment China is the fastest growing market for green energy.

The huge demand and proven success for Chinese wind power companies have of course drawn the attention from large international players like Vestas, Gamesa, General Electric and Suzlon and intensified the competition of the Chinese wind.

Suzlon just announced yesterday that it would raise $1.1 billion on the stock market and use the money to increase its presence in China and India because of the slow order growth in Europe. Vestas, the world’s largest wind turbine manufacturer opened an R&D center in Beijing yesterday as the first international wind power company and is in general trying to gain market shares in the attractive Chinese market.

It all sounds like China is up for a lot of green energy, but to me it also sounds like the wind power companies are aiming for an intense competition. It makes sense that they all want to explore (or exploit?) the seemingly growing market, but is the market big enough for all of them?

The Chinese wind power producers have already set new standards for how cheap a wind turbine can be in China and with the prices the international companies offer, they might be lost in price competition.

However, the cheap Chinese prices do not account for the quality of the turbine that requires them to get repaired or changed every second year or so. In the long rung the international companies have a competitive advantage in terms of quality. The big issue for those companies will then be for the Chinese costumers to start appreciating that.

Nevertheless, the Chinese wind market and the fight for its market shares will be interesting to keep an eye on the nearest future.