As the long-running saga over the sale of Suntech Power Holding’s Wuxi manufacturing unit appears to draw, slightly, closer to an end, little remains to have been said about what will happen to the fallen giant after the sale of its production arm.
In an exclusive interview with PV Tech, Shunfeng’s executive chairman Zhang Yi pays homage to the Suntech brand and reveals the scale of Sunfeng’s power project business.
What are Shunfeng’s plans after the deal is complete?
Firstly, I would like to talk about the company structure after the deal’s been completed. In the future we will still take solar power plants as our main business focus. Wuxi Suntech, one of the subsidiaries of Suntech Power, will serve as a supporting body for the development and construction of those PV plants. Therefore, we would be able to be further ahead in terms of technologies, and utilise Wuxi Suntech’s technical platform for R&D purposes, to improve the quality of our solar products and increase their efficiency. This will make our PV power plants more competitive. Our [Shunfeng’s] main purpose will remain building and operating more solar power plants. We will also be involved in the supporting equipment business accordingly, including the R&D of new technologies.
Can you provide us with an update on the deal’s progress?
We took over Wuxi Suntech, one of the subsidiaries of Suntech Power, which was already bankrupt in China, by obtaining the court’s approval.
According to our procedure, the deal won’t be complete until the extraordinary meeting of shareholders gives its approval and we pay the related amounts. Now we have got the court approval, approval from the creditors, and are in the process of gaining approval from the shareholders.
Once completed, Wuxi Suntech will become a company with zero liabilities, a solar manufacturer without any liabilities.
In the second part of December, the main shareholder of Shunfeng [property magnate Cheng Kin-ming] will put in RMB2.5 billion (US$412 million) on behalf of the listed company. In the middle of next February, after the meeting of shareholders gives consent, the company will pay back this amount. By then, Wuxi Suntech will become a member in the listed company, and seal the deal.
What are your plans for Wuxi Suntech’s manufacturing capacity?
We have made some plans for Wuxi Suntech. Firstly, we’ll use the production capability of Wuxi Suntech to support Shunfeng’s plant development and construction.
We also want to improve the quality of existing product portfolios. We are planning to use the existing facilities as a key R&D platform. We will go through the portfolio carefully, and eliminate some of the poor performers and keep the high-efficiency products. And at the same time, we will introduce more advanced technologies.
As a special mention: I’d point out that in the past, Wuxi Suntech has well established its own brand in the industry, and is a well-known international brand. Its modules have been installed in more than 80 countries. The technology advances are quite clear. We want to remain on that track and make the necessary improvements, to keep the leading place in the market.
What kind of investment will it take to do that?
Once the deal’s completed, Wuxi Suntech would be a zero-liability company, which is a rare existence in the current Chinese PV market; therefore it has quite a financing capability by itself. We only need to provide a small sum, to ramp up products’ quality and recover the normal production.
As for capacity expansion, it depends. We would go with the market research. If the products from Wuxi Suntech are good enough, we would use them; if not, we will update the production in time. We are aiming to mark our own plants as technology-leading. The focus is more on the technical reformation, not necessarily on increasing the capacity. Its existing level might well be enough. For example, we plan to accomplish 3-4GW of projects by the end of 2014, and Wuxi Suntech could be able to provide about 2.5GW of product, and for the rest we might just purchase from other manufacturers. This could serve well for the plants' construction guidance for the next year. So our main focus is to constantly improve the quality.
Will you maintain the Suntech brand?
We would mainly keep two brands in the future. Shunfeng Photovoltaic International for solar power plants, and Wuxi Suntech for solar products. We will attach to it new concepts, new meanings; eliminate the lagging technologies, keep the advanced ones, and introduce new ones. We will even introduce all new products and new management methods.
Although Wuxi Suntech has been through all the recent drama, it is still well-known in the international market, and its products are favoured in western countries. So we will keep the brand name, but also attach new values to it.
Can you elaborate on how you will develop these new meanings?
The new meanings are about several things.
The technology in the [PV] industry has evolved rapidly, with many new ones emerging. We would introduce new technologies from China, as well as from foreign markets. We will deploy these new technologies in Wuxi Suntech’s facilities for pilot application. If the new technology was found to be successful, it would be formally applied and increase our products’ efficiencies, lower the costs and improve the quality.
For the existing product portfolio, we are about to increase the investment dynamics, and improve the weak points in the portfolio.
As far as a new management team, Wuxi Suntech has a very excellent management team well known in the Chinese market. Having them could also boost our own management methods and push up the management quality.
Based on that, we would like to make Wuxi Suntech a leading-technology, quality ensured brand, and to revive its fame again internationally.
It sounds like technology improvements will be at the core of this, do you plan to do this R&D in house, acquire patents…?
That could happen in many different ways.
We are communicating closely with many international R&D bodies. If we find anything interesting and beneficial, we have Wuxi Suntech’s factories and facilities already ready, along with the engineering team and other relevant staff. We are able to merge some of the new products and technologies into Wuxi Suntech’s facility to gain more experience with them.
Many organisations are currently developing new products and technologies. They may do well in the laboratories, but still need to be validated in practice. Wuxi Suntech has an excellent platform for it.
We would of course conduct our own R&D processes at the same time as well.
You mentioned the brand has international status, will you look at markets beyond China?
In the near future, our main focus would still be within China, that is our main interest, but we are open to opportunities in the foreign market, and would pay sufficient attention to them.
Will you acquire more companies?
That’s a great question. In 2014, we will still focus on the construction and operation of the PV plants. As mentioned just now, our installation guidance for next year is around 3-4GW, which is quite a large amount. To accomplish that, we need to be focused on the power plants. But at the same time, we are not going to refuse any opportunities for introducing any new ideas, like hydropower, wind turbines, or bio-energy. But solar energy will remain as the major business.
At the same time, we are taking on the business of distributed generation. Next year, the centralised and distributed projects will be conducted together.
That is one of the main focuses. Another is to utilise Wuxi Suntech as a supporting base, an R&D centre.
Therefore, we might form three departments: one for the operations of the plants, one for the construction of the plants, and one for the manufacturing of solar products which mainly consists of Wuxi Suntech, and some existing facilities from Shunfeng. But our main focus would be solar plants’ construction and operation.
You recently connected your first project…
That 50MW project is one of ours in Gansu province. In the next 20 days or so, before the end of this year, there will be another batch of plants being connected. We have another several plants to be connected. We did a lot of preparation work early this year and had a lot of communication with local governments, National Grid, and other parties. We devoted much time to the preparation.
What’s more important is the support from the Chinese government, by publishing and announcing supportive regulations, requiring that any delays on solar and wind energy are not allowed, and allowing solar energy to be connected into the main national grid. This support from government is really helpful for us. And of course, as a commercial company, we need to reinforce the communication and liaison with the National Grid and increase the plants’ quality. We invited the National Grid to conduct tests on our plants, and after securing approval, we are allowed to connect. The connecting efficiency of this project was very satisfying; it only took two weeks from completing construction to connection.
There has been lots of talk of consolidation in the Chinese market, do you think Shunfeng could be one of the companies that that consolidation could centre around?
Shunfeng’s premier concern is to take good care of ourselves first, improving the ability of constructing and operating power plants, increasing the products’ qualities, and maintaining the advantages we gain from it. However, we would love to sit with other solar companies, with open minds, to communicate, cooperate and discuss how to increase the products’ quality.
We would really love to have better communication with other solar companies, and also other clean energy companies, to achieve bilateral benefits, but we won’t deem ourselves as the centre of gravity. We hope we could have a healthy relationship with other solar companies, including those from western countries, with an open mind, to create a better environment for clean energy.
What direction do you think the Chinese market is taking? What will it look like in a few years time?
With full support from Chinese governments, and a rapid economic development rate – the GDP growth rate is around 7-7.5% currently, which needs more energy to support it – I personally have great confidence on the future of the solar industry. The government has also given the industry a lot of support, publishing many regulations, announcing plenty of polices, all of which are very detailed and specific. I have great faith in the industry.
For the distributed generation projects, in the long term, the total installation capacity – in the industrial parks and other places – is ever growing, and is currently in the process of accumulation. I believe in the next few years, the distributed generation projects would gradually become the centre of the solar industry in China.
Translation by Huangye Jiang.