China Sunergy released the 1Q13 financial report on July 1st, 2013. The overall net sales turned out to be better compared with last quarter. Shipments totaled 102.5MW, a 30.7% increase in contrast to previous quarter. The gross margin also increased from -3.7% in 4Q12 to 0.4%. EnergyTrend, a research division of TrendForce, had the pleasure to interview China Sunergy’s global business development and marketing VP, Jonathan Pickering. In the interview, Mr. Pickering talked about the company’s strategy and product development for the future.
CSUN global business development and marketing VP, Jonathan Pickering (Left) and EnergyTrend Analyst, Jason Huang (Right)
Increasing Global Presence, Building new factories in Turkey
Fascinated by Turkey’s sunny weather, strategic location, and the extra bonus that will be given out if using the modules that are made-in-Turkey (due to the recently established feed-in tariff), CSUN chose to build new factories in Turkey. CSUN’s Turkey facility officially went into production in May, 2013. With the Turkey facility being the company's second largest production base, they now have a total capacity of 100MW in PV cells and 300MW in modules. Meanwhile, the capacity for PV cells and modules in China remain 470MW and 800MW, respectively. Mr. Pickering pointed out that they have started working on the turkey plant since mid-2012, which’s before Europe’s anti-dumping investigation on the solar products that are made-in-China. He believed that the whole trade disputes can go on for years as other countries in the region may take different actions, not to mention energy is something that’s usually strictly controlled by the government. Therefore, in order to better understand how the government functioned and how the industry worked in Turkey, CSUN chose to form a close partnership with local Turkish company, Seul Energy. While Seul Energy had a minority shareholding in CSUN’s factory, CSUN had a minority shareholding in Seul Energy’s development.
Three scenarios of project development
Mr. Pickering particularly mentioned that one sector of the industry which has to be localized is the project development sector. So far, CSUN’s project development can be divided into three scenarios: 1) Some regions will only provide modules. 2) Some regions will focus on developing partnership with local project developers. For example, through joint venture with local companies in Turkey, it can help CSUN navigate and develop projects regionally. 3) Some regions will choose to develop their own projects. For example, the 22MW “golden sun” project in China will be completed by the end of August and they’ve just signed another 40MW project in Xinjiang. In addition, CSUN has held a 10MW project development in UK since 2012, with 5MW completing grid-connected by the end of this March while the other 5MW still going through paperwork process. Although a developing project is likely to bring higher gross margin to a company, it will require larger amount of investment and can be quite risky as there may be environmental or legal issues throughout the process and thus may interfere the project. According to Mr. Pickering, in order to minimize the risk, CSUN will take a conservative approach to pick a market that they think is safe and that they are familiar with. Moreover, they will carefully select the local partnerships and develop a network in terms of banking and business relationships.
Different strategies intended for different regions
While Europe continued to be the head in terms of demand, Mr. Pickering indicated that they will shift their focus toward the emerging markets in Asia, such as Japan, China, and India in 2013 as Asia has quickly gained initial revenue contribution with a strong demand coming from these three regions. CSUN will continue their geographic diversification and use different strategies to develop the projects according to different regions. For example, they will mainly develop their power plants through working with the energy groups, such as CEEG in China. In Japan, more profit can be gained by working with the local project developers. And in India, there will be mostly large-scale projects in the second half of 2013. Furthermore, they’ve seen some opportunities in Thailand, thus it might be another region for them to explore in the near future.
Present Targets and Goals
“In order to be successful, CSUN has to become not just a Chinese manufacturer but a global company which has a more diverse approach,” said Mr. Pickering. Hence, apart from geographic diversification, they have also been making effort to improve their brand image to make CSUN a global brand. CSUN’s logo color has changed from the original green and yellow to blue and orange. Their slogan even switched from “Energy for the future” to “Energy for today,” representing that PV has become one of the most important renewable resources nowadays. In addition, by working with CSUN’s global team, they can stay competitive in the global market.
EnergyTrend’s point of view:
Although the road for China Sunergy has been quite bumpy, they will continue to work towards global development because they are determined to transform from a Chinese manufacturer to a global company. By coming up with different business models based on different regions, expanding to the emerging markets, and improving their brand image, the road for them to walk towards globalization seems not far away.