IN DEPTH: The Ming Yang empire
“If you’re Chinese, you can’t buy a European-sized suit — it won’t fit,” says Zhang Chuanwei with a chuckle, leaning back in his wide white armchair.
It almost seems like the affable boss of Ming Yang is telling a joke. But he is, in fact, explaining the key to his company’s success — how it set itself apart from the competition by developing turbines specifically for Chinese wind conditions and customising every machine according to each customer’s requirements.
The business model seems to be working well. Just seven years since the company’s inception, Ming Yang is the fourth-largest turbine maker in China and among the top ten biggest in the world.
And, despite some disappointing financial results in recent times, the manufacturer is still on an upward trajectory.
Indeed, the company is expecting significant international growth, with 400MW anticipated to be shipped overseas this year.
And in line with its philosophy of giving the customer what it wants, Ming Yang is now able to offer developers its own financing — a major potential advantage in the cash-strapped West.
It is in a strong position, especially when you consider that it has been only eight years since Zhang — Ming Yang’s founder, chairman and chief executive — “suddenly saw an opportunity”. In 2005, Zhang’s electrical components company, Ming Yang Electric, supplied power converters for a 1.2MW wind turbine design that Goldwind had secured from German manufacturer Vensys.
“I could see what they were doing,” he tells Recharge. “They were combining components together, assembling them, and providing engineering and maintenance services — that’s all.”
Zhang realised he could do much more than assemble components if he learned how turbines were designed.
At the time, China’s nascent turbine makers were mainly licensing European designs without securing the core technologies.
At a factory about an hour outside Zhongshan, Guangdong province — a massive facility that produces Ming Yang blades — a company spokesman credits Zhang’s dedication as key to the company’s rapid development.
As he walks past a worker spraying epoxy resin on a massive 6.5MW blade, he says: “All the other big Chinese manufacturers have seen their executives leave, but Zhang is still here.”
Back at company headquarters, a lush green campus in Zhongshan — a relatively sedate city two hours from Hong Kong by ferry — Zhang tells Recharge that Ming Yang is facing the same obstacles as all the other Chinese turbine makers.
“The Chinese wind industry grew too quickly from 2007-11,” Zhang explains, pointing to the grid congestion in northern China that has resulted in 11GW of projects being completed but unable to transmit power.
He says he foresaw the current slowdown when the company launched its initial public offering in New York in 2010, and knew then that it would cause problems for some of the country’s biggest manufacturers.
Yet Ming Yang seems to have held its own. It saw 1.5GW of its turbines installed last year — a 27% increase on 2011 — and expects to ship 2.5GW this year. This forecast comes after a disappointing second quarter in which Ming Yang posted a net loss of 87.4m yuan ($14.2m), down from a 27.5m-yuan deficit 12 months earlier. Nevertheless, Ming Yang expects to claim 10% of the Chinese market this year, up from about 8.7% in 2012. “We’re very confident about our market share, which has been increasing every year,” says Zhang.
He acknowledges that Ming Yang is slightly behind schedule, but says: “There will be no change in our target, and the third quarter will be a big season for shipments.”
Zhang says that Ming Yang’s different rotor sizes — 104-metre and 110-metre variants for its 2MW model, as well as 100-metre, 110-metre and 120-metre options for its SCD 2.5/3MW turbines — are highly suitable for lower wind speeds. The carbon-fibre blades of its SCD 2.5/3MW models should also help it snag orders for such projects, he adds.
Ming Yang has six factories throughout China, including plants in Inner Mongolia and the northern cities of Jilin and Tianjin. But its production presence in Zhongshan and the province of Yunnan could help it benefit from the southern China wind rush.
“Turbine makers based in southern and central China will benefit from that trend, and the typical example is Ming Yang,” argues Patrick Dai, an analyst at Macquarie Securities in Hong Kong.
Another potential area of growth is foreign sales. Ming Yang aims to ship 400MW of turbines overseas this year, with projects in India and Romania likely to account for the lion’s share.
“We’re actually in talks about projects in Northern and Eastern Europe,” adds Zhang, without elaborating.
In late 2012, Ming Yang signed a deal with Indian power group Reliance to jointly develop up to 2.5GW of renewables projects, including solar arrays. It shipped two 1.5MW turbines to India in the second quarter of this year.
Ming Yang is also set to supply a 150MW project in northern India in the third or fourth quarter, with discussions continuing over supplying two more projects in India this year.
Zhang visited Romania in August to investigate a potential 100-230MW project. “We should be able to make a final decision quickly,” he says, adding that construction will probably start in the fourth quarter.
A key element of Ming Yang’s global expansion strategy is the $5bn credit line it secured from China Development Bank in 2010. This, along with financing support from the Export-Import Bank of China, allows it to offer comprehensive financing solutions to developers in foreign markets.
As Zhang says: “EPC services and comprehensive financing are the main strategies for us to expand overseas.”
And with the Chinese government now actively tackling the key problems facing the wind industry, Zhang is bullish about the future.
“Over the past two years, there has been a big change; so I believe that the industry is becoming healthier in 2013,” Zhang says. “And we are determined to be a market leader.”