Xinjiang Goldwind Science and Technology Co (Goldwind) is the 2nd biggest Chinese wind turbine producer and amongst the top 5 wind turbine companies in the world. Goldwind stock has been punished alongwith other Chinese wind turbine stocks as a fierce price war in the Chinese market has led to nosediving margins and revenues. There is massive overcapacity in the Chinese wind market as there are around 100 odd producers of wind turbines with 7 out of the 15 top global wind turbine makers. Chinese Government policies have been changed to weed out the smaller inefficient wind turbine makers, however the competition still remains quite high just like the Solar Panel Industry.
Other global heavywieghts like Vestas, Gamesa ,Suzlon are facing bankruptcy concerns as the 20-30% cheaper Chinese wind turbines take a big toll. Goldwind has been trying to expand internationally by doing an IPO to raise funds and has invested heavily in the North American market like USA which is the second largest wind market in the world. Its investments has paid off as it has managed to bag 13 wind farm projects and get marquee customers like Enel Green Power. The prospect of western wind turbine producers remains bleak given the Chinese expansion in Europe and USA.
Chinese Wind Energy Dominance
The Chinese have not only captured most of the top rankings of the biggest solar panel producers in the world,they have extended their lead into Wind Energy as well.7 of the top 15 positions in Global Wind Turbine Producers are Chinese according to a new ranking.Sinovel and Goldwind have become the No.2 and No.4 rankers in the world with more than 10% global marketshare each.Dongfang is the other top Chinese wind power company with a 7% marketshare.United Power is at 10.Other top Chinese wind energy companies are Mingyang,Sewind and XEMC China.
Goldwind IPO Story
China has massively increased its wind installations to become the world’s second biggest market in 2009 . It has also managed to cultivate its local home grown industry to join the ranks of top 10 world turbine makers. Foreign dominance of China’s wind market has completely disappeared as the share had declined to 5%. Now Chinese wind equipment makers are spreading their wings outside their overcrowded home market with APower planning a massive wind farm in Texas.Both Sinovel and Goldwind which are the two largest wind equipment producers are planning IPOs to raise more capital and increase their visibility. Goldwind which was planning a HK listing since January has got regulatory approval to raise $1.5 billion in Hong Kong making it one of the biggest green offerings in the world this year .
Chinese Green Companies are being forced to look at overseas market for Profits as their Domestic Market is being ravaged by fierce price wars.Wind,Solar and even Smart Grid Companies in China compete mainly on price as technology is not the strong point for these companies.Lots of these small companies are promoted through provincial government bodies with massive capital and other subsidies.With excess capacity and little technology,there is little incentive for consolidation in the Green Industry with the attrition the only way out.Even the bigger players like Goldwind, Suntech and Jinpan are facing huge pressure from these low margin,low cost small companies in China.The fierce competition in the domestic market has forced these companies to look at foreign market to generate revenues and profits.While the solar companies have succeeded in this endeavor capturing a massive 50% global marketshare,Wind and Smart Grid companies are still struggling to expand outside their home market of China.
Wind Companies looking to Foreign Markets to Avoid Domestic Competition
Like Solar,China’s Wind Sector has seen a massive boom with China installing a huge 13 GW of Wind Capacity in 2009 which is 1/3rd of the global demand.The Wind Energy Market in China has witnessed the growth of almost 90 companies with little differentiation competing fiercely on prices.This has led to low to zero margins for most of these companies.Even bigger companies like Goldwind and Sinovel which rank amongst the top 10 global wind turbine suppliers are feeling the heat.The 2008 GFC only exacerbated this trend with even more price cuts.The wind farm operators in China like Longyuan,Huangeng have been the major beneficiaries of these price war