Sky is the limit

Updated: 2011-06-03 11:18

By Fu Jing (China Daily European Weekly)

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Chinese tycoon conjures up green dreams in Europe with solar panels

Sky is the limit
Ni Kailu is glad to see his photovoltaic products at a solar power farm in Germany, his first major step into the European market. Provided to China Daily

Soaring high in the skies in a helicopter over a massive photovoltaic (PV) farm in suburban Berlin, Ni Kailu, the 55-year-old solar tycoon from China, says his European business is on the threshold of a takeoff.

Located in a wasteland 40 kilometers outside Berlin, the 75-hectare Ahrensfelde Solar Plant is capable of generating 24 megawatts of power. But more importantly, Shanghai Chaori Solar Energy Science and Technology, a company owned by Ni, has supplied all the solar panels for the plant at an estimated cost of around 350 million yuan (37 million euros).

"This is our biggest overseas order," Ni says. The plant, which started to generate electricity since the beginning of this year, is among the top 10 solar farms in Germany, the world's biggest solar market so far.

Like a proud parent, Ni also beams with pride when he talks of the trust that the Shenzhen-listed Chaori gained after successfully teaming up with Damm Solarproject, an import company based in Kaiserslautern, southwestern Germany.

"Building the plant and achieving the deadlines was akin to running a relay race," says Andreas Damm, owner of the German company.

Damm says that the German government is planning to reduce feed-in subsidies for solar farms built this year.

To make more profits from solar project construction, companies have no choice but to finish the project within the stipulated time, which was in this case Dec 31, 2010. "Before or after that day, the feed-in tariff is different," Damm says.

After negotiations with Ni's team, who agreed to work full time to produce the panels, Damm and the plant owner started the project on Oct 1. "The trust we achieved then has helped us turn a wasteland into a solar farm within three months," Damm says. "It was truly a miracle."

Though he made the first solar strides in 2003, Ni is a latecomer in Germany, which plans to increase solar power capacity to at least 10 percent of the total power mix and also cut power costs by half at the same time. With more than half of the German PV market being supplied by Chinese companies, industry giants including Suntech Power, Yingli Group and Trina Solar have already gained considerable market share in Germany.

"But we believe the potential is still there if we have the proper market approach and sharpen our core competitiveness," Ni says.

According to Ni, the biggest gain from the 37-million-euro deal is recognition from German banks. "We are on German banks' list of PV exporters, which is a rare honor," Ni says. "This helps us get easier access to loans."

Ni says his company has already started promotional campaigns in Germany. Starting July 1, Chaori will sponsor FC Schalke 04, a leading football club in Germany and the signing ceremony for the sponsorship will be held during the Intersolar Exhibition in Munich this month. "We will invest more to boost our image in Germany as it is our biggest overseas market so far," he says.

Though Chaori has only a 2 percent market share in Germany now, Ni expresses confidence that he would be able to increase it to 5 percent in the next two years.

Apart from Germany, Ni is also planning to expand into other European nations such as Italy, Britain, France, Belgium and Bulgaria.

Japan is another potential market that the company will consider seriously, especially after the recent nuclear plant disaster. Market penetration efforts are under way and a breakthrough is likely to be achieved next year, Ni says.

"It is difficult to enter the Japanese market but we are confident that once we succeed, our business partner will help us become the largest PV exporter to Japan," says Ni without revealing who the partner is.

That, however, does not mean that the company is totally ignoring the huge US market. Ni says his company will not only sell PV panels but also invest in building solar farms in the US.

As a farmer-turned-tycoon who had just eight years of schooling during childhood, Ni used to work as the village team leader and as the head of an agricultural seeds company in Shanghai's Fengxian district, where he was born.

He started a trade company in the 1990s and shifted to producing and selling baby tricycles. His target market was the US. Business was not bad then.

But before the Christmas shopping spree in 2000, US regulators told Ni that the sale of nearly 30,000 baby tricycles would be held up due to the absence of a safety accessory. Though the safety accessory cost only 10 yuan per unit, the airfreight costs for the same unit was nearly 100 yuan.

"I lost several million yuan in the deal, which was a big sum for me then," Ni says.

Disillusioned, Ni decided to leave the tricycle export sector and seek greener pastures. His quest finally ended on a summer night in 2002, when he was driving on the highway in Shanghai.

That night, Ni spotted a traffic light powered by a PV panel. Though he had no knowledge of the sector, he suddenly realized that producing the PV panel should be his calling.

In April 2003, a friend called Ni, saying a PV executive from a company affiliated to the prestigious Shanghai Jiao Tong University had been removed from his post, along with a team of professionals looking for suitable opportunities.

Without hesitation, he agreed to meet these people. And two months later, they set up Chaori Solar, which has since grown into a group with nearly 2,000 employees and a turnover of more than 2.6 billion yuan as of last year.

In the beginning, Ni's company accepted orders from big brands and started to manufacture PV panels for them. Gradually, as his network widened he started to explore the overseas market. "The German market has offered us tremendous opportunities and brought us success," Ni says.

At the same time, he has an air of modesty around him when he says that there are times when he has made mistakes. Nothing pains him more than the decision taken three years back to forgo an opportunity to list his company in the US markets.

Like several of his peers, Ni was also contemplating a Nasdaq listing in 2008 and got the necessary approvals. It was also a time when China's capital markets were on a high growth trajectory. His legal advisors urged Ni to consider a domestic listing, rather than an overseas one.

"Looking back, it was a big mistake. Otherwise, my company should be even bigger by now," Ni says.

Chaori started its domestic IPO preparation in 2007 and during that year, the company's sales volume reached 1.2 billion yuan, while profit was around 120 million yuan. In 2008, the company submitted the required IPO documents for regulatory approval. "We were quite confident about our balance sheet, as it was the best among small- and medium-sized enterprises at that time," Ni says.

The company's IPO application was put on the waiting list. Unfortunately for Ni, the financial crisis broke out in the intervening period and the market regulator decided to freeze approvals for initial public offerings in September 2008.

Seven months later, regulators gave the green light for public floats and Chaori was one of the first few cases that were reviewed. But regulators refused to approve the float as they found the company's expansion strategy a risky proposition.

"It was nonsense, but obviously we didn't have enough communication with regulators," says Ni, adding that the refusal came on July 15, 2009. "That was the most unforgettable day in my life and I was terribly sad."

Undaunted, Ni refused to give up. He went back and started to increase the registered capital of the company. His company was listed on the Shenzhen Stock Exchange on Nov 18, 2010.

According to Chaori's 2010 annual report, revenue surged 103.81 percent year-on-year to 2.69 billion yuan while net profit increased 29.67 percent year-on-year to 220 million yuan.

Looking back, Ni says the last few years have been challenging, as he had to constantly equip himself with knowledge about the solar sector, finance and stock market. "I love to learn new things and this open-minded approach has helped me a lot," Ni says.

Indeed Ni was a keen learner. Even when he worked in the village in the 1980s, he learned dancing, swimming and bridge. "I have hobbies which are different from those of an ordinary farmer."


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