Speed of 'Light'
Updated: 2010-12-01 16:45
By Andrew Moody and Bao Chang (China Daily)
Peng Xiaofeng was voted CEO Choice of the Year in October by fellow CEOs. Provided to China Daily
Young entrepreneur was one of the first in China to recognize the potential of solar power
Peng Xiaofeng, one of China's wealthiest young entrepreneurs, was inspired by a visit to Europe to launch the business on which he built his fortune. Five years ago, the now 35-year-old was at a crossroads in his business career when he saw the potential for solar power as an industry of the future. Seeing the efforts of European companies in this field, he believed there was a major opportunity to build an industry in China. Now his company, LDK, based in Xinyu city in Jiangxi province, is one of the world's leading companies in this form of green energy. Its success has led to him being listed by Forbes magazine as one of the 500 richest men in the world.
"I used to travel a lot in Europe at the time and there was a lot of interest in green energy, particularly in Germany. I realized this was a business for the future and a big opportunity to start a business in China," he says.
Peng, who was voted by fellow CEOs as the CEO Choice of the Year in October's China's Business Leader Awards in Shanghai, believes solar power will be the energy of the future and will supply most of the world's energy next century.
"In 100 years, my view is that 60 percent of the world's energy will come from solar power," he says.
"This is not an optimistic prediction. The European PhotoVoltaic Industry Association (one of the solar energy industry's main trade bodies) puts the figure at 80 percent."
China is still heavily dependent on coal but the government wants 20 percent of the country's power to come from renewables by 2020, although hydro and nuclear power, and not solar, will provide the major part of this.
Peng believes the change will be brought about by oil becoming scarcer and ever more costly.
"Oil, maybe, has 50 years, I don't know. That is because it is not very renewable. It is also going to get more expensive. Even with the background of a financial crisis like now, its price has gone back up," he says.
Peng launched the business with $30 million (22 million euros) of his own money and raised a further $100 million of private equity.
Two years after starting the business it was floated on the New York Stock Exchange (NYSE).
"We first targeted a listing on Nasdaq but the NYSE came to us and we were qualified to list on the exchange. We thought strict US company governance norms would give investors confidence in the business and would be good for long term growth," he says.
"A lot of our investors are now from around the world, from the UK, Frankfurt, Switzerland and Japan," he says.
Peng comes from a rural area of Jiangxi province in East China and is the son of a local doctor.
At school, he was interested in science, particular physics and was given the nickname "Light" which has stuck ever since.
"When I was at school I was always reading books about light, which is where I got the nickname from," he says. "My dream was to study physics in the United States. At the time the role model for a lot of young people in China was (Thomas) Edison (the American inventor of the light bulb)."
Instead he went on to study international trade at his local college and when he graduated, he set up his own trading business with 20,000 yuan (2,200 euros) of savings in 1997.
The timing could not have been better since it was a time when China was emerging as the manufacturing hub of the world.
His company, Suzhou Liouxin Group, locally manufactured and sold protective products such as safety gloves, jackets and shoes.
"I set up the company by renting an office and buying a fax machine and just learning about international business and how to sell China products overseas. At the time it was very profitable to sell China products."
The business was a spectacular success, growing from an initial $7 million of sales to $200 million in just a few years, employing 10,000 people.
The wealth the business generated made Peng think about what he really wanted to do in life and after his trips to Europe chose to set up in solar power. He spotted there was a big shortage in China in the production of multi-crystalline wafers, the light sensitive tiles which capture light and turn it into energy.
"There was a big shortage in the wafer market and at that time wafers were about 70 percent of the cost of producing solar energy," he says.
The company is the world's largest maker of solar wafers and has increased its global market share from 11 percent in 2008 to 18 percent now.
"The company's market share is increasing, our cost leadership is getting stronger and we are placing a great deal of emphasis on technological innovation this year," he says.
Since floating on the NYSE, the company's shares have had something of a rollercoaster ride. After their initial flotation price of $27 in 2007, they soared to nearly $70 only to crash to $7 in the wake of the economic crisis on fears the industry was over supplied. They have gradually climbed back this year to more than $13.
"The economic crisis has affected everybody and, in particular, solar energy. Many projects have been delayed, mainly because of the problems in getting bank finance," he says.
On the back of LDK's success a number of other solar power-linked companies have clustered in Xinyu city, which is now known as "Solar Power City".
"This is a very small city and we bring a lot of jobs to it. It is my home province and the local government is also very supportive of the solar energy industry, " he says.
Peng was ranked by Fortune magazine as 23rd out of 40 of the "hottest business stars" under the age of 40 in the world. On the same list was Facebook founder Mark Zuckerberg, News Corporation's James Murdoch and golfer Tiger Woods.
The Chinese entrepreneur is far too modest for this to go to his head but recognizes the opportunities for businesses success are as never before in China.
"We are very lucky in this generation, especially, say, compared to the opportunities my parents had. We have greater access to education, the chance to meet people in Europe, the US and internationally. You also have the benefits of globalization, access to foreign capital and to buy equipment and bring in expertise from such countries as the US, Germany and Japan," he says.
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