Pittsburgh groups court Chinese wind companies

13 Chinese organizations visit region

Premium content from Pittsburgh Business Times - by Anya Litvak

Date: Friday, June 10, 2011, 6:00am EDT

Pittsburgh¡¯s renewable energy groups, labor unions and economic development officials are wooing Chinese wind companies to spread their wings in this region.

A delegation of 13 companies and government organizations from China visited Pittsburgh at the end of May to explore the potential of wind development in the U.S.

¡°There¡¯s been a lot of interest in Chinese manufacturers and developers going global,¡± said?Jun Yu, CEO of Pittsburgh-based USFOR Energy LLC, which organized the visit. ¡°One of the things that was impressed upon Chinese manufacturers is that to really be successful (in the U.S.), they¡¯d have to really make an investment and create jobs. That way, there would be buy-in in the communities.¡±

Yu¡¯s company, founded last year, works with Chinese wind energy firms, developers and Chinese banks who want to do business abroad.

Among the companies that visited were Sinovel, China¡¯s largest wind manufacturer and the world¡¯s second-largest, and Guodian United Power, the fourth-largest in China.

Bernie Lynch, president of Strategic Development Solutions LLC, a Pittsburgh-based economic development firm, said that while no one in the delegation was looking for sites immediately, Sinovel and Guodian were ¡°the closest to making investments.¡±

¡°They¡¯re looking for where to put their headquarters in the U.S., where are opportunities to do wind farm projects, and where would they put (manufacturing) plants,¡± she said.

Xiao Qiang, brand manager for Sinovel said, in an e-mail that the company is ¡°still doing research and evaluation¡± regarding possible locations in the U.S., but noted that ¡°I really like it there in Pittsburgh.¡±

COMPETING FOR FOREIGN WIND

Five years ago, Pennsylvania scored a major win when Spanish company Gamesa, the third-largest windmaker in the world, chose the Keystone state as its U.S. base, bringing nearly 1,000 jobs, including 300 to a factory in Ebensburg.

A local supply chain has grown around it, Yu said, which is one of the selling points for Chinese companies looking to set up shop in Pennsylvania. That, plus the region¡¯s manufacturing work force and a series of commercial and industrial sites in the airport corridor, along the Mon River and in Westmoreland County, was presented to the delegates to entice them to settle in southwestern Pennsylvania.

At least three of the companies in the delegations have been considering Houston, said?Andrew Chen, president of USFOR.

Sinovel already has an office there. For Guodian, this was a second visit to Pittsburgh following a November meeting, according to Lynch.

BUSINESS DIFFERENT IN THE U.S.

In 2010, China surpassed the U.S. to take the global lead in installed wind capacity with 45 gigawatts, according to the Global Wind Energy Council. The U.S. came in second with 40 gw.

But despite China¡¯s swift technological development and generous financial resources backing wind companies, Chinese companies have yet to burst onto the American wind scene in any meaningful way. That¡¯s in large part because they are still familiarizing themselves with a very different business culture, especially as it concerns wind development, Chen said.

The U.S. is the world¡¯s second-largest wind market. The Chinese wind industry¡¯s venture into the U.S. is just one part of an increasingly global strategy to build Chinese brands abroad, by buying up manufacturing companies and distribution networks, said?Dennis Unkovic, a partner at Meyer, Unkovic & Scott LLP, and an international business attorney.

¡°A lot of what the Chinese are looking for now are companies that make things,¡± Unkovic said. Part of it stems from the Chinese sitting on $3 trillion in foreign currency that might inflate its own if it remains in the country, he said.

But for a growing number of products, manufacturing in the U.S. might make more sense, said?David Iwinski, managing director of Pittsburgh-based Jin Fu Consulting, which sprung up nine months ago ¡°exclusively to capitalize on this trend of China¡¯s direct foreign investment.¡±

While labor remains cheaper in China, automation is decreasing its importance in terms of cost, he said. At the same time, land in the U.S. can be a tenth of the price in China and power, more reliable in the U.S., is also much cheaper here, Iwinski said.

¡°And when the goods are done, it¡¯s only a truckload away from consumers,¡± he said.

Iwinski said that in the next decade, the American manufacturing renaissance will be funded by Chinese money.

¡°In our area, we should probably see those kinds of changes in the next 18-to-24-month period,¡± he predicted.

Chen estimates it might be at least six or 12 months before the Chinese wind companies that visited may begin serious discussions about locating units here.

Taking a closer look
Representatives from 13 Chinese organizations visited Pittsburgh in late May.
Hebei Technology University
Maoxin Wind Energy Technology Co.v South China Railroad Wind Co.
Hewang Electric Co.
Dongfang Turbine Co.
China State Energy Bureau
Tianjian Wind Energy Association
Sinovel Technology Co.
Guodian United Power
AVIC International
CSR Zhuzhou Institute Co. Ltd
Shenzhen Hopewind Electric Co. Ltd
Tianjin Xinmao Xinfeng Technology Co. Ltd.
Source: Andrew Chen, USFOR Energy

 


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