Vestas Needs to ‘Crack the Code of China,’ Chairman Says

Vestas Wind Systems A/S wants to gain market share in China, where almost half of last year’s new wind turbines were installed, Chairman Bert Nordberg said.

The Danish wind turbine manufacturer, the world’s biggest, wants to be the “indisputable global leader,” Nordberg said late yesterday in an interview from Aarhus. He identified South Africa, Vietnam, Thailand and the Philippines as markets where the company is weak and can take market share, and he said China also represents a challenge.

“We need to crack the code of China,” Nordberg said. “We’re pretty weak in China, but we have to make money. Otherwise there’s no use in doing the business.”

China is attractive because more than a quarter of global wind capacity is installed there and it took 45 percent of last year’s market. At the same time, foreign manufacturers have struggled to grab share due to low prices and competition from domestic companies. That’s changing, said Justin Wu, a wind power analyst at Bloomberg New Energy Finance in Hong Kong.

“The Chinese wind market is quite different now than it was a couple of years ago -- it’s maturing a lot,” Wu said in a phone interview. Developers are “caring more about quality and project performance now. It’s not all about up-front costs.”

Even so, turbines are selling in China for about 500,000 euros ($690,000) to 600,000 euros a megawatt, compared to 900,000 euros outside China, Wu said. That’s made it hard for Western manufacturers such as Vestas, General Electric Co. and Gamesa Corp. Tecnologica SA to grab share.

Chinese Share

Vestas was the top-ranked foreign turbine maker in the Chinese market last year, Wu said, citing Chinese Wind Energy Association figures. The Danish turbine maker came 11th, taking 3.2 percent of the market, while Gamesa came 16th and GE 19th. Both had less than 2 percent. China’s Xinjiang Goldwind Science & Technology Co., Guodian United Power Technology Co. and China Ming Yang Wind Power Group had the biggest shares.

Vestas has installed close to 1-in-5 of the world’s wind turbines, a proportion that drops to lower than 1-in-20 in China, where it has installed 4,312 megawatts of machines. China had about 91,000 megawatts of turbines at the end of 2013, or 29 percent of the world’s 318,000 megawatts according to figures last month from the Global Wind Energy Council.

China installed 16,100 megawatts last year, 45 percent of the global total of 35,500 megawatts and five times the next biggest market, Germany.

At the end of last year, Vestas had three turbines totaling 6 megawatts erected in Vietnam and 20 devices totaling 33 megawatts in the Philippines, according to company figures. It last installed machines in those nations in 2011 and 2008. In Thailand, it’s only ever installed one machine, rated at less than a megawatt, in 1996.

“Vietnam, Thailand and Philippines are good markets with good winds and ideas to grow,” Nordberg said. “There are a number of markets where we will invest to gain market share.”

In South Africa, another market identified by Nordberg as a growth target, the Danish manufacturer has installed 39 devices totaling 69 megawatts.

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