A private Company’s road to internationalization

ZHANG XUEYING

IN February 2012, during Chinese Vice President Xi Jinpings visit to the U.S., the two countries signed a whopping 149 contracts and cooperation agreements worth a total US$38.6 billion. Chinas biggest private new energy company ENN Groups US$5 billion deal stood out as particularly impressive.

Different from a technical cooperation project they signed last year, the deal will see ENN invest US $5 billion in the coming 10 years to build a clean energy ecological center in Nevada, the U.S., which will mainly feature a photovoltaic power plant, a photovoltaic component factory and the development of a future energy eco-city.

“After several years of preparation, its time for ENN to explore overseas invest- ment that will not only contribute to the groups industrial chain and expansion, but also be of strategic significance to its transnational operation,” said Wang Yusuo, chairman of the board of ENN Group,

Relying on Technology to Go Global

ENNs investment in the US is a landmark in Chinas new energy field, starting the ball rolling for Chinese new energy companies to export domestically developed technology. As Vice President Xi Jinping pointed out, this is a big step. “During the past 30 years or so, with Chinas reform and opening-up and modernization drive, the traditional model in which the U.S. provides funds and technology and China provides la- bor, resources and a market has changed fundamentally,” Xi said.

With total assets of over RMB 40 billion, ENN owns more than 100 subsidiary companies and branches in China, the U.S. and Europe, but when Wang Yusuo founded the enterprise some 20 years ago, it was just a small company selling liquefied gas. As it grew, ENN began to provide urban areas with public gas services. Today, the company has become an influential player, shaping a coordinated industrial energy distribution network and the development of chemical, solar and smart energy.

During global energy shortages in 2004, when energy security and environmental conservation became widely discussed topics, ENN decided to enter the field of clean coal and seek alternative energy. Later it became involved in solar power, and invested in building an industrial chain for producing clean energy.

It was with these ventures that ENN distinguished itself globally. Back in July 2009, U.S. Energy Secretary Steven Chu made his sole visit to a clean energy company during his trip to China, when he toured ENNs headquarters in Langfang, Hebei Province, bringing the group out of relative international obscurity and into the limelight. Impressed with their“zero-emission” coal-derived energy test center and photovoltaic solar cell production line, Chu praised the groupsresearch and development of clean energy, encouraging their future endeavors and expressing hope that the U.S. and China strengthen exchange and collaborative promotion of related technologies.

ENNs motto is all about adapting to prevailing conditions. “Only by integrating its strategy with national strategy can an enterprise reach a large market; only by merging its scientific and technological development with the global trend of development can it attain sustainable development.” Gan Zhongxue, vice chairman of ENN Group and CEO of ENN Smart Energy, has been an important player in the groups exploration of international markets.

Gan started his career at ABB Research Center North America and rose to the position of technical director and chief scientist in the automation department. In 2003, he returned to China with seven other researchers and joined ENN. He was involved in the establishment of ENN Science and Technology Development in 2006, which set up a postdoctoral scientific research center specializing in new energy technology. After several years of development, ENN now employs a high-end technology team consisting of 100 PhDs and 600 MAs.

Thanks to this team, ENN has produced many practical additions to clean energy technology. At present, ENN Science and Technology has applied for over 270 patents and formed two clean energy processes, namely its coal-derived low carbon energy conversion and smart energy network. ENN harnesses these new technologies to provide integrated solutions to energy distribution, energy chemicals, solar energy, biomass energy and clean energy. ENNs industrial scale demonstrations of technologies, such as underground coal gasification and microalgae carbon absorption, have been launched in Inner Mongolia Autonomous Region.

It is this kind of advanced technology that has boosted ENNs globalization efforts. In 2009, ENN began cooperation with foreign scientific research institutions, including the National Energy Technology Laboratory and the National Renewable Energy Laboratory in the U.S., which entered into joint research in catalytic coal gasification and microalgae carbon sequestration with ENN.

More notably, ENN has put forward the concept of “cycling economy & intellectualization.” According to ENN, to fully solve the energy problem, foremost is establishing a brand new system of energy production covering production, application, storage and transport, and recycling. The group uses advanced methods in the production, systematic use and smart management of clean energy to maximize efficiency and steer the energy industry towards low-carbon and cycling economy. This concept has been recognized across the global energy industry, and has prompted Guido Bartels, chairman of Global Smart Grid Federation, to remark, “Ideas about energy from China are leading the world.”

expanding International Market

As well as maintaining a reputation for cutting-edge technology, ENNs performance is also impressive in terms of its expansion into overseas markets.Its progressive business model and innovative technology have been a solid base from which to launch its global ventures, and it has explored new ways for Chinas new energy enterprises to break into the global market.

As early as May 2001, ENN Energy Holdings Ltd. was listed on the growth enterprise market of the Hong Kong Stock Exchange. In 2002, the public company made it onto the main board, which meant that its access to finances broadened significantly. The same year, ENN Group raised money from eight Asian, American and European banks in order to exploit gas projects. Some people regard this as the starting point of ENNs global strategy, providing ENN with the cash to undertake market expansion.

ENN Solar Energy has been developing its overseas market since 2009. It currently has networks covering Asia, North America, Europe, Middle East and North Africa, and has undertaken dozens of power plant projects in the U.S., Germany and Italy.

ENNs expansion overseas, however, has been focused on the U.S. In September 2009, ENN Group signed a cooperative agreement with Duke Energy, one of the largest electrical power holding companies in the U.S., at the Clinton Global Initiatives Annual Meeting. With the aim of accelerating technological development of low-carbon and clean energy, both sides benefited by drawing from each others experience garnered from their diverse activities in the energy sector.

One month later, they established a cooperative partnership, combining Dukes extensive market resources with ENNs world-leading technology in silicon-based thin film solar module and system integration to develop photovoltaic power stations and buildingintegrated photovoltaics (BIPV).

ENN and Duke embarked upon further cooperation in January 2011 after Duke showed great interest in ENNs system energy efficiency theory and smart energy network. “The U.S. and China have a shared vision about the future of clean energy – better environment, healthier life and happy work,” said Jim Rogers, president and CEO of Duke Energy, when discussing the companys cooperation with ENN. Even before prior consultation, Dukes “redefinition of energy” and ENNs “new normality of energy” bore close resemblance to one another.

That June, ENN Group, Duke Energy and the governments of Langfang and Charlotte, North Carolina, entered into a cooperative contract that saw ENN move further into the North American market, and with last Februarys contract ENNs presence in the U.S. is set to expand.

strengthening International Cooperation

In recent years, the global activities of Chinas new energy enterprises such as ENN have been increasing in scale. How- ever, with this growth comes inevitable friction and disagreements on trade. Late last year, the U.S. and China became embroiled in a dispute over photovoltaic cells as the U.S. announced investigations into alleged illegal dumping and subsidy, while in Germany a number of solar energy companies have laid part of the blame for their bankruptcy on China.

Some market analysts claim that

the U.S. investigations have no hope of blocking the global distribution of Chinas new energy products. On the contrary, in forcing Chinese enterprises to avoid trade barriers by setting up factories and research centers in the U.S. they are in fact driving them to increase their international presence.

Several well-known Chinese new energy companies have invested in the U.S. In early 2011, LDK Solar bought a 70 percent interest in Solar Power, but many of the aforementioned companies invest in job creating ventures.

“Merger and acquisition is only one method for Chinese enterprises to go global,” said Wang Yusuo. “Managers should think as entrepreneurs, who not only provide employment opportunities and achieve revenue, but also reduce trade frictions.”

Phoenix, Arizona, now boasts a US$10 million solar cell production plant courtesy of Suntech Power, while in Illinois you can find a US $200 million 110-megawatt wind power station built by Goldwind Science & Technology. At the same time, ENN Group has helped local governments to bring the same green electric power, green manufacturing and smart ecology that ENN previously applied in Shanghai, and Hebei and Hunan provinces to American cities in order to save energy and reduce emissions. This decade-long project is projected to create thousands of employment opportunities.

Wang hopes that foreign governments will greet Chinese enterprises with an open market and fair policy, and help them to achieve long-term development like that of GE and IBM in China.

“If one day ENNs clean energy integrated solution can be accessible to people all around the world, the effective use of clean energy will go further, which is of great importance to ENNs future,”said Wang.Achieving global technological cooperation in clean energy is Wangs dream. He hopes it will achieve global emission reduction targets.