Green China Corporate Strategy: What will a Green China look like in the Future? France Houdard Managing Director.

Transcription

1 Global Strategy Global Challenges Executable Solutions Green China 2020 Corporate Strategy: What will a Green China look like in the Future? Copyright 2011 Exolus. All rights reserved. France Houdard Managing Director france.houdard@exolus.com February 2011

2 Solar Energy World s Largest Solar Research Institute American Corporation sets up World s Largest Solar Research Institute in China President Obama, State of Union Address, January 2011: Just recently, China became home to the world's largest private solar research facility yes, but Who made this Private investment? Company: Applied Materials From: United States (AMAT: US) Investment: USD300 million Functions: - R&D, Engineering, Product Demonstration, Testing and Training for Crystalline Silicon and Thin Film Solar Module Manufacturing Equipment and Processes - Entire Applied SunFab Thin Film Manufacturing Line - Complete Crystalline Silicon Pilot Process Facility: 400,000 square feet Source: All Publically Available Information, Company Website 1

3 USD billion China Today World s #1 Country for Investment in Green Energy Investment in China Green Energy nearly Double that of United States Green Energy Investment (2009) Biofuels Efficiency/Low Carbon Other Renewables Solar Wind Source: Clean Energy Factbook, Who is Winning the Clean Energy Race?,

4 Million Tons of Oil Equivalent China Today World s #1 Energy Consumer China Energy Consumption Overtakes the United States 2500 Energy Consumption (United States and China) US China Source: Central News Agency 3

5 Table of Contents China Energy Overview - Today - China Energy Consumption in Global Context - The Future - China s Economic Growth To become #1 Economy in The Future - Forward Trend in Middle Class Growth - The Future - Forward Trend in Mass Migration / Urbanization - The Future - China s Future Country-Sized Mega-Clusters - The Future - China s Energy Consumption to Grow by another 50% by 2020 Green Technology Trends - Policy - China Places High Priority on Green Energy - Cost Structure Subsidies in Place to Drive Green Energy Development - Investment China Investment in Green Energy #1 in World Corporate Burning Platforms: Innovation, Markets, Cost Reduction - Innovation Where are Key Nodes for Structuring R&D Platforms? - Solar Energy Projected Market Growth - Solar Energy Where are the Solar Energy Clusters? - Solar Energy Where is Manufacturing taking Place? - Wind Energy Projected Market Growth - Wind Energy Where is Manufacturing Taking Place? - Hydro Energy Projected Market Growth - Hydro Energy Where is Manufacturing Taking Place China s Economic Health and Report Card - China Investor Confidence: China Ranks #1 as Most Attractive Investment Destination of Future - Financial & Economic Health: China Balance Sheets - Banks, Enterprises, Households 4

6 CHINA ENERGY OVERVIEW 5

7 Million Tons of Oil Equivalent per Person Today: China Energy Consumption Very Low on Per Capita Basis China Per Capita Consumption 1/6 th that of United States Per Capita Energy Consumption (2009) US China Russia Japan Europe* India Europe* refers to OECD Countries Source: BP Statistical Review and Economist Intelligence Unit 6

8 USD (Real Market Rates) Today: China Remains the Fastest Growing Economy in World China s Economy: Doubles every 7 Years Tripled most Recently 5.0 China GDP (USD trillion) Hosts OLYMPIC games x Accepted full convertibility for current account transaction Admitted to WTO China Opens to the World Applied to join GATT Eliminated its dual exchange rate 2x 0.5 2x 0.0 Source: IMF 7

9 The Future: World Bank Projects China as #1 Economy in World by GDP* GDP* PPP-adjusted France UK China US India Japan EU-27 Germany $29.6 tr $28.8 tr $13.4 tr $6.8 tr 2009 GDP* $30.0 tr GDP* PPP-adjusted France EU-27 UK US 6,4 trillions China de $ 3,6 trillions de $ Japan India Germany $14.1 tr $9.1 tr $4.1 tr $3.8 tr $14.2 tr Source: World Bank 8

10 Urban Population (millions) The Future: Forward Trend in Exploding Middle Class China s Middle Class: 400 million (2010) 500 million (2015) Middle Class Income Bands for Urban Population Upper Middle Class Lower Middle Class Urban Household Income (US$ PPP-Adjusted) Global > US$107,800 Affluent US$3, , Upper Middle US$21,501 53, Lower Middle US$13,500 21,500 Poor < US$13, F 2015F 2020F 2025F Sources: Urbanization Rates, Population based on UN, World Urbanization Prospects 2007; MGI Consumer Demand

11 Population (million) The Future: Forward Trend in Mass Migration into Cities China s Urban Population: 600 million (2010) 700 million (2015) China s Urban Population versus Rural Population 1,600 1,400 1,200 1,000 1 billion 1.2 billion 1.3 billion billion billion 624 Rural Population (million) % 31% 40% 49% 57% Urban Population (million) Urbanization Source: World Urbanization Prospects

12 The Future: Emergence of 10+ Mega-Cities the Size of Countries Mega-City Profile: 60 Million Population + World-Class Infrastructure Mega-Cities Mega-Corridors China s Emerging MEGA-CITIES Heilongjiang Jilin Xinjiang Liaoning Gansu Inner Mongolia Hebei Beijing Tianjin Qinghai Ningxia Shanxi Shandong Mountains Tibet Sichuan Shaanxi Chongqing Henan Hubei Anhui Jiangsu Shanghai Zhejiang Guizhou Hunan Jiangxi Fujian Yunnan Guangxi Guangdong 11

13 Million Tons of Oil Equivalent The Future: China Energy Consumption to Increase by 50% by 2020 Energy Consumption Doubled last Decade 50% Increase this Decade China Project 2020 Energy Consumption (Million Tons of Oil Equivalent) 4,000 3,500 3,000 2,500 49% Increase 2,000 1, % Increase 1, Source: Central News Agency 12

14 GREEN TECHNOLOGY TRENDS 13

15 Percentage Green Energy Policy: China Places High Priority on Green Energy Significant Growth Planned for Green Energy Development Green Energy as a Percentage of Total Energy Consumption ( ) 100% 90% 80% 70% 60% 50% 40% 30% 25% 32.5% 40% 20% 15% 10% 0% Source: State Council, New Energy Development Plan for China,

16 Gigawatts Policy: China Places High Priority on Green Energy Significant Growth Planned for Green Energy Development 350 Installed and Targeted Capacities (2010, 2020) Targeted Capacity 20 Installed Capacity Hydro Wind Nuclear Solar Biomass Source: State Council, New Energy Industry Development Plan

17 RMB / kwh Cost Structure: China Places High Priority on Green Energy Subsidies in Place to Drive Green Energy 1.4 Cost of Electricity Subsidy Net Cost Hydro Wind Nuclear Solar Biomass Source: Wind Energy Information Center, 16

18 USD billion Investment: High Investment Levels in Green Energy Significant Investment in Wind and Solar Green Energies 30 New Investment in China Green Energy (2009) Wind Solar Biomass & w-t-e Other renewables Energy smart technologies Source: Bloomberg 17

19 USD billion Investment: China Investment in Green Energy #1 in World Major Investment in Green Energy - Wind, Solar, Renewables Green Energy Investment (2009) Biofuels Efficiency/Low Carbon Other Renewables Solar Wind Source: Clean Energy Factbook, Who is Winning The Clean Energy Race?,

20 BURNING PLATFORMS: Next Generation Strategic Optimization 19

21 Today s Burning Platform: Markets and Innovation Global Structural Cost Reduction Revenue Growth Revenue Growth Innovation Sales Development Marketing IT F&A Shared Services HR Procure Research CONTRACTS, PAR TNERSHIPS SHARED SERVICE CENTERS (SSC) Distribution Production Sourcing RESEARCH & DEVELOPMENT RESOURCES Cost Reduction SALES & MARKETING PRODUCTION / SOURCING DRIVING Shareholder Value 20

22 Innovation: Where are Key Nodes for Structuring R&D Platforms? R of R&D Seeks Universities D Seeks Markets & Production R&D Centers (# Operations) > 10 Research & Development Centers (Number of Operations in Select Cities) > 50 Heilongjiang > 150 Wage Bands Mega-Cluster Mega-Corridors Xinjiang Gansu Inner Mongolia Hebei 1 Liaoning Beijing Tianjin Jilin Qinghai Ningxia Shanxi Shandong Mountains Tibet Sichuan Shaanxi Chongqing Henan Hubei Anhui Jiangsu 1 Zhejiang Shanghai Guizhou Hunan Jiangxi Fujian Yunnan Guangxi 1 Guangdong Source: UNCTAD, WIR 21

23 Thousands Innovation: China Mobilizes all Resources to Develop Talent China Science and Engineering: 1.6 Million Graduates per Year 200 United States China 180 United Kingdom Japan 160 South Korea Germany 140 University Natural Sciences Degrees ( ) USA China Sources: National Science Board, Science & Engineering Indicators

24 Energy Market: Where are Designated Provinces for Green Energies? Solar > West Wind > North Hydro > S West Nuclear -> East Legend Insolation > 5,000 MJ/m2/yr Green Energy Geographic Focus Provinces with Nuclear Plants Heilongjiang Designated for Wind Power Top Provinces for Hydro Jilin Xinjiang Inner Mongolia Beijing Liaoning Hebei Tianjin Qinghai Ningxia Gansu Shanxi Shandong Shaanxi Henan Jiangsu Tibet Sichuan Chongqing Hubei Anhui Shanghai Zhejiang Guizhou Hunan Jiangxi Fujian Yunnan Guangxi Guangdong Source: National Development Reform Commission (NRDC); World Nuclear Association; Gao Hua Securities 23

25 Solar Energy World s Largest Solar Research Institute American Corporation sets up World s Largest Solar Research Institute in China President Obama, State of Union Address, January 2011: Just recently, China became home to the world's largest private solar research facility yes, and who made this private investment? Company: Applied Materials From: United States (AMAT: US) Investment: USD300 million Functions: - R&D, Engineering, Product Demonstration, Testing and Training for Crystalline Silicon and Thin Film Solar Module Manufacturing Equipment and Processes - Entire Applied SunFab Thin Film Manufacturing Line - Complete Crystalline Silicon Pilot Process Facility: 400,000 square feet Source: All Publically Available Information, Company Website 24

26 Megawatts Solar Energy Projected Market Growth Projected Photovoltaic Installations in China Cumulative Installed Photovoltaic Power Capacity ( ) 350, , , , , , , , , ,000 50,000 19,531 23,853 28,854 35,080 43,181 54,122 69,457 91,092 - Source: China Generating Equipment Market Analysis 25

27 Solar Energy Growth across Technologies Solar Energy Cells - Projection in China Solar Energy Cell Market Projections CIGS CdTe Silicon-based Thin-film 100% 90% 13% 25% 80% 37% 40% 70% 27% 60% 50% 40% 43% 36% 35% 30% 60% 20% 10% 32% 27% 25% 0% E 2015E 2020E Source: GTM Research, trimmed by CEBM 26

28 Solar Energy Where are the Solar Industry Clusters? Bohai Rim Yangtze River Delta Pearl River Delta Western China R&D Centers (# Operations) > 10 Photovoltaic Industry Clusters > 50 > 150 Heilongjiang Wage Bands Mega-Cluster Mega-Corridors Xinjiang Qinghai Gansu Ningxia Inner Mongolia Shanxi Liaoning Beijing Hebei Tianjin Shandong Jilin Circum-Bohai-Sea Region Monocrvstalline Silicon Wafer Processing Tibet Central and Western China Photovoltaic upstream Polysilicon Industry Sichuan Chongqing Guizhou Shaanxi Hunan Henan Hubei Jiangsu Shanghai Anhui Zhejiang Jiangxi Fujian Yangtze River Delta Photovoltaic Cell Module Research and Manufacturers Yunnan Guangxi Guangdong Pearl River Delta Photovoltaic Downstream Applicable Industries Source: UNCTAD, WIR 27

29 Solar Energy Where is Manufacturing Taking Place? The Locations of Major PV Manufactures China Crystalline-Silicon Solar Cells Thin-Film Solar Cells Jinneng Solar Photo-electricity China Light Solar Soltech Corporation Harbin Crona China Solar Power Yingli Solar Jing Ao Solar Solarfilms ENN Solar Harbin Polar PV BSTRPV Shunfeng Trina Solar Nuvo Solar Energy Star Solar Yunnan TianDa Dali Chengdu Kunming Haikou Beijing Baoding Tianjin Langfang Yantai Weihai Bengbu Nantong Changzhou Wuxi Shanghai Suzhou Shaoxing Jiangxi Ningbo Fujian Shenzhen Eoplly QS Solar Suntech Wuxi Shangpin Canadian solar Best Solar Solar Energy S&T Topsola Green Energy Ulica SMIC Suntech Solar Electric Power Cineng PV Sopray Solar GS Solar Topray Solar Jiawei Hengyang Photovoltaic Trony Hainan Tianju Ganneng Huaji Best Solar Source: SEMI 28

30 Wind Energy World s #1 Producer of Wind Technologies China World s Largest Manufacturer of Windmills 29

31 Megawatts Wind Energy Projected Market Growth Wind Turbine Market Projection 2020 Wind Turbine Installation Capacity 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Source: China Generating Equipment Market Analysis 30

32 Wind Energy Where is Manufacturing Taking Place? Wind Turbine Manufactures in China NORDEX REPower Harbin Electric Hafei Industry GOLDWIND Harbin China Creative Wind Energy GE Energy SINOVEL Beijing Liaoning CSR Xinjiang Baotou Tianjin CSIC SUZLON Gamesa Chengdu Xi an Xiangtan Nanjing Nantong Shanghai Hangzhou Leqing CASC ACCIONA SHANGHAI ELECTRIC HeWind Windey DEC Zhongshan Guangzhou XEMC ENGGA MINGYANG ELECTRIC Source: Status of Wind Energy in China,

33 Hydro Energy World s #1 Producer of Hydro Technologies World s Largest Dam Three Gorges Dam Three Gorges Dam Total Capacity: 18,200 MW Total Investment: USD31 billion 32

34 Megawatts Hydro Energy Projected Market Growth Water Turbine Generator Installation Capacity Water Turbine Installation Capacity 30,000 25,000 20,000 15,000 10,000 5,000 - Sources: The 2nd International Conference on Hydropower Technology & Equipment,

35 Hydro Energy Where is Manufacturing Taking Place? Water Turbine Manufacturers Harbin Electric Harbin ALSTOM Jinan Fadian Tianjin Lanzhou Jinan NTC Nanjing Hangzhou Shanghai STGC TOSHIBA Chengdu Tonglu Resource Hydro LANZHOU ELECTRIC Ganzhou Fujian ZHEFU DEC TIANBAO HEAVY INDUSTRY Fujian Nandian GANZHOU UNITE Source: All Publically Available Information, Company Website 34

36 China s Economic Health Report Card 35

37 China United States India Brazil Russia U.K. Germany Australia Indonesia Canada Vietnam Mexico Poland France Percent of Responses Senior Executives Select China as Most Attractive in World Investor Confidence in China #1 in World % 60 Top 14 Most Attractive Destinations for Future Investment ( ) Source: World Investment Prospects

38 Healthy Balance Sheets Banks, Enterprises, Households USD2.85 trillion in Foreign Reserves Insulation of Financial System Clean Balance Sheets China s Financial System Healthy, Benefits from Insulation, Abundant Liquidity China banks cleaned up in 1990s: Non-performing loans in 1997 averaged 40 50%; only 6% in Financial institutions extended approximately USD1.4 tr in new loans in 2009; almost double that of 2008; and USD1.2 tr in 2010, slightly down from Forex Reserves Achieve Record High in 2010: USD 2.85 trillion The Central Bank has accumulated over USD 2.85 trillion in foreign reserves. The accumulation of large external surpluses means financial system enjoys abundant liquidity. Clean Balance Sheets for Enterprises and Households State Owned Enterprise net profits as share of GDP has grown from (-1%) in 1997 to (+4.3%) in Record corporate profit growth over past 5 years (industrial profits rose 38 ppa); liability ratios declined. Urban incomes have nearly doubled in past 10 years. Source: Deutsche Bank; Standard Chartered; UBS; IMF; Other 37

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