Sinovel Wind shuts four overseas subsidiaries
Updated: 2013-07-09 13:55
By Zhang Xiang (chinadaily.com.cn)
Sinovel Wind Group Co., one of China's largest wind-turbine manufacturers, announced that it has shut four more international subsidiaries including its US unit, a move seen by insiders as a setback in its globalization efforts, the Securities Times reported Tuesday.
The four recently closed subsidiaries are in the US, Belgium, Italy and Canada. In April, the company shut another four subsidiaries in Britain, Poland, Romania and Australia. So far, among its ten overseas subsidiaries, only those in Spain and Turkey are operational.
Last year, the company said that global expansion was its priority during the 12th Five-Year Plan. Its business targets not only the traditional markets in US and Europe, but also the emerging markets in India, Canada, Turkey and Brazil. It said Sinovel will become an international company in 2015.
Some insiders speculate that by closing the overseas subsidiaries, Sinovel is actually avoiding its legal problems in the US.
Late last month, the US Justice Department filed criminal charges against Sinovel for alleged trade-secret theft, criminal copyright infringement and wire fraud. If proved guilty, the company will have to face up to billions of US dollars in penalties.
However, spokeswoman Wang Wen said closure of the subsidiaries is in accordance with the company's business plan and has nothing to do with its legal disputes.
Sinovel's annual report reveals that all its ten overseas subsidiaries reported losses in 2012, with the Spanish unit loss reaching 14.83 million yuan and the US unit loss 780,400 yuan.
"The set-up of the subsidiaries was intended to avoid export and trade risks, but now the market quotation has changed, and the company has to cut its operating costs, so it's reasonable that the overseas businesses which bear higher risks are cut first," an insider said.
Data show that Sinovel reported a net loss of 582 million yuan last year and 248 million yuan in the first quarter of this year.
"The overseas market is more mature and has adequate supporting facilities and policies. Sinovel's problem lies in its own product lineup. It focuses on low-value-added products, which cannot attract demanding clients," said Wang Xiaokun, an analyst with Sublime China Information Co Ltd.
"Sinovel used to lead the wind power industries. Its newly installed capacity was No.1 in China for many years. However, the problems of overcapacity and hasty expansion began to emerge," an insider told Securities Times.
"It is a warning for other wind power enterprises. Before international expansion, the domestic market has to be enhanced with high quality brand," the insider said.