Wind in the sails
Updated: 2013-03-15 07:20
By Cecily Liu and Zhang Chunyan (China Daily)
Joseph Deng (center), director of Ghrepower UK Ltd, at a wind turbine construction site in Wales. Provided to China Daily
Ghrepower makes the difference by creating jobs amid tough economic climate
When Ghrepower, a Shanghai-based manufacturer of small and medium-size wind turbines, decided to set up a subsidiary in Swansea, Wales, in 2011 to tap into the British wind turbine market, it did not realize how much of an impact it would make on the local community.
Joseph Deng, director of Ghrepower UK Ltd, says that though the overall investment environment in Britain is satisfactory, it is the help that his team received from the Welsh government that has greatly helped the company grow.
"They have been very supportive of our development and in turn we create more jobs for the local people and bring growth to the local economy," Deng says.
The initial choice of location was made to minimize cost, he says. "Wales was not doing particularly well after the financial crisis and its government was keen to support businesses growing through favorable policy measures."
One such scheme that helped the company was the Local Investment Fund scheme, which funds up to 40 percent of the capital equipment cost for small and medium-size firms in the manufacturing and manufacturing services sectors.
Another scheme of great help to Ghrepower was the GO Wales Work Placements scheme, created to help Welsh graduates find work.
Graduates participating in the scheme work at companies located in Wales for between six to 10 weeks, during which time the Welsh government contributes up to 100 pounds ($150; 115 euros) per week to their wages. When the placement period ends, the employers can offer the workers long-term jobs if they wish to.
"This scheme has been very helpful for us because it creates a period of time for us to understand if the new worker fits in well with our team before we make a commitment to hire them," Deng says. So far, three Welsh graduates have completed their placements at Ghrepower, and all three of them continued on to more permanent roles.
"Labor laws in Wales are very different from that of China. As it is much harder to fire a worker in Wales, we take great care to select the most suitable workers in the first place. And the placement period of the scheme helps us with that a lot," he says.
In Wales, workers have the right to take their employers to employment tribunals, if they feel their dismissal is unfair.
Differences in labor laws between China and many Western countries often surprise Chinese managers when they start to work overseas.
Despite the complexity of Welsh employment laws, Deng greatly supports the idea of employing local workers. He is currently the only Chinese within his team of eight.
"Local employees can contribute a lot to our business, they speak the local language, they know the local market very well, and they can visit our customers as they have local driving licenses," he says.
Last year, Ghrepower was selected by the Welsh government as one of 50 businesses to participate in its High Potential Starts project, a scheme designed to help young SMEs grow by providing them with financial, legal and technical consultancy services.
Launched in January 2012, the three-year scheme would cost the Welsh government 2 million pounds, but is forecast to generate an extra 36 million pounds of turnover for participating businesses and at least 480 well-paid jobs for the local economy.
"The scheme has helped us a lot, especially in terms of widening our business connections," Deng says. He regularly attended seminars, talks and conferences that the government organized to introduce SMEs to expert advisers.
One business Deng met through the scheme is an energy sector consultant that has done many projects for well-known German power generating companies.
The company helped Ghrepower develop a new technology that allowed wind turbines to function properly even when the temperature drops below 0 C. "When the weather gets cold, the propeller blades of the wind turbine sometimes freeze, but the new technology generates heat internally to prevent this."
Meanwhile, another consultancy firm has done research on the market for small and medium-size wind turbines across Europe for Ghrepower, at Deng's request.
Deng says that such research could easily cost 1,000 pounds to do, but it was given to Deng's team for free as a part of the scheme package.
The scheme also put Deng's team together with many local banks, which provide guidance on how to prepare the right documents to get funding for wind turbine construction.
Installing a medium-size wind turbine would generally cost about half a million pounds for the whole project, and it is hard for Ghrepower's customers to provide this investment by themselves. Therefore Deng's team has been helping their customers in getting bank funding.
"In the past, it has been particularly hard for customers to apply for bank funding for our wind turbines because we only have two years of history in Wales, but the life of a wind turbine is 20 years, so our track record is not enough," Deng says. "In our industry, we say that such wind turbines are not 'bankable'."
One solution his team recently devised is to contribute a part of the capital investment for its customers, in exchange for the subsidy that the British government gives to users of renewable energy.
But the scheme allowed him to meet many banks that specialize in financing small-scale projects, which could be a perfect solution to the funding challenge. "It was very helpful to hear from them the criteria that they judge projects by," he says.
Ghrepower sold its first wind turbine in the UK five years ago through a local distributor. The Scottish government opened a bid to construct a wind turbine next to a recreational facility and Ghrepower won the contract.
Two years ago, Deng set up a subsidiary for Ghrepower in Swansea. While the wind turbines' manufacturing is still done in China, the Swansea subsidiary is in charge of sales, repair and installation.
"We expanded overseas because the wind turbine market in China is restricted by China's immature smart grid system, which is the infrastructure essential for delivering energy generated from wind farms to people's homes," Deng says.
"In comparison, the smart grid market of the UK is very advanced. Another advantage of the UK market is the financial support the government gives to producers of renewable energy, which drives up demand," he says.
Under a feed-in tariff scheme introduced in 2011, homeowners and businesses are paid a cost-based subsidy by the government for the renewable electricity they produce, which includes solar, wind, tidal and others.
For wind energy, the UK government is paying 17.50 pence for each kilowatt-hour of electricity generated if the total amount of power generation is between 100-500 kW.
However, to help its customers take advantage of this scheme, Ghrepower had to undergo the Microgeneration Certification Scheme assessment. Deng says that Ghrepower has already invested one and a half years and a lot of assessment fees to gain this certificate. He believes Ghrepower will receive its certificate within the next three months.
"We are fully confident about our growth in the British market. But at the same time, growing in the British market is an opportunity to accumulate lots of knowledge in this industry to be used at home as China's wind turbine sector matures in the future," Deng says.
Contact the writers at email@example.com and firstname.lastname@example.org
(China Daily 03/15/2013 page6)