Yingli Green Energy’s Brazil World Cup Quest
If you are one of the viewers watching Germany taking on Argentina in the next couple of hours, there is a chance you might notice an obscure name on the boards surrounding the pitch: Yingli Green Energy.
The Chinese company, the world’s largest solar panel maker based in the country’s most polluted Hebei province, has spent roughly $ 70 million to make its name appear along more familiar ones like Johnson Johnson Johnson Johnson and McDonald’s. At Maracana, where the final match will be held, more than 1,500 Yingli solar panels encircling the top of the stadium also provide electricity.
As the only Chinese firm sponsoring the event, Yingli hopes to score at least one goal: To make itself a household brand in Latin America, a market holding the key to future growth for beleaguered Chinese solar panel makers.
After three consecutive annual losses, Yingli hopes to blaze new trails in Brazil and its neighboring countries, where the combination of abundant sunshine and high electricity prices make further expansion ideal. Pouring money to make its name flash before World Cup viewers could help the company raise brand awareness and achieve the goal of increasing its market share in Latin America from less than 5% in 2013 to more than 10% by 2015. It may also nail some good deals out of the region’s plan to install 724 megawatts of solar panels by the end of this year.
And in this process, Yingli, joining its peers like JA Solar Holdings, is expected to return to profitability as early as this year. JA Solar reported a 2013 Q4 profit of 32 cents per American diluted depositary share after focusing on Japan and European countries.
“Many of our potential customers have not yet developed established relationships with PV [photovoltaic, the process that converts sunlight into electricity] suppliers, so we have the opportunity to take first-mover advantage in burgeoning, high-potential solar markets.” Yingli’s Vice President of Global Marketing Judy Lee said in an emailed statement to the GlobalPost.
The rise in Latin America is crucial when conditions at Yingli’s two key markets- China and the United States- are getting increasingly complicated. In China, where Yingli last year shipped 34% of its panels at prices roughly 10% below international standards, a supply glut has sent another solar company- Shanghai Chaori Solar- to become the country’s first onshore bond issuer to default.
Meanwhile, fresh U.S. plans to impose duties of between 18.56% to 35.21% on Chinese solar panels has propelled Yingli into a combative mood. The company, which said on June 4 that it will be subject to a preliminary anti-subsidy tariff of 26.89%, announced that it will “continue to fight this petition and defend itself.”
But cracking the Latin American market is not going to be easy. For one thing, governments in the region don’t provide generous subsidies or guarantee high prices for solar electricity in countries such as United States, Japan and China, according to consultancy GTM research. That means the market is going to develop at a much slower pace.
But for Yingli, such an emerging market is simply too big to miss. After all, it also has the chance to attract the attention of Chinese President Xi Jinping, who was invited to watch the final before attending the BRICS meeting in Fortaleza. Although Xi won’t be able to show up at the match, he will, as a football fan, surely be one who recognizes the Chinese characters appearing at the world’s most popular sports event.