Arturo Herrero
CSO and Head of Emerging Markets
Jinko Solar

Mexico Is Key for Chinese Manufacturer's Expansion

Wed, 02/24/2016 - 13:22

The objective of Jinko Solar is to capture as much market share as possible, an approach that has proven successful enough for the company to become a leader in countries like Chile, where it has deployed more than 400MW. Arturo Herrero, Jinko Solar’s CSO and  Head of Emerging Markets, says Mexico is the company’s next target, where it plans to obtain 30-40% of the market share. With the company signing a 55MW contract with TSK, for a project in Durango, Jinko Solar has already taken its first steps in the market, giving it a competitive edge.

According to Herrero, the main difference between Jinko Solar and other Chinese companies is the way it approaches the market. In the Jinko Solar model, two teams work in continuous coordination. Its sales force team works closely with the customer in order to finalize negotiations and contracts. Another team is focused on business development, approaching international investors and banks in order to make sure that Jinko Solar is bankable. This team also approaches utilities, developers, technical due diligence companies, and industry analysts, ensuring that they realize the value of the Jinko Solar brand.

Contrary to common reports, the tariff disputes between Chinese solar panel manufacturers and European and American governments has actually been a driver for Jinko Solar’s growth strategy, moving manufacturing outside of China and supplying its markets through different bases. The company now invests heavily in local markets, a move Herrero confidently believes will further the globalization trend. “It shows Jinko Solar is not afraid of the imposed barriers. Today we are the second largest producer of solar equipment in the world. By 2016 the company will reach 10GW of installed capacity and supply over 85 countries,” Herrero states. In this sense, Jinko Solar sees the possibility of carrying out local manufacturing in Mexico. “This country ranks highly on the company’s list of future developments because it is a key production market with several FTAs, including NAFTA, which would enable us to supply internally and serve many other countries,” he mentions. However, he points out that Jinko Solar will only choose Mexico as the right location to invest once it has identified the feasibility and possible risks of doing so. “We must see how serious the government is about establishing a stable market and that the prices of electricity are not manipulated. We will not invest in Mexico if we do not trust the electricity prices.”

To achieve its pursuit of innovation, Jinko Solar places significant importance on partnerships, such as the one it has with DuPont for the development of advanced materials used in panels. Herrero acknowledges that Chinese products have a reputation for using low-quality materials, but he asserts that this is far from the case for Jinko Solar. “For us, innovation does not stop with our products. We also implement it in our production processes, which are as high-quality as the materials we use. All of our equipment is fully automatized, and we have amalgamated expertise and technology from Switzerland, Germany, and Italy.” The fact that Jinko Solar is vertically integrated also drives innovation, as it can introduce technological breakthroughs across the production of its ingots, wafers, cells, and modules. One of the key components of Jinko Solar’s manufacturing skills is related to innovation and technological improvements. For example, the company introduced four busbars in its production to increase the efficiency of its cells.

There are two main courses of action Jinko Solar takes when developing partnerships. The first is related to the supply chain and production process. “We look for high- quality suppliers of equipment and materials to stock our production plants in China, South Africa, Portugal, and Malaysia,” Herrero details. The second consists of a local action targeting Mexican developers and customers. In this regard, the company approaches distributors that will supply its products to the end customer, and it also targets EPC companies that will implement Jinko Solar’s technology in the development of their projects. An important aspect in Jinko Solar’s development of partnerships is its relationship with banks. “Project financing is a tricky part of the sector, so our business development team focuses on establishing relationships between banks, the developers, and the technology provider, which is Jinko Solar in this case,” mentions Herrero. At the moment, Jinko Solar has over 86 banks financing projects worldwide and relies on local banks that support its customers for equity or debt.

Synergies with these banks are crucial, explains Herrero, since some European banks are arriving in Latin America in pursuit of JV investments with local banks. For example, Herrero says Bancomext needs the reinforcement and expertise from European banks, since the latter have more experience and knowledge in project financing. “Mexico is still learning how to carry out this kind of project finance for solar projects. Jinko Solar is happy to bridge this gap by providing the needed knowledge,” Herrero concludes.