Simon Zhao
President
Solarever
/
Insight

Working for Stronger Mexico-China Relations

Wed, 02/21/2018 - 11:57

The attractiveness of Mexico as an emerging market in the renewable energy sector has drawn the attention of many global companies. Despite slower-than-expected growth, Simon Zhao, President of Solarever Tecnología de América, says the opportunities to capitalize will only increase. “With two auctions already on the books and more in the pipeline, as well as a growing distributed generation market, Mexico shines as a highly attractive market,” he says. “Although the market’s growth has been slower than expected, it has been constant and we expect more opportunities to come.” To take advantage, the company, a Mexican photovoltaic panels designer, manufacturer and distributor with its products being commercialized in Canada, the US and Latin America, installed its manufacturing facilities and main office in Hidalgo using both Mexican and Chinese capital. It uses domestic raw materials whenever possible and provides jobs to the national workforce.

Locating manufacturing facilities in Mexico is a strategic decision that provides tangible benefits. “Our product gets the Made in Mexico denomination, which offers a tax benefit that is reflected in a lower price for the final customer,” says Zhao. “We have also discovered unexpected advantages of being Made in Mexico, such as our ability to take part in government projects that require products having this denomination. We expect that this will also be an advantage in the future when more projects require this denomination, even outside the public sector.”

Being a company that produces Made in Mexico products also works as a leverage for aftersales, he says. “By manufacturing its panels in the country, Solarever can provide a quick response to customer requests, even with only a couple of days’ notice.”

To further expand its footprint in the Mexican market, Solarever has nurtured strong partnerships that allow it to offer integrated services to its final customers, says Zhao. “Solarever does not only manufacture panels but also provides the best energy distributed solar solution to the final customer thanks to its partnerships, which are helping to lower the final customer’s electricity costs while also making it environmentally friendly.” Through its partnerships Solarever is reaching a bigger market, but it is also looking to expand its presence in the coming years.

Financing, however, remains a key issue for companies looking to expand. Part of the problem, says Zhao, is that there are only national financing institutions to choose from and these tend to have high interest rates. “Financing in Mexico is very important, but it is also quite hard to get,” he says. To counter this, the company has introduced the “packaged project,” which brings together smaller projects that are eligible for funds from Chinese lenders. “To increase the penetration of this solution we manage packaged projects, where several smaller projects are tied together. The packaged project can receive Chinese financial support at lower rates than in Mexico.”

In an industry that is just developing, it is no surprise that most engineers have academic knowledge but little real working experience in the sector. “It was not easy to find engineers in Mexico who were able to both install and operate the manufacturing facility we have here. This forced us to bring engineers from the US and China to do the work,” Zhao says. “We expect to see more Mexican engineers available for our activities as the market expands.”

Zhao has also found that the Mexico-China relationship is not yet strong enough to allow for the sharing of information and experience, which would give students access to the knowledge and experience from the energy industries of both countries. To this end, Zhao is the cofounder of a fund called Mexico-China Dream Fund, which promotes Chinese culture and language in Mexico, as well as Mexican culture and language in China. “The fund will help students and teachers from both countries to participate in exchange programs and in this way strengthen the MexicoChina relationship. China is one of the Top 3 economies in the world, and Mexico is one of the biggest economies in Latin America. Their economic partnership and cultural integration is very important. As a first step, we are investing MX$1 million into the fund. By 2020, with the help of our partners, we expect it to total MX$10 million.”