Huarui caught in the "redundancies" storm

After the PV suffered the "double reverse" between the United States and Europe, the wind power industry also encountered "winter". As a giant in the domestic wind power industry, Huarui started from November 15th and 350 employees were on holiday. As of December 10, this figure has climbed to 469 people. Some people in the industry believe that the former wind power giants have been trapped in operating difficulties due to blind expansion, internal management imbalances, and external overcapacity.

According to statistics, in the first three quarters of this year, the company's operating income was only 3.634 billion yuan, a loss of 255 million yuan, and its performance was down by 128% year-on-year. This was the first time that Sinovel had incurred losses in four years. As of September 30 this year, the company’s inventory amounted to 8.5 billion yuan.

Huarui caught in the "redundancies" storm

On November 15 this year, Huarui posted a "Notice on Stoppage of Employees in Some Positions" in the office building. The "holiday" involved 356 employees. The notice stated that the company's business is adversely affected by the overall economic downturn and the tightening of industrial policies, production and operations are facing adjustments, many jobs are underemployed or have been discontinued, and a large number of employees have no job assignments, so the group decided to determine whether the start-up was insufficient or the production was suspended. The staff performs the decision to suspend work and leave.

According to the calculation of Beijing’s 2012 minimum wage of 1,260 yuan, employees who are “off” at the Beijing headquarters may receive a minimum living allowance of 1080 yuan per month from next year. Afterwards, Huarui added three additional holiday lists: 21, 35, and 63 respectively. The most recent one was on December 10th. Thus, about 469 people have been suspended for work.

In the current situation of Sinovel, Wu Chaoguo, a senior industry researcher at China Business Intelligence Network, believes that the difficulties of wind power are mainly affected by the overall environmental downturn in the wind power industry and the impact of its own blind expansion on overcapacity. Currently, the wind power industry has high inventory and product prices all the way. When the market goes down, there is a serious shortage of market demand. The loss of Sinovel Wind Power can be said to be inevitable.

Has set a domestic first in 5 years

Huarui, a wind power company with a starting value of RMB 20 million in 2006, has experienced a net profit increase from RMB 126 million to RMB 2.855 billion from 2007 to 2010. On January 5, 2011, Sinovel entered the A-share market at the issue price of RMB 90 per share, setting a record price for the main board market for 20 years and becoming a wind power equipment manufacturer with a market value of nearly RMB 100 billion. In just 5 years, Huarui has created a miracle of wealth in the history of Chinese companies in a sensational speed. However, compared with other purely market-oriented industries, the wind power industry depends more on the support of industrial policies and the will of competent authorities. Of course, Huarui’s success cannot be separated from this.

Driven by the National Development and Reform Commission, a series of policies to support and encourage the development of wind power are intensively introduced. The wind power industry also ushered in explosive growth. According to the plan for the initial period of the “Eleventh Five-Year Plan” period, the installed capacity during the “Eleventh Five-Year Plan” period was 5 million kilowatts. By the end of 2007, the target was adjusted to 10 million kilowatts. However, in fact, the installed capacity of the entire “Eleventh Five-Year Plan” exceeded 40 million kilowatts. In the past five years, China’s installed capacity of wind power has reached 41.827 million kilowatts, which has doubled in five consecutive years and has taken the second place in the world.

In this regard, Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, said that the overall overcapacity in the industry as a whole caused Huarui to fall into a situation of significant layoffs and profitability. This is not a case.

Internal and external problems make it difficult

With the tightening of industrial policies, the National Energy Administration requires all provinces, autonomous regions, and municipalities to strictly implement wind power project approval plans, and may not approve unscheduled wind power projects without authorization. Huarui’s high inventory has exceeded 8 billion yuan and the funding chain is in jeopardy. At the same time, the United States made a final ruling on December 18th that China has dumped and subsidized its application-level wind towers exported to the United States, and ruled that there was a dumping margin of 44.99%-70.63% for China's application-grade wind towers, including Huarui produces application-grade wind towers.

The situation of the external environment is grim. Some problems have also arisen within Huarui. Some people in the industry believe that the risk of Huarui's production of a single product is the main cause of its impediment. In its most prosperous year 2010, Sinovel should diversify its development. The number of patents each year can reach 1,000, but there are few real applications in production. Research and technology investment should be strengthened and patent applications promoted.

Pang Wenwei, Minister of Wind Power of Xiangtan Motor Co., agreed with the views of the appellants. He believes that Sinovel does not have core technologies and that key technologies are purchased. The overall strength cannot be regarded as the 'leading leader' of the wind power industry. At the same time, Huarui selected double-fed generators with gearboxes, which resulted in high failure rates and high replacement costs. This also affected the quality of Huarui products.

Offshore wind power is a breakthrough?

Huarui insiders revealed to the media that in addition to layoffs and work stoppages, the company has other strategically shaped documents that have begun internal adjustments. And began to take the "double sea" strategy as a breakthrough. According to the above-mentioned sources, Sinovel has established the “Sinowind Wind Power National Offshore Wind Power Technology Equipment R&D Center” and has developed 3 MW, 5 MW, and 6 MW of land, sea, and intertidal zone with global leading level. Series wind turbines, and research and development of more powerful wind turbine technology of 10 MW and above. The 5 MW offshore wind turbine has been put into operation, and the 6 MW wind turbine has also been commissioned and connected to the grid in Jiangsu.

According to Pang Wenwei, if wind power companies want to develop, they must first survive by controlling costs under quality assurance. Then use generators to optimize the design, spare parts procurement, bulk procurement and other measures to enhance their competitiveness. China's wind power industry cannot leap forward. First, we must improve the market entry level of wind power industry, and then we must change the evaluation system of wind power enterprises. We can't evaluate the strength of a company based on its production volume alone. We should consider comprehensively its product quality, failure rate, and power generation.