Henning Gammelgård Jensen, Danish Wind Energy Group
Release Date: 2009-09-30
The wind industry developed in Denmark 30 years ago and the country has been able to build up a very strong global positioning. What would you say have been the key factors that have enabled Denmark to acquire this positioning?Henning Gammelgaard Jensen (HGJ): If you look at wind turbine technologies, we not only have the know-how but also the know-why. About 50% of the know-why is located in Denmark while the other 50% is in Germany. I know that many Spaniards and Americans won’t like this simplification but this would be the rough picture. Denmark has been in this business for 30 years and of course we have a lot of experience.
The roots of the Danish wind industry are in heavy duty machines, whereas in America all came from aerospace technology. Wind turbines operate for 8600 hours without the need for maintenance every year. Aeroplanes require maintenance after flying for 10 hours, this does not happen with a wind turbine. It is crucial that modern turbines have to run about a year before having their first maintenance service. In a certain way, a wind turbine is one of the most sophisticated man-made machines.
Rikke Berg (RB): The Danish have many years of experience, and clearly this is not true for all nations.
HGJ: We have invested a lot of hours, turbines and money in these last 30 years. It’s not just about putting 7 components together and then getting a 1.5MW turbine. This know-how is our competitive advantage to enter the Chinese market because they need turbines to generate wind power
Do you think that it is still possible to say that 50% of the technology resides in Denmark and the other 50% in Germany if China will become the largest turbine manufacture in the next year?
RB: Being one of the largest turbine manufacture does not necessarily mean that China has the technology. It is true that they are learning really fast.
HGJ: Of course, when we are talking about bigger turbines ranging from 3MW to 6MW then it will take longer for the Chinese to catch up. Even today there are many things that we do still have to learn about large turbines, we have not yet solved all the problems even though we have much more experience than the Chinese manufacturers.
How far do you think China is behind Denmark in terms of technology and quality?
HGJ: It is very difficult to say. If you had asked me in 2005 I would have told you that it would take at least 5 to 10 years. Now, after having been in contact with universities I would say that it is a question of a few years.
RB: There are significant differences between the capabilities of the different Chinese manufacturers. I believe that their main disadvantage is their technological innovation capability, since they have no experience to back this process. They do have the knowledge but they lack the experience.
The future of the wind industry is not in Denmark since the sector has become global. How are the Danish suppliers and service providers performing in the increasingly competitive international marketplace?
RB: Danish companies have to recognize that their products are part of a portfolio; they have to focus on how their products can work together with other components. They might not enter the international market as independent suppliers but based on cooperation with other Danish companies. Again, I believe that this is an advantage for the Danish companies that have been doing this for years, and I believe that Danish suppliers and service providers are competence leaders in the international market. Also, if they want to become major suppliers to the Danish turbine manufacturers they are forced to follow them into their export market. The question is not if they want to do enter the international marketplace; rather it is a question of how to do it.
What is the export strategy of your members? Are they proactively seeking new opportunities or are they reacting to the demands of their existing customers?
HGJ: Our turbine manufactures are facing the challenge of finding new customers; therefore they provide a lot of assistance to their suppliers as they follow them into international markets. We all have the mindset to grow both rapidly and internationally. If we take China as an example, adapting to the local conditions is really hard for individual suppliers.
RB: I believe that the largest challenge is adapting to the local mindset of a new potential customers in the international markets.
How would you describe the reputation of the Danish industry in China?
HGJ: We went to China in November 2005 with 17 members. It was a really successful trip that took place at the right time. The Chinese were really interested in our knowledge and treated us with great respect. Now we have a challenge, and we are going to enable small Danish companies to to export or even set up their company in China.
Which mode of internationalisation do your members often choose?
RB: They normally start exporting from Denmark to other markets, often because their customers are operating in those markets. For some of the companies it is difficult to set up their business in China since they do not have any business experience in the country upfront. On the other hand, due to 70% local content requirement several Danish companies have been forced to set up their companies in China earlier that they would have normally done. Their approach ranges from representative offices, sales offices, to local wholly owned production and joint ventures.
Did any Danish companies that entered the Chinese market close their operations because they did not succeed?
RB: No, not yet. When the Danish Wind Energy Group went to China in November 2005 to visit Chinese turbines manufacturers, very few of the 17 companies that participated were already doing business in the Chinese market. However, by early 2007, 7 companies of those 17 had started working in the Chinese market. Most of the Danish sub-suppliers that have actually started working with China have been there less than 2 years as an individual company. There are only very few companies among our members, such as Eltronic, that have been out there for 5 years.
HGJ: Until now, no one really understood how big the Chinese market is. The Chinese government set a target of 30GW for 2020 but the market might actually reach up to 300GW over that period. In the coming years, there will be a lot of things happening in the Chinese wind industry.
Which role do you expect European companies to play in the Chinese wind industry?
HGJ: It will be easier for the sub-suppliers than for the large turbine. If you look five years ahead, you will see how European sub-suppliers can play a very important role, because they offer very specific components that are very difficult to be replaced. Therefore, in the coming years the sub-suppliers will play a great role in the industry.
RB: But it demands that both the Danish sub-suppliers and the Chinese manufacturers realize that they will need to collaborate. I believe that both parties for the time being are a little bit afraid. The Danish sub-suppliers might be a little bit afraid to tell too much because the Chinese might just copy their products, and the other way around the Chinese turbines manufacturers might be a little bit reluctant to enter into a cooperation agremeents with the sub-suppliers that is too open.
Which role should the Chinese and Danish governments be playing in this process?
HGJ: They do not bring people together but offer the opportunity of knowledge sharing between Danish and Chinese companies in an educational manner. I really think that it is up to the companies, and that is much healthier too. Personally, I believe that finding the right connections is one of the most important things in China. That is why the DWEG plays a very important role, because we act as a network.
RB: What we try to do on a small scale is to provide the individual companies with a handpicked personal relationship. We can just open the door and they must then sell their products. We give them the opportunity to work alongside the most high profile Danish companies.
Do you believe that Danish companies have gotten complacent to some extent as a result of having such a strong home market for decades?
HGJ: To some extent yes, because they have had really good relationships with Vestas and Siemens, but now that is about to change. Companies are starting to change the corporate language from Danish into English as they recognize that the future is international.
The companies that are willing to go to China do truly believe that there is great potential to create long-term relationships. But there are clearly four stages when doing business with China. Firstly, the Chinese companies are amazed by the processes and technology behind building a turbine. Then they become more reluctant because they believe that they have already obtained all the necessary knowledge build wind turbines by themselves. Then during the third stage they start to understand how complicated the processes are and finally during the last stage, they realize that partnerships are required.
Danish companies also realized that the Chinese thought that building a turbine was just a matter of putting 7 different components together, but we all know that that is not that easy. They have realized that there is a huge market potential and that they have the know-how to enable the Chinese companies to succeed. We just have to ensure that those members that have taken the decision to enter the Chinese market are not moving too slow.
| Company: | Danish Wind Energy Group |
| Position: | Chairman |
| Country: | Denmark |