Tommy Gundelund Jespersen, kk-electronic
Release Date: 2009-05-05
After a career in Bang & Olufsen, FiberVisions, and LEGO you made the shift to kk-electronic and the wind industry. What surprised you the most about the wind industry?The first thing that really caught my attention was the entrepreneurship that you find in this industry. When I arrived at kk-electronic in 2004 the wind industry was still a relatively young and undeveloped industry. The industry was based on workmanship that had to be industrialized and then globalized. This company, with 200 employees making control systems and Bonus as a major customer, was developing a new control system for every project. The lack of standardization and structured processes really caught my mind.
What also surprised me was the quality issue. At that time the whole industry’s approach to quality was out of focus, there were problems with many components while the market demanded more and more efficient turbines. The industry tried to develop bigger turbines while in my mind it never optimised the ones that we had before we jumped to new turbines. Basically, that is what we are seeing in China at the moment, where companies have very ambitious plans but they might run into problems if there is no increased focus on quality and optimization of existing turbines. I foresee a similar situation in the Chinese market, but I must say that they are really ambitions.
You took the position as a CEO of kk-electronic in 2004, when China was not viewed as a potential market. When did you first identify the opportunities in China?
We started to consider China as an important market for kk-electronic in 2006 and we have moved very fast since then. The funny story is that our biggest customer, Siemens, asked us to help them building their business in China. When we were travelling around China a lot of Chinese companies approached us and expressed their interest in working with kk-electonic. At that time I made the decision not to enter China alone because this company is growing 40% every year so we need to focus on our existing customers. My experience from the fibre business taught me that expanding in Europe, China and the US at the same time its not feasible. When you have very good people running your operation and when you start to move them abroad, the backbone of your business is going to be challenged. If I would have started a kk-electronic business in China alone then I would have had to move the best people out of my core organizations which would have created problems for any company growing at 40% annually.
In the end you were approached by Chongqing Qianwei Instrument & Metering Factory to enter into a joint venture, why do you believe they selected kk-electronic?
It is a funny story. Basically there is no logic for Qianwei to be in the wind turbine business, but this is a state owned company that already had ten years experience in working with a joint venture partner from Europe based on a partnership with a German company manufacturing gas meters. Our Chinese partner Chongqing Qianwei Instrument & Metering Factory operates under the CSIC umbrella, which is a state owned company with 180,000 employees. Haizhuang, one of the companies of Qianwei, is manufacturing 850GW and 2 MW wind turbines. The 50-50 joint venture company that we established in Chongqing is called kk-Qianwei ands started by opening a 130.000 sq meter factory and hiring 100 employees. Of course, we will to increase this figure dramatically. Basically kk-Qianwei will supply control systems to Haizhaung but we are also allowed to work as sub-suppliers for other turbine manufactures which gives us an excellent positioning.
As a private foreign company it is really difficult to establish relationships in the Chinese market, and I estimate that many companies will face serious difficulties. That is why we decided to enter the Chinese market through a joint venture. We are the first Danish company that has decided to go for this model and it is really successful and beneficial for both parties because we provide the technology while Qianwei brings in the business. We are both sharing the same goal to create a successful company and this will be achieved if we work together.
After the 16 meetings we held to establish this joint venture I may say that we know each other pretty well. The good thing is that this joint venture is based on exchange. kk-electronic contributes the know-how and technology and our partner in China knows the customers and has very good marketing capabilities. This combination of competences in combination with the high level access in China would have been much harder to achieve for kk-electronic independently.
What will be the main focus of kk-Qianwei in the coming years?
Our main long term focus will be on offshore because kk-electronic is one of the only control system supplier that is experienced in offshore control systems. Technology-wise we are ahead of both Chinese and international offshore control system suppliers, although Mita-Teknik is a good competitors, but moreover we are a Chinese company in China and a Danish company working in China in the minds of our European customers.
We do not want to have a lot of customers because our business model is based on offering total supplier solutions rather than selling control systems. That is why we try to be really selective with our clients. Selecting the right customers in China would definitely have been much more complicated without partnering with Qianwei.
Does the fact that you entered into a joint-venture with Qianwei imply that you will be working primarily with state owned companies?
No, they definitely push us to work with different companies. We simply need to go out into the market to ensure that we have the right pricing and stay competitive. If you just work in a closed system where you always win the orders you might get lazy, you have to loose some orders as well to stay on the leading edge. For us, the focus on the quality of our products and the performance of the turbine is crucial. When we optimize the output of the turbine we will have happy customers. Our Chinese customers will need more help in the start-up phase and we will provide that support.
Which role will the business in China play in the development of kk-electonic over the next 5 years?
In five years from now our China business will be bigger than the total business of kk-electronic today. I love the country, the food and the culture, but now it is time to capitalize on the opportunities in China and good decisions shall be made!
| Company: | kk-electronic |
| Position: | CEO |
| Country: | Denmark |