At Suntech's headquarters in Wuxi near Shanghai, workers in white uniforms produce solar cells in dust-free rooms. Visitors to the company are greeted by the smiling face of founder Shi Zhengrong on giant monitors in the lobby. Shi is one of the so-called "sea turtles," the term used for up-and-coming entrepreneurs who have returned to China from abroad.
The 48-year-old is already one of the richest businessmen in the People's Republic. Companies like Suntech and Yingli now dominate the world market for photovoltaics. The Chinese already generate close to half of global sales and almost 60 percent of profits in the industry, according to a study by the management consulting firm PRTM. This places the Chinese among the "biggest winners" of the last year, the study concludes. Eight companies from China and Taiwan are on the top-10 list of the fastest-growing players in the industry. There are no longer any German companies on the list, however.
This means that the Chinese competition is now more likely to benefit from the billions in feed-in tariffs in Germany than domestic producers. To a substantial degree, German electricity consumers are helping to fund the rise of Chinese solar producers. According to the Rhenish-Westphalian Institute for Economic Research, the average German household pays about 123 a year to subsidize green electricity.
The generous subsidies are a prime example of how the German policy of promoting green energy is pushing things in the wrong direction. Photovoltaics is by far the most expensive and most inefficient method of energy production. It consumes billions, and yet it produces just 2 percent of Germany's energy requirements. A program to promote electricity conservation would be at least as productive, and much cheaper to boot -- but it makes less of an impact than the production of shiny solar collectors. The operators of wind turbines also benefit from this controversial EEG subsidization policy, albeit with a smaller gap between costs and revenues.
The balance of power is also shifting in the wind market. Five years ago, there were four German names among the world's 10 largest wind turbine producers. Today there are only two, Siemens and Enercon, while four Chinese turbine makers are now among the top 10.
The Chinese also benefit from government support in their advance on markets in Europe and North America. But China doesn't promote the industry via consumers -- it helps the companies directly. The country subsidizes the development of large production capacities, which allow manufacturers to reduce their costs even further. State-owned banks then help the wind turbine producers advance into export markets.
Chinese banks offer the operators of wind farms financing for new facilities. The cost of an offshore wind farm can easily reach 1 billion. Of course, Chinese manufacturers are also awarded the contracts to supply the turbines.
In Ireland, for example, the China Development Bank financed the construction of several wind farms, with the turbines being supplied by the Chinese manufacturer Sinovel.
By comparison, medium-sized companies from Germany's famous Mittelstand sector are the rule in the German wind power industry, so that coming up with the necessary funds for investments and expansion abroad can present a challenge. Some also lack experience in doing business in other countries. As long ago as 1998, Hamburg-based Nordex opened a plant in China, in the expectation of receiving contracts to build turbines there. But the Germans soon discovered that Chinese suppliers were often given preference.
A global corporation like Siemens, on the other hand, has both the capital and the connections to establish itself as one of the biggest producers of wind turbines. Siemens' Munich-based wind turbine division, which, together with other companies in the Siemens group, already has a lot of experience in the Chinese market, is taking a different approach. It plans to establish a joint venture with Shanghai Electric, hoping that this will improve its chances of securing Chinese contracts.
Significant changes are taking place in Germany's two most important green energy sectors. Some companies in the wind energy and solar-cell industries will likely disappear from the scene. Others hope to survive by aligning themselves with investors with deep pockets. Corporations like General Electric, Samsung, Sharp and Total are on the lookout for attractive solar candidates, hoping to capitalize on their economies of scale and develop mass production.
These young industries are now undergoing a maturing process that resembles the track record of carmakers in the early 20th century and later the consumer electronics industry. A handful of viable companies are emerging from a field of dozens of pioneers.
Green energy technology will remain a growth industry. But only well-funded companies with strong research capabilities and a global orientation can prevail in the long term. These companies do not restrict themselves to the domestic market, despite the temptations of relying on national subsidies.
Siemens, in particular, is taking this approach in wind power. As for photovoltaics, experts believe that the German technology company Bosch stands a good chance of being a player in the global league.
The company, which is based near Stuttgart, has already invested 2 billion in the solar sector. In the coming years, Bosch CEO Franz Fehrenbach plans to beef up the company's Stuttgart workforce to about 7,000 employees. In this "extremely competitive market," says Fehrenbach, only those manufacturers that move into mass production -- and those that seek their fortunes abroad -- will prevail in the long term.
Bosch plans to build a solar module plant on the Malaysian island of Penang and is investing 500 million in the project. Perhaps Penang will be home to the next Solar Valley.
REPORTED BY DIETMAR HAWRANEK, ALEXANDER JUNG, NILS KLAWITTER AND WIELAND WAGNER