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In China solar is the path to riches

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    In China solar is the path to riches

    PUBLISHED: 10 FEB 2015 17:01:00 | UPDATED: 11 FEB 2015 06:37:59


    Li is at the forefront of China’s clean energy drive.
    Getty


    LISA MURRAY

    China Observed | Over the past 16 years, the title of China’s richest person has changed hands no less than 12 times. Last week, Hanergy boss, Li Hejun, became the latest man to claim the crown, dethroning Alibaba’s Jack Ma, who only months earlier stole the title from property developer Wang Jianlin.

    In comparison to this game of musical chairs, Bill Gates has been at the top of the American wealth charts for 21 years.

    China’s high turnover rate reflects not just the ups and downs of its tycoons’ personal fortunes but also the changing nature of its economy.

    Take Hanergy’s Li, the latest businessman to top the closely watched rich list prepared by Shanghai-based research group, Hurun. An ambitious 47 year old, who believes that solar energy will lead a third industrial revolution, Li is at the forefront of China’s clean energy drive. Hanergy, which invests in solar, hydro and wind power, is hardly a household name. But its subsidiary, the Hong Kong-listed Hanergy Thin Film Power Group (HTF), is now one of the world’s biggest solar companies by market value. Despite none of its manufacturing plants operating at full capacity, shares in the solar equipment maker quadrupled last year. It’s important to note that questions have been raised about HTF’s rapid rise, with most of its revenue derived from sales to the parent company.

    However, accounting issues aside, Li’s presence among China’s wealthy elite reflects the emergence of the green energy industry. Premier Li Keqiang last year declared a “war on pollution” and that has resulted in big policy shifts. Economic growth is no longer at the top of provincial priority lists, local officials are now getting punished for missing air quality targets, and polluting companies are being heavily penalised. Last year for the first time in 14 years, China’s consumption of coal actually declined, albeit only slightly. And last month, coal imports saw a dramatic decrease, dropping 53 per cent from a year ago by volume.

    Property developers, which used to dominate the rich list are now struggling to keep up. In 2007, they made up more than half of the top 20. But as the real estate sector slows down after an unprecedented two decades-long construction boom, property developers take out just four spots these days. Wang Jianlin, founder and head of Dalian Wanda Group, is the exception but he is also one of the developers who spent the last five years diversifying his business and looking outside China for growth. He now controls the world’s largest chain of movie theatres and has embarked on $1 billion hotel developments in London and New York. His group has also bought large stakes in commercial and hotel projects in Sydney and on the Gold Coast.

    Last year, 70 percent of Wanda’s revenue came from its property arm but in a recent interview with Bloomberg, Wang said he was aiming to reduce that to 50 per cent by 2020. His focus instead will be on the burgeoning Chinese film industry as he looks to tap into the changing spending patterns of the country’s rising middle-class.

    These are the same people who now do more of their shopping online, boosting the fortune’s of Alibaba’s Jack Ma. Last year, online retails sales surged 50 per cent according to the National Bureau of Statistics. They now make up almost 11 per cent of total retail sales.

    Indeed, four of China’s top 10 on the rich list made their money from IT. These include the founders of internet companies Tencent and Baidu and smartphone maker Xiaomi.

    Whether Li Hejun can keep his place on the top of the pile remains to be seen. Hanergy is certainly generating some hype, teaming up with Ikea to provide residential solar panels and electric car company Tesla to roll out supercharger stations across China. However, there is some scepticism about whether these are marketing coups rather than revenue raisers. Still, as China moves to address its environmental challenges and the Communist Party puts the weight of its support behind the industry, expect more new energy companies – and tycoons -- to rise through the pack.


    Cheers,

    Samson.
 
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