Sunday, 2024 May 26

Sany Group adopts “bottom fishing” strategy in new energy sector: “Better to make mistakes than to miss out”

At the outset of 2024, an atmosphere of overcapacity pervaded the entire new energy sector: reports of layoffs, salary reductions, and price wars occasionally surfaced from the photovoltaic, energy storage, lithium battery, and new energy vehicle industries. Established players were scaling back, while newcomers aggressively pursued cost-cutting measures, and some cross-industry participants even exited the market.

Against this backdrop, Sany Group, a cross-industry newcomer and leader in engineering machinery, expanded against the prevailing tide, persistently placing strategic bets while its competitors retrenched.

During the Lunar New Year holiday, the second phase construction of Sany Silicon Energy’s ultra-thin monocrystalline silicon wafer project in Shuozhou remained in full swing. Additionally, while some lithium battery factories halted production and laid off workers at the year’s outset, Sany Lithium Energy continued to aggressively recruit talent through various channels.

Photo of Xiang Wenbo, rotating chairman of Sany Group. Photo and header photo source: Sany Group.

At the end of January this year, Xiang Wenbo, rotating chairman of Sany Group, told members of the media that in the new energy sector, it is better to make mistakes than to miss out, emphasizing that anyone capable of assuming such risks and willing to venture should try to do so. A subsequent interview saw him reiterate his stance, stating that the “spirit of adventure” is a fundamental quality of entrepreneurs.

The driving force behind Sany Group’s foray into new opportunities is the booming new energy sectors of the past two years. Sany Group’s new energy portfolio not only includes photovoltaics, lithium batteries, and energy storage, but also encompasses wind power, hydrogen energy, and new energy vehicles, leaving virtually no sector untouched.

Sany hydrogen fuel cell truck prototype. Image courtesy of Sany

Behind this comprehensive strategy lies the new vision of Sany Group to make new energy its third entrepreneurial venture and achieve a leap into the trillion-dollar figure in market value.

In the eyes of insiders in the new energy sector, Sany Group is one of the most underestimated cross-industry players. This is not only because Sany Group’s founder, Liang Wengen, was once China’s richest man, sued Obama, and built Sany Heavy Industry, the wind turbine leader, from scratch, but also because of its extensive experience in navigating industry cycles over the years.

The cyclical nature of the sector dictates that, to capitalize fully and reap dividends, one must claim the peaks and endure the troughs. Behind its expansion against the prevailing market trend, Sany Group leverages the industry downturn to opportunistically “bottom fish” in new energy.

Betting on new energy, including wind, solar, and hydrogen

Sany Group’s entry into the new energy sector began with a focus on wind power. In 2013, as part of a strategy aimed at rebuilding Sany Heavy Industry, its subsidiary, Sany Electric, primarily engaged in wind turbines, wind farms, and photovoltaic power plants, underwent a name change to Sany Heavy Energy. After a period of dormancy, Sany Heavy Energy capitalized on the wind power boom from 2018 to 2020, rapidly ascending to become one of China’s top five wind turbine manufacturers and entering the A-share market in 2022.

The domestic wind power market, known for its intensity, embraced Sany Heavy Energy, which swiftly emerged as a major contender, often bidding at historic lows in project tenders. Its rapid growth propelled it from obscurity to the forefront of the industry, marking its inaugural skirmish in the new energy arena.

Building on its success in wind power, Sany Group diversified into other sectors of the new energy landscape. In August 2022, Sany Hydrogen was established, focusing on R&D, sales, and manufacturing of hydrogen production and hydrogenation systems. According to Zhu Weiqiang, director of Sany Heavy Industry’s power institute, electrification and hydrogen fuel represent Sany’s primary transformative strategy.

Sany hydrogen refueling station solution. Image courtesy of Sany.

Simultaneously, in August 2022, Sany Lithium Energy was registered, with Sany Heavy Industry assuming the controlling stake. Its core activities include R&D, manufacturing, and sales of battery swapping equipment, battery systems, and energy storage stations, marking Sany’s formal entry into the lithium battery and energy storage domains.

In May 2023, Sany Group unveiled its aspirations in the photovoltaic industry with a post on its official WeChat account. According to the announcement, Sany Silicon Energy, the flagship entity driving Sany Group’s photovoltaic endeavors, boasts a fully integrated industrial chain capable of producing ten gigawatts worth of photovoltaic products. This comprehensive setup covers everything from pulling and slicing to battery manufacturing and component production.

Sany Group’s simultaneous foray into wind, solar, and hydrogen energy underscores a grand strategy devised to target the new energy sector. In February 2023, 67-year-old Liang articulated the goal for the third venture: achieving a trillion-dollar market value for Sany Group and fulfilling the “333, 366” targets. The pivotal role of the new energy sector in realizing this objective cannot be overstated.

Over the past two years, numerous leading domestic enterprises, including Midea and Geely, have pursued cross-industry expansions into new energy, aiming to create a second growth curve. However, companies like Sany Group, which dare to concurrently enter multiple new energy industries, are indeed rare.

Photovoltaics and lithium batteries typify heavy asset industries, necessitating substantial capital for capacity building, often requiring the parent company to inject funds in the initial stages. To prevent any single entity from over utilizing capital, Sany Group has implemented clear asset allocations within the group. The four emerging businesses—wind, solar, hydrogen, and energy storage—are each attributed to three listed companies under its umbrella.

Sany Lithium Energy, the lithium battery and energy storage platform, is primarily owned by Sany Heavy Industry, while Sany Heavy Energy oversees the wind power business. Sany Silicon Energy and Sany Hydrogen fall under Sany International, managing the photovoltaic and hydrogen energy sectors, respectively.

Bold in planning, cautious in advancement

Compared to startups that start from scratch, having the backing of a powerful conglomerate undoubtedly facilitates the progress of Sany’s new energy business. Sany Lithium Energy, Sany Silicon Energy, and Sany Hydrogen swiftly established production capacity and applied it across various scenarios such as battery swapping and hydrogen refueling stations.

The existing wind power business and the recently added photovoltaic and energy storage ventures also exhibit certain synergies. Sany Heavy Energy’s wind power division primarily serves state-owned, enterprise-level power developers, who are also customers for centralized photovoltaic and energy storage products. Moreover, Sany Group itself is developing wind and photovoltaic power plants on a large scale, enabling some “internal digestion” of wind power, photovoltaic, and energy storage products.

Sany International, a subsidiary of Sany Group, also manufactures lithium battery equipment and possesses the ability to comprehensively serve lithium battery production lines. According to 36Kr, over 40 equipment units in the first 3 GWh lithium battery production line of Sany Lithium Energy were independently developed by Sany International.

From business synergy, scenario implementation, to upstream and downstream linkage, Sany Group, at the group level, offers extensive support to its four emerging businesses of wind, solar, hydrogen, and energy storage, surpassing the business complementarity and synergy typical of cross-industry enterprises. However, in comparison to the ambitious goal of becoming China’s number one in battery, hydrogen, and photovoltaic equipment, Sany Group’s current foray into new energy appears more cautious and restrained.

Sany Group is carefully expanding in wind, solar and storage sectors. Image courtesy of Sany.

In terms of the photovoltaic business, Sany Silicon Energy initially constructed a pilot production line with a mere 500-megawatt capacity for its entire industry chain and commenced large-scale capacity building only after a successful trial. Yet, its eventual 10-gigawatt integrated capacity is modest compared to the expansion of other newcomers in the photovoltaic industry over the past two years. Similarly, Sany Lithium Energy has only established a 3 GWh lithium battery capacity so far, lacking a significant presence compared to the pace of expansion witnessed in second-tier lithium battery factories across China.

An analyst specializing in the new energy sector told 36Kr that Sany Group’s cautious approach is influenced by intense competition. “The current oversupply has made it challenging for second-tier lithium battery and photovoltaic manufacturers to turn a profit. Those with weak technical capabilities will incur losses when introducing new products. At such times, Sany’s conservative approach is prudent,” the analyst said. From another perspective, the analyst suggested that Sany Group’s cautious strategy in photovoltaics, lithium battery, and hydrogen energy might be aimed at preserving resources for expansion and catching up during the next upturn in the industry cycle. “Sany Heavy Industry currently boasts nearly RMB 20 billion in cash reserves and a debt ratio of only 55%. Funding for expansion is not an issue. It may even be possible to acquire a struggling lithium battery factory,” the analyst added.

Although Sany Group’s initiatives may not be groundbreaking, its defiance of market trends, the price competition it incited in the wind power industry, and its aspiration to lead in wind, solar, and hydrogen energy have garnered optimism among industry insiders. Some industry commentators speculate that, with its cash reserves and contrarian strategy, Sany Group may emerge as the “reaper” of this phase of the cycle. However, it’s worth noting that, while the barriers to entry into the lithium battery and photovoltaic industries may not be high, acquiring advanced technology in these fields can be challenging. Currently, only top-tier manufacturers can profit at the prevailing price levels, owing to their technological edge.

36Kr has previously reported multiple incidents during project construction at Sany Silicon Energy, suggesting that Sany Group’s specialization in the new energy sector may still require refinement. Some analysts also pointed out to 36Kr that, while transitioning from engineering machinery to wind turbine manufacturing was relatively straightforward due to their shared machinery industry classification, photovoltaics, energy storage, and lithium batteries belong to the broader power electronics category, making it more challenging for Sany to establish a leading position in these new domains.

For Sany Group, given its expertise in navigating business cycles and the resources from its core business, expanding during the sector’s cyclical downturn to reap rewards may seem like a feasible proposition. However, achieving Liang’s gargantuan vision for the third venture and securing top spot in battery, hydrogen, and photovoltaic equipment will likely necessitate far greater efforts than what the group is currently undertaking.

KrASIA Connection
KrASIA Connection
KrASIA Connection features translated and adapted high-quality insights published on, the largest and most influential technology portal in Chinese language with over 150 million readers across the globe.

Related Read