Rise of the sun king

Chinese entrepreneur Liu Jiayong, who built a business empire on the back of Europe's demand for solar power, is looking to Africa for new opportunities

When Liu Jiayong set up a business in his university dormitory, the 25-year-old had no idea that the trading company's registered capital of 12,500 euros would turn him into a multi-millionaire by his early 30s and see him eventually looking to Africa and other emerging markets for new business ventures.

Liu began building a business empire while studying in Germany, with high ambitions despite not coming from a wealthy family. What he did have was a "hunger for success" though. And now the self proclaimed former diaosi, a Chinese term that identifies someone as a "nobody", is a successful businessman, television personality and author, with new ambitions to expand his European solar panel business empire into Africa, where he believes a burgeoning solar market offers strong opportunities.

In his recently published book Diaosi's Breakgthoughs in China, the now 36-year-old shares his journey from a "nobody" living in a small city in Northeast China to the CEO of the Madrid-based Fire Energy Group, one of the leading solar panel distributors in Europe.

"The key is to be adventurous and embrace challenges," he says.

Both going to Germany without basic language skills and choosing to study cognitive science at the University of Osnabrueck, were challenges for Liu. But the real life-changing adventure began in early 2004 when the businessman uncle of one of his classmates asked him if the small trade company he had set up could secure solar panels from China.

Liu and a friend had just launched a two-man company called Eurosten GmbH.

"Both of my partner and I were titled as general managers of the small company, which practically did almost everything from selling cloisonn vases to promoting German trade fairs and events among potential Chinese exhibitors," Liu says.

Liu said yes to the solar panel request without hesitation, assuming they were similar to solar energy water heaters, which are common in China. In fact, solar PV, which converts sunlight to electricity, is far more complicated and an advanced technology.

"At the meeting, we were stunned to find out that the total order of 10 megawatts of solar panels was worth 40 million euros. You can imagine what that huge number meant for some college students like us," says Liu, adding that he realized immediately solar PV could be a very lucrative opportunity for them.

He was quite right. With a goal to produce 35 percent of electricity from renewable sources by 2020 and 100 percent by 2050, Germany was one of the first countries in the world to introduce feed-in-tariffs to encourage the use of solar energy.

Germany has gone from little demand for solar panels in 2004 to being the world's strongest market with the most installed capacity for solar energy. According to the European Photovoltaic Industry Association, for the seventh time in the last 13 years, Germany was the world's top PV market, with 7.6 gigawatts of newly connected systems, in 2012.

In the early days of Germany's move toward solar power it was difficult to buy solar panels in the country, while in China there were a number of factories building strong production capacity in this area. With this in mind Liu decided to make his company a bridge between German solar PV users and Chinese producers.

He failed to secure the 40 million euro deal because in early 2004 very few companies in China were capable of producing 10 megawatts of solar panels, but his first successful deal of 120 kilowatts, worth 300,000 euros, came just a few months later.

With the boom in Germany's solar PV market, came rapid growth of Liu's company. Though he didn't finish his postgraduate dissertation at the University of Osnabrueck, he did manage to earn his first 200,000 euros at the age of 28 and change his 400-euro second-hand car for a brand new Mercedes-Benz E200.

"My family didn't quite understand my choice because in their opinion I was going to Germany to study so I have to come back to China with a university degree. But sometimes you cannot plan out the rest of your life, you just need to seize whatever good opportunities come to you," says Liu.

In 2006 he went to Spain for a solar exhibition and spotted another opportunity: the Spanish solar market. "I suggested expanding our business in Germany to Spain but my partners didn't agree with me. So I split with them and took some clothes for a six-day business trip to Spain and it turned out I never looked back," he says.

With stable suppliers from China and support from local businesspeople in Spain, Liu set up is own company, Fire Energy Group, in 2007, in time to catch the boom in Spain's solar energy market between 2006 and 2008, during which installed solar energy capacity in the country surged from almost zero to 2.5 gW.

That was the height of his solar panel business, but business has taken a downturn in recent years.

Liu refuses to reveal his company's size, but says that it sold 90 mW of solar panels in 2012, compared to 200 mW the year before and 230 mW in 2010, because of a downturn in the European solar power market, an anti-dumping investigation against China-made solar products, and an oversupply in China where solar PV production is estimated at more than 40 gW a year.

According to Liu, his company's profit margin has shrunk from between 10 and 15 percent to just 1 to 2 percent. "With the declining prices set by suppliers in the market downturn, sometimes you can end up with no profit or even worse," he says, adding that the number of his company's employees has fallen from about 200 at its peak to 50.

Tough times in Europe have pushed Liu to rethink his company's business strategy, focusing away from Europe and onto emerging markets, including Africa.

Liu says he was actually relieved when in early June the European Commission decided to impose provisional tariffs on solar panels imported from China.

"The dust can finally settle. Those who have been struggling to make decisions can now put their feet down on whether or not they still want to stay in the solar PV sector," says Liu, who predicts consolidation will take place in the industry soon.

The 36-year-old has no plans to hang up his solar boots like some of his peers have done, but is taking a break from being a full time businessman and weighing his options.

Since last summer, he has been a judge on a popular job-seeker reality television show in China. Liu was inspired to write his book after witnessing the concerns of people looking for work in China.

"I want to take this year off and recharge my batteries. China will certainly be my top choice for further developing my solar business, but there is no easy market and easy money in China," he says, adding that he is looking for a new adventure.

mengjing@chinadaily.com.cn

(China Daily Africa 07/05/2013 page28)