China's 'Sun King' Stages an Unlikely Battle With Local Government
WHY YOU SHOULD CARE
Huang Ming joins other Chinese entrepreneurs challenging officials amid struggles and a shifting market.
By Tom Hancock and Sherry Fei Ju
China’s Himin Solar was flying high a decade ago as the world’s largest solar water-heating company, securing $100 million in an investment round involving Goldman Sachs.
But this year, with sales plummeting as consumer preferences have shifted, its founder has embarked on a rare confrontation with government officials.
The company stands as an example of how large Chinese groups can struggle to adapt to their fast-changing domestic market. As the financial strains tighten, Himin’s founder, Huang Ming, has joined an emerging group of Chinese entrepreneurs who are challenging local officials over debt.
In February, Huang took the unusual step of writing a public letter accusing officials in the company’s home province of Shandong for failing to compensate him as promised for RMB 3 billion ($440 million) he spent building facilities for a solar conference eight years ago.
His February missive … was unusual in China, where private entrepreneurs strive to maintain a low profile.
At the height of its success in 2008, Himin launched an audacious $740 million plan to build “Solar Valley.” The project, in the city of Dezhou in Shandong, features solar-powered lampposts illuminating wide boulevards leading to a “low carbon” hotel beside what the company advertised as “the Biggest Solar Energy Production Base in the Whole World.”
For its headquarters, Himin built the Sun-Moon Mansion, a huge fanlike building covered with photovoltaic cells and vacuum tubes. But the company was caught out by Chinese consumers switching from rooftop solar to electric and gas-powered water heaters.
Huang, dubbed the “Sun King” in Chinese media, says the Solar Valley project made a loss. “At that time, I was so hotheaded that I felt that I could do anything and earn so much money,” he told the Financial Times.
Himin, which Huang says still counts Goldman as a shareholder, once had the largest share of China’s now RMB 20 billion solar-powered water-heating market. But the market shift compounded its investment losses.
“The industry began to decline after 2013,” says Hong Shibin, executive director of the marketing committee of the China Household Electrical Appliances Association. “Now everyone is fine with the convenience of electric water heaters and the practicality of gas water heaters.”
Information released ahead of a now mothballed initial public offering showed that Himin’s annual net profit shrank from RMB 197 million in 2008 to RMB 28 million in 2011. Huang blamed cost cutting by Chinese property developers opting for cheaper brands of solar heaters.
His February missive, which called out the top Communist Party official in Dezhou by name, was unusual in China, where private entrepreneurs strive to maintain a low profile. In response to Huang’s letter, local authorities said they would “solve” the problem, without giving details.
It followed similar moves this year by wealthy property and construction entrepreneurs. Analysts said tightening liquidity in China was forcing companies to call in debts — even from local governments.
Huang says he expected a “good result” from the matter, declining to comment further.
Himin has cut its number of stores in China from 9,000 to 3,000, and is betting its future on new product lines and a plan to turn Solar Valley into a tourist destination.
“We can do everything involving solar energy: solar toys, solar barbecues, solar mobile phone chargers, solar cooling, solar heating, solar lights, solar fountains,” says Huang. “We can’t wait here to die.”
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