In less than 10 years, firms in China, India and South Korea progressed from no wind turbine manufacturing experience to state-of-the-art wind turbine systems. Consider this: Goldwind from China installed 2,727 MW in 2009, a 140% increase on 2008 that saw its international market share rise to 7.2%. The Indian company Suzlon owns 9% of the global market share. What policies led to such robust domestic wind power development?
Last month, the International Finance Corporation's (IFC's) Cleantech Investment Program hosted Dr. Joanna Lewis, a professor at Georgetown University’s School of Foreign Service, to share research on the strategies used by wind power technology companies in China, India and South Korea to develop wind turbine technology. Lewis is working on a paper that details case studies of the current industry leaders in these three countries, including Suzlon (India), Goldwind (China), and Hyundai, Doosan and Daewoo (South Korea).
In her presentation, Lewis discussed how the primary technology transfer and acquisition strategies utilized by firms in China, India and South Korea included licensing arrangements, mergers and acquisitions that resulted in the transfer of technology ownership, or the joint development of new technology. She emphasized that all of these technology development or acquisition strategies were conducted within the constraints of national and international intellectual property law. Previously, technological know-how was developed primarily by and for the developed world. Today, as technology development becomes increasingly global, firms can take advantage of increasing access to such technological know-how.
There are lessons to be learnt from the different strategies used by the companies to bring wind energy to scale in their regions. India's Suzlon Energy Limited and China’s Xinjiang Goldwind Science & Technology Company are leading wind-turbine manufacturers in their respective home country markets. Both began manufacturing in the 1990s and have used a similar turbine technology licensing strategy to scale up manufacturing. In the early years, Suzlon and Goldwind used foreign licenses to develop their wind turbine technology. As they became more successful, they reached out to additional foreign partners and acquired majority control of foreign companies. With greater know-how, the two companies each ventured into joint technology development.
In comparison, South Korea has been a late-mover with turbine manufacturing―beginning in the early 2000s. Korea’s heavy industry companies—especially Hyundai Heavy Industries, Doosan Heavy Industries and Construction, and Daewoo Shipbuilding & Marine Engineering—were able to enter the wind turbine field because their technological know-how in machinery and shipbuilding were applicable to the wind industry. Their already established global networks and finances provided additional advantages (for more details see this blog post by a research fellow at The Samsung Economic Research Institute). However, wind development in South Korea still lags China and India.
In all three case studies, tapping into global learning/innovation networks is proving to be highly valuable. Suzlon has developed a network of global innovation subsidiaries while maintaining control of enough intellectual property rights to remain at the forefront of global wind turbine manufacturing and sales. Goldwind’s presence has been more limited in the global learning networks, but the company plans to continue R&D, manufacturing and project development overseas. And with a global export focus, Korea recognizes that global technology partnerships will be vital to gain greater shares of the export market and compete with global industry leaders.
Lewis’ study highlighted the need for improving technical capacity in wind turbine design through independent research and testing centers, enabling additional knowledge transfers, and building international innovation networks.
Joanna Lewis’ new paper, "Building a National Wind Turbine Industry: Experiences from China, India and South Korea," will be published in the coming months. To find out more about infoDev, visit: www.infodev.org.