Grigory Potemkin was the minister who led Russia’s war effort during the Russo-Turkish conflict in the late eighteenth century. But despite his military career, Potemkin’s legacy rests more on his efforts to deceive Empress Catherine II on her visit to the Crimea in 1787, when he built a series of pretend villages on the Dnieper River.
Historians still argue whether the tale of the ‘Potemkin villages’ is even true but the phrase has stuck as a way of describing a form of deception designed to impress onlookers. And the strategy seems to be alive and well in China’s renewable energy sector, where companies have been busying themselves creating an illusion of activity to mask the dire conditions in the industry.
Xing’an County in Guangxi province is one place where reality is failing to live up to the hype. Until recently, Xing’an had no solar industry whatsoever, but it now has plans to build a Rmb100 billion ($15.98 billion) industrial park specialising in renewable energy. In support of the plan, it claimed to have 18 businesses already operating in the photovoltaic industry last year, with annual output of Rmb4.7 billion of equipment.
Not all is as it seems, reports China Enterprise News. A reporter from the newspaper visited what is supposed to be the largest plant in the park, Xing’an Jiyang PV Corporation, on the pretext that he was helping relatives to find work. But an over-talkative employee at the door told the visitor that orders were so low that he had no chance of getting his family member a job. In fact, the factory only spent half of its time in production and had already fired at least half of its thousand workers.
This was a very different situation to the reporter’s encounter in an earlier visit, where he had witnessed white-coated workers toiling on a busy production line.
A visit to a nearby village revealed what was really going on. Local residents explained that whenever an outsider judged to be important came to inspect the factory, they would be summoned to pose as workers, only to disperse back to their rural jobs once the visit was over.
As for the proposed solar park plan, the locals complained that it was probably a ploy to appropriate land from nearby villages. China Enterprise News also reported clashes in Tielu village earlier this year when the county government gave local land to solar firms without gaining majority consent from nearby residents.
But fake factories aren’t limited to the solar industry, it seems, with wind turbine manufacturer Sinovel also accused of employing similar tactics. When Sinovel went public early last year, it said that it would be building a plant in Yancheng to produce a series of heavy duty turbines for major offshore wind projects. But nearly two years later and Yancheng phase II has yet to be completed, reports Capital Week. Only Rmb110 million has been invested, leaving the plant as little more than a “shell”.
Capital Week’s source had more news, too, especially that the facility has been lavishly furnished with Italian furniture, but that no work actually goes on there. Sure enough, the allegation was also that the facility is populated with staff from Beijing when it receives official visits, who act out research and development work.
Sinovel hasn’t commented on the article, although Xinhua has reported on the allegations too.
The firm is currently battling with an oversupply crisis in wind power equipment and National Business Daily has said that Sinovel had Rmb8.52 billion of unsold inventory at the end of the third quarter. A cash crisis seems to be beckoning, which is probably why Sinovel is reducing the number of staff nationwide. Last month Bloomberg reported that 351 people were told to take leave, about 12% of the work force. They’ll get full pay for the first month, and then just 80% of Beijing’s minimum wage (Rmb1,260) thereafter.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.