One of the most pressing challenges for many international businesses is how to navigate the Sino-US economic and political divide. Some do it a lot better than others: Tesla is one of the most high-profile examples of an American firm that is just as successful in China as it is in the US, staying ahead of the geopolitical storm.
Renogy – one of the latest new energy unicorns – is trying to achieve something similar. It sells battery storage products to customers going ‘off-grid’, whether they are travelling around the US in camper vans, fixing panels to the roofs of their homes, or powering up their boats.
Renogy offers a DIY approach, minimising installation costs by providing customers with the parts they need to assemble solar panels and battery storage devices themselves. Part of its marketing message is that it helps people to live more self-sufficient lifestyles that also reduce their carbon footprint. Much of its image is inspired by the independent spirit of frontier America. So it might come as a surprise to most of its customers that its founders and investors are largely Chinese.
Renogy was started by 37 year-old Li Yi, who studied for a PhD in physics at Louisiana State University (LSU) after completing her bachelor’s degree at Nanjing University.
The company’s website and media coverage is full of references to Louisiana and California, where it is now headquartered. The depiction is of a classic American start-up, which began in a college dorm with a $5,000 loan and grew into an international business.
Li wouldn’t have succeeded without LSU’s incubator for entrepreneurship, she adds. “Without their help, I would have been a lot more lost. It was through the programme that I was able to network and partner with various companies.”
In 2010 she started out by sourcing energy storage products and selling them on eBay, employing the person who packed the boxes for her as Renogy’s first VP of operations. The box packer’s sister later became her head of HR as the company began to expand.
She describes its mission as “to solve different electricity crises, from no electricity at all, to unstable electricity”.
In 2020, Li made a rare reference to her roots in China when she gave an interview to the newsletter team of VC firm Hemi Ventures on the platform Medium.com. She described how Renogy enjoyed an advantage over homegrown US companies.
“We combine the advantages of two markets,” she explained. “Compared with other Chinese companies in the US, we are more familiar with the market because we hire native staff to do marketing and branding. Compared with American companies, we also have stronger capability in the supply chain because we have a strong R&D team in China.”
“Our familiarity with China’s supply chain enables us to purchase products at better prices,” she added.
However, by this point Renogy was also being forced to contend with the Sino-US trade war, after former US president Donald Trump ordered 30% tariffs on imported solar panels in 2018.
With her business under pressure from the associated price increases, Li had to fire a quarter of her staff. “There’s no way to find another domestic supply chain within a week,” she complained. “The tariff is punishing American companies, the whole industry and everyone in this chain.”
This March the US Department of Commerce followed up with an investigation into Southeast Asiansolar manufacturers, after allegations they have been helping to skirt the tariffs by selling panels made from parts imported from China.
But the Biden administration announced earlier this month that it would allow the solar industry a two-year window to use imported panels of questionable origin until domestic production can be brought up to speed.
Renogy’s strategy of taking advantage of cheaper manufacturing costs in China had already become harder to implement. Over the longer term the supply chain challenges look set to continue as well, with reports that the Biden administration could invoke the Defense Production Act to drive US manufacturing of solar panels and other clean energy technologies.
But at least Li seems to have found it easier to source funding from her native country since setting up Renogy Technology (Shenzhen) in 2017. Renogy China began raising capital from private equity sources a year later, the local media reports, and the company has just completed its Series E financing round. It now has a roster of some of China’s best-known funds, including Beijing-based Sirius Capital, which participated in its first financing round in 2018. In 2020 and 2021, it also attracted Jiayu Capital, founded by former Alibaba CEO Wei Zhe and Firstred Capital, started by former Huatai United Securities chairperson Liu Xiaodan.
S&P data suggests that the most recent Rmb200 million ($29 million) round was completed in June, with Qianhai Fund of Funds as a lead investor. It was set up by Jin Haitao, the former head of Shenzhen Capital, also known as the ‘Southern Emperor’ of China’s venture capital sector
Investors told 36Kr, a news website, that Renogy has an edge in its ‘cross-border’ approach, drawing on a photovoltaic supply chain in China that leads the world. “Its products are invincible because they’re so competitive in global markets,” claims Jiayu Capital’s Wei Zhe. “Renogy makes full use of China’s industrial chain advantage and is the world’s best brand for consumer-grade photovoltaic solutions,” he added.
Renogy also sells its products in China, although Li says that fewer customers are looking for the ‘off-grid’ lifestyle. Instead the company’s sales strategy targets operators of trucks, fire engines and military vehicles.
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