Envision business model

Internet is evolving very fast – now it’s possible to find a free and fast connection almost everywhere.

So, during a VERY long bus trip, I was able to get online and keep investigating on one of the fact that puzzle me more in the wind industry: the fact the Chinese WTG manufacturers are not gaining market share outside their home market.

I already wrote a post about this subject. However, today I just found online an interesting paper on this subject:

“Business model innovation for internationalization: the case of the Chinese wind turbine manufacturer Envision”.

Envision is one of the few (if any) exceptions to the rule: in the last months they have been able to win quite a lot of projects abroad, for instance in the Argentinian tenders RenovAR and RenovAR 1.5.

The authors of the paper think that the success of Envision is based on several key differences in their business model. You can obviously read the full document by yourself, but I will try to summarize the main ideas in this post.

A different marketing position. The concept is that they are selling “cheap technological wind turbines” filling a space in the market somewhere in between “cheap unreliable Chinese WTGs” and “expensive high tech European turbines”. I’m aware that I’m over simplifying here and I hope that no one will be offended.

“All-star”, international human resources. The idea here is that they started from the beginning with the very best specialists in each field, skipping (or shortening as much as possible) the initial learning phase.

The authors also states that they are “customer oriented”. I disagree with this point.

All company in the word needs to be customer oriented, otherwise they simply will not survive in a free, competitive market – they can only survive thanks to monopoly, trade barriers, etc. I think that all OEMs struggle to be customer oriented.

The fourth and last difference in the business model, according to the document, is “supply chain”. The idea is that Envision is using a peculiar mix of cheap China based sourcing and Key Partnerships with company such as Siemens, ABB, etc. to source the most critical elements of the turbines.

I also partially disagree with this concept. To the best of my knowledge, quite a lot of OEMs are purchasing a certain amount of components in China, while for other “business critical” component they have similar Key Partnership.

Leave a Reply

Your email address will not be published. Required fields are marked *