INTERIVIEW-UPDATE 1-Vestas CEO sees 2008 market share revival
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BEIJING, April 10 (Reuters) - Top wind turbine maker Vestas (VWS.CO) said on Thursday China may become the world's number two wind power market this year and the firm expects a sales recovery there to boost its flagging global market share to 25 percent.
Chief Executive Officer Ditlev Engel said Vestas' quality and reliability, and a strong relationship with China's powerful utility firms, would allow it to push back against the swathe of new Chinese rivals that have sprung up in recent years.
"We are positive on the development in China and we are actually forecasting for 2008 that our global market share will be 25 percent," he told Reuters in an interview during a visit to the Chinese capital.
"The only thing that has surpised us is that the market has grown so fast in China in 2007, but our customer base is the major Chinese utilities and that is for me very fundamental in building the business in China," he added.
China's wind power market has been booming on the back of high oil prices and a push from Beijing to increase use of renewable energy, and the government recently doubled its target for installed capacity in 2010 to 10 gigawatts (GW). A government rule that any turbine erected in China must be 70 percent domestically made has helped to foster a competitive local industry that has yet to be consolidated.
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Despite rising competition, China last year became Vestas' third-largest market and the company says its turbines provide around one-fifth of the country's currently installed capacity.
Wind power farm operators have complained of breakdowns among cheaper models, and Engel said Vestas' track record would help it to rebuild market share after a dramatic slump last year.
"We went from 28 to 23 (percent) globally, and this was predominantly because of China," he said.
"It's still early days to see how well these people will develop over the coming years because the reliability of the equipment, as we know from our clients, is absolutely key."
The output of local rivals, in a market where major firms' supply capacity often lags demand, had also helped Vestas by speeding the expansion of the Chinese market and appetite for wind power, Engel added.
He highlighted grid infrastructure and tariff reforms as key areas for development in China.
But because Vestas is focused on returns and profitability rather than market share, he would be happy to be a smaller but successful player in a larger market.
"We could have thrown a lot more megawatts online if we were not paying attention to earnings and long-term reliability. So we have gone as fast as we could without compromising," he said.
"We are running as fast as we can, and if you try to run faster than you can, then you stumble." (Reporting by Emma Graham-Harrison; Editing by Edmund Klamann)
