This is the second half an interview with Shawn Qu, Founder and CEO of Canadian Solar. It includes our conversation about competition from China, as well as a valuable solar PR leadership lesson. If you missed Part 1, catch up here.
Qu on Maintaining Canadian Solar’s North American Presence
We are talking about the demise of Solyndra and the competition from China. I ask Qu if it’s financially sustainable for Canadian Solar to maintain its Ontario facilities, given the lower manufacturing costs of panels made in China.
Qu has a somewhat unique perspective on this, since he is not only a Canadian citizen born and raised in China, but also because his company maintains factories in both Canada and China, just outside of Shanghai.
First, Qu paints a broad picture, pointing out that there are still solar sectors that are very competitive in North America, such as polysilicon manufacturing, as well inverters and core electronics, and of course, installation. He says, “If you look at the whole value chain of a fully installed solar module cost, let’s say, $3/watt, hypothetically speaking, I would say 50 cents of that $3 of value comes from the Asia Pacific. A lot of the rest is happening in other parts of the world, and a lot is happening in the U.S. So, I will say that even if the Asia Pacific provides modules, so what? Look at the entire value chain, and there’s still lots of value added outside of the Asia Pacific region.”
He adds, “In the case of Canadian Solar, we look at different markets on a case by case. In the case of our Canadian operations, it has an advantage supplying to the local Ontario market.”
“And if the lucrative Ontario FIT goes away in a few years, then what?” I ask.
Qu says that over the next two to three years, Canadian is honing efficiencies so that their Ontario operations will be on equal footing, even if the FIT goes away by that time. “I think that’s possible for several reasons,” he says. “Number one, we’re using fully automated lines in Canada, which minimizes the labor component. Number two, the cost of manufacturing in the Asia Pacific is also going up. For example, the Chinese Yuan [currency] is appreciating against the Dollar 4 to 5% per year. That’s a lot. And labor costs, that’s going up too, at least 20% every year or more than that. In our case, we give our employees there at least a 15 to 20% wage increase every year — just a wage increase, not a bonus or anything like that. So, labor costs there are going up, at least 20% every year, and that’s catching up.”
The other issue besides currency pressures and escalating labor rates are bank loan interest rates in China, which he says can average around 7%. Qu said, “If you’re adding another 4 to 5% RMB appreciation, then the cost of money is over 10%. So, I think things will get more expensive as the living conditions over there improve, and that’s also good. People are starting to consume there, so maybe that will help the Chinese solar market to start and go up, as well.”
On Solar Leadership
We’d met for around 40 minutes and it was time for me to wrap it up. In the past, I’ve criticized Solar CEOs for not leading more publicly and being more of a public advocate for the solar industry, as well as their own companies. And so I asked him about this and his efforts.
Qu responds that Canadian Solar tries to make everyone at the company an advocate for solar and points to the president of Canadian’s U.S. division, Alan King, who Qu says talks to customers and partners often. “Everyone is an advocate,” he says.
Nevertheless, he agreed with me that there were no Steve Jobs of solar who is capturing the public’s attention. He explained, “I agree that in the solar industry, we CEOs often have our heads buried in growing our own businesses. We’re not doing enough to lead the public,” he said. “I want to do my contribution. I’m talking to you, and talking to other media to get our message out, but I agree with you that we should do more.”
I thanked him for allowing me to ask such impolite questions and sharing his thoughts. We shook hands, and I left.
I’m not sure Qu was being modest or polite, but upon returning to Los Angeles, I wanted to see what else had been written about Shawn Qu. Instead of an article, I found the below video of a speech he made at a Waterloo, Ontario TEDx conference. (If you don’t know TED, you should.)
Ironically, the presentation here is just the kind of presentation that I was criticizing Qu and other solar CEO’s for not making more often. Yes, it was to a local Canadian audience, but of course, with a video camera and YouTube, it’s a presentation that reaches beyond Waterloo. (In fact, I’ve passed it on to you now.)
From a marketing and communications perspective, Qu’s presentation is a great solar CEO PR leadership lesson on several levels:
Number one, Qu makes it personal. Qu talks about his background and why he started Canadian Solar, including much of the same information he later told me at SPI. No matter. I didn't know his background and neither did this audience. The point is that Qu shared some personal stories, and I think that's important to this type of public presentation.
Second, Qu speaks simply for the lay audience in front of him. He makes a great comparison to the upfront costs of solar and the upfront costs of building a coal or nuclear plant. He also points out that solar costs have gone down, and many other points that solar industry geeks like us know. However, to most of the public, this is new information that is often drowned out by Solyndra and other misleading solar media information.
Third, Qu’s presentation is authentic. Being authentic is a big buzz word in today’s marketing and communications, and I think this is an excellent example of “authenticity.” For example, Qu speaks with his Chinese accent, but he is still very understandable. And although the presentation was prepared, he speaks naturally without a script. It’s clear he’s being himself and that he believes what he is saying.
Fourth, Qu includes his non-sales pitch vision for the future. As you’ll see, the size of this audience appears to be fairly large, so Qu had a great opportunity to give a song and dance for Canadian Solar products. But he didn’t. Instead, perhaps using his old PhD teaching skills, Qu speaks about a future with smart grid technology, better energy storage, and the possible turning point for solar going main stream — when the environment demands we do something and, in his words, “voices its discontent.” At the same time, Qu concedes the practical: that we still need a balanced approach to energy, which will include fossil fuels for now.
I can’t tell you how important it is for solar CEOs to present their vision for the future to audiences, lay and solar savvy. Many times, it’s all about what they’ve done and what they’re doing, but they often leave out a vision or goal for the future. Our brains are cursed with worrying too much about the future, and we need solar public speakers to show us their vision for a path to stability.
If I have a constructive criticism of Qu’s presentation, it’s that it missed one last element: In addition to the above points, these presentations should include a “call-to-action” at the end: “Help me achieve this vision by doing x or y.” It doesn’t have to be big, but I think it helps the presenter bond with those listening live and on the web. It assures the audience that “Despite solar’s future being challenging, you, the audience, are not powerless. Here’s what you can do.” This last element can be very powerful for solar advocacy, establishing solar leadership authority, as well as for brand loyalty.
And so, technology and dollar/watt aside, from a marketing and solar leadership perspective, I think that Canadian Solar and its stock holders are served very well by its CEO, Shawn Qu. I encourage other solar CEOs to also reach out often to the public with their own authentic presentations and visions for solar’s future.
As always, UnThink Solar.
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