Localisation Strategies of Firms in Wind Energy Technology Development

Abstract

Abstract:The paper looks at the localization strategies of multinational wind in emerging countries of China and India. It explains why these firms are localising new manufacturing and R&D facilities in countries like China and India, and how local knowledge and capabilities are being increasingly integrated into global technology and manufacturing networks of multinationals. It explores the reasons behind the localization of MNC that helps them gain strategic access to wind technological capabilities in emerging economies. It looks closely at the case of Vestas in the expanding wind energy cluster of Tianjin in China and Chennai in India. At the strategic level, it explains the importance of the role of local capabilities and skills in the global production networks of multinationals. At the policy level, the discussions leading from the case focuses on the concrete steps necessary to integrate technology and innovation more closely into development of sustainable energy markets in developing countries.

New Maps, New Questions: Global Cities Beyond the Advanced Producer and Financial Services Sector

“…The energy industry must cope with growing oil scarcity, problems of securing supply, environmental degradation, and growing needs in developing and emerging economies (Dorian et al, 2006). Global energy corporations' location strategies partially reflect such challenges (Perrot and Filippov, 2010). These companies are traditionally not incorporated in the GaWC rankings, which encompass firms that are involved in accountancy, advertising, banking/finance/insurance, legal services, and management consultancy.…”

Fusing East and West Leads a Way to Global Competitiveness in Emerging Economy: Lessons from China’s Leap in Wind Energy Development

“…In order to establish themselves in Tianjin cluster during 2005, success lured foreign firms such as Vestas, had setup a factory with a 363 million USD making it an important manufacturing base in China. Choice of selection of this cluster was due to its location and infrastructure (Perrot and Filippov, 2010). As of now, it has developed a strong value chain with 80 odd local suppliers.…”

Supply Chain Localisation as a Social and Environmental Business Value: How Applicable Is This in Practical Terms?

“…According to Perrot and Filippov (2011), within the renewable energy sector there was also the issue of high operational costs that characterise markets like wind and solar, and which make the markets depend on production incentives, local subsidies, and tax benefits. Thus, sustainable energy companies became attracted to the low-cost advantages and large market size in emerging Asian economies, the relatively adequate level of existing skills and facilities there, and the previous success of destination countries like Taiwan and China in the manufacture of semiconductors and microchips; the stagnation of western markets at intervals between the 1980s and the current decade further catalysed this trend (Perrot & Filippov, 2011).…”

“…Another common social argument against the "internationalisation" of companies' operations is that it results in the loss of jobs in the companies' home countries (Hamilton & Summy, 2011;Alaane & Saari, 2006;Li, 2005). However, Perrot and Filippov (2011) suggested that the transfer of functions such as research and development to overseas locations is not always a "zero-sum game", as it does not by default lead to the closure of corresponding jobs in the home country. Other reasons that are attributed towards the support for localisation include rising labour costs in developing countries, rising energy costs, the export-import balance, currency depreciation, and the leaning of public attitudes towards environmental protection and social responsibility (Longo, Markandya, & Petrucci, 2008;Ristola & Mirata, 2007;Walker, 1995).…”