The Many Facets of China Cleantech

German Solar 2010

The modern solar industry was cradled in Germany. It was the firstcountry to offer robust incentives for solar installations, and nowboasts the largest solar market in the world. (See, solar can thriveanywhere.)

And while that world-leading market was developing,German solar companies were on top of the world…In early2006, as the solar market really got underway, German companies likeQ-Cells and SolarWorld (SRWRF.PK) doubled shareholders’ money inside of two months. Take a look:

But the Chinese are great atreverse engineering, and when they saw how much money was being made —and how they could use solar in their own country — they quickly tookaction. In less than a year, multiple Chinese companies enteredthe market. Aided by cheap labor and relaxed government regulation,these companies were quickly able to steal market share from theGermans.

And while a few German companies had doubled investors’money in early 2006… by the end of 2007, there were several Chinesesolar firms that had tripled in value or better:

Chinese Solar 2007

Those companies would go on tosupply not only Germany, but also the rest of Europe, China, and eventhe United States.

Of course, we were advising premiumGreen Chip members of this situation as it unfolded, and many walked away with triple-digit gains in hand.

But the solartakeover was only the first leg of China’s cash-rich cleantech trinity.

China’s Wind Energy Industry

Just likethe solar market, the wind energy market was pioneered outside ofChina, namely in the Netherlands and Scandinavia, where wind power hadbeen used for centuries.

Between 2003 and 2008, as the windindustry really ramped-up, investors made good money playing Europeanwind turbine companies. Vestas and Nordex  were among the few pure wind plays onthe market, and their shares rallied as wind farms sprang up around the globe.

But it wasn’t long until China made a move on thisindustry as well.

After buying several turbines from theirWestern counterparts, Chinese companies quickly learned how to buildtheir own quality version. And soon, wind farms were being built allover the Middle Kingdom.

In fact, in 2009, China not only builtthe most turbines in the world… they also installed the most wind turbines in the world.

And almost overnight, Chinesecompanies like Sinovel Wind and GoldWind Science — which you probablyhave never heard of — have become global Top 10 producers of windturbines… and are knocking on the Top 5 door.

Green Chip investors have profited from this trend as well, as companies doing windbusiness in China have blown passed European-based companies likeVestas:

China Wind 2010

But if you missed the Chinese solarand wind runs… the third horse in this profitable trifecta is justnow getting out of the gate.

China’s Clean Auto Industry

By now, the Chinese have realized three things:

  1. They can produce high quality / high profit cleantech products;

  2. They can ensure economic prosperity and energy security while reducingpollution by deploying those assets in their home country;

  3. They can make even more money selling those products to other countries.

As you just read, each of those three tenets was realized duringthe Chinese wind and solar booms.

And it’shappening again… in the auto industry.

Undoubtedly, you’vewitnessed the trend toward more efficient (and even electric) cars.Led by Japan (and, to a lesser extent, the U.S.) sales of smaller, more efficient automobiles have skyrocketed in the past two years… andwill only go higher.

Honda, Toyota, and Nissan were well-positioned to benefit(and they have), and Ford has also ramped upits offering of efficient autos.

Now, China is gearing up itseffort. Members of its billion-strong middle class are buying more and more cars each day. They want those cars to be efficient. And theywant those cars to be Chinese.

You can already see how Chineseauto companies are performing as other mainstream brands continue tostruggle:

China Auto

But there’s one Chinese clean car company about to blow all the others away.

Theymake a series of gas, hybrid, and electric cars that are all the ragein China. And they’ll soon be on sale in the U.S and Europe — the same as we saw with solar and wind.

The company sold 165,000 cars in2008. But that grew 170% in 2009 to over 450,000.

What’s more,China is now the world’s largest car market, with 13 million cars soldlast year.

In all reality, this company could become the world’slargest automaker by taking over sales in China, and then the rest ofthe world.

They’ve already got backing from Buffett and the right portfolio of cars to make it happen…


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