EC Workshops 16.6. - 18.6.1997

Sunda Solar Energy Technology Co., Ltd.
Beijing, June 10th, 1997

A Brief History

	1985
	Dornier GmbH, a daughter company of Daimler-Benz Aerospace AG, and Beijing Sunpu Technology Co., a daughter company of the Beijing Solar Energy Research Institute, start their joint research and development activities for vacuum tube solar collectors. The research work is funded by the Beijing Science and Technology Council, the German Ministry for Research and Technology, the United Nations Development Program and both companies.

	1993
	Establishment of a pilot production plant at Beijing Sunpu Technology Company
to manufacture vacuum tube solar collectors with heat-pipe and flat absorber.

	1994
	Export of vacuum tube solar collectors to Germany. Marketing and Sales organized by Daimler- Benz Aerospace. Begin of Joint Venture negotiations between Sunpu Technology and Daimler- Benz Aerospace.

	November 13,1995
	Joint Venture Contract signed.

	December 18, 1995
	Legal  establishment of Sunda Solar Energy Technology.  

	June 6, 1996
	Opening of the new production site in SanHe, Hebei Province, to increase the manufacturing volume of vacuum tube solar collectors.
	
	July, 1996
	Establishment of Sunda Solartechnik GmbH, Friedrichshafen, a wholly owned subsidiary for import, marketing and sales in Europe. 

The New Company

 
 Daimler-Benz Aerospace

  Sunpu Technology Company

	      	      	

					49%								51%

		 

Beijing Sunda Solar Energy Technology Co., Ltd.

			

					

		Research, Development, Marketing and Sales of
		Vacuum Tube Solar Collectors for Heat Supply in
		China and in Export Markets 

The Locations 

	Headoffice in Beijing, Haidian District

	-	Administration
	-	Research & Development	

	Manufacturing Plant in SanHe, Hebei Province

	-	27.000 m2 land area
	-	8.000 m2 workshop area
	-	500.000 tubes per year (planned capacity)

	Subsidiary in Friedrichshafen, Germany 

	-	wholly owned subsidiary company
	-	Import, Marketing, Sales, After Sales Service
		for European markets 

The New Company

	Company:			High-Technology Joint Venture
	Headquarter:		Beijing
	Manufacturing: 		SanHe, HeBei Province
	Staff: 				280 employees
	Scope of Business:	Vacuum Tube Solar Collectors for heat supply
	Export:				Germany, Austria, Switzerland, Singapore, Korea, Australia etc.

The Products

SEIDO 1
Vacuum tube solar collector with Heatpipe and Flat Absorber

The selective coating of the absorber plate transforms the solar radiation into heat
(> 92%) with almost no energy emission.

The heatpipe, mounted in the absorber, transports the heat very quickly to the heat circuit, where the energy is fed in by a metallic heat link. The fluid, which transfers the heat to the hot water storage tank, circulates in the heat circuit, but it does not flow through the collector tubes. This enables an easy installation and provides a safe and reliable operation of the system. 

The stable ultra high vacuum prevents heat losses and provides high performance even at low outside temperatures. It also protects the absorber and ensures a long lifetime of the collector. 

The Products

SEIDO 3
Vacuum Storage solar collector (market release 4th quarter 1996)

The hot water storage, made out of stainless steel,  is integrated into the collector tube. The hot water is directly produced within the collector therefore the system does not require any additional external storage. The system operates on normal water pressure.

The stainless steel tank carries the selective coating and acts as the absorber.

The vacuum provides additional insulation for the stainless steel hot water tank, prevents heat losses and provides high performance even at low outside temperatures. It ensures a long lifetime of the collector.

The Products

SEIDO 5
Vacuum tube solar collector with Heatpipe and Bended Absorber 

The bended absorber plate increases the energy gained from the solar radiation as it follows more precisely the turn of the sun in the morning and the late afternoon hours. 

The heatpipe, mounted in the absorber transports the heat very quickly 
to the heat circuit where the energy is fed in by a metallic heat link. The fluid that transfers the heat to the hot water storage tank, circulates in the heat circuit but it does not flow through the collector tubes. This enables an easy installation and provides a safe and reliable operation of the system. Single tubes of the system can be exchanged without interruption of the system operation.

The stable ultra high vacuum prevents heat losses and provides high performance even at low outside temperatures. It also protects the absorber and ensures a long lifetime of the collector.

Joint Venture Planning and Realization - Timetable 

10/ 1994
Discussion and pre-negotiation with the Chinese partner on a Joint Venture.
Preparation of a company internal proposal.

12/ 1994
Letter of Intent. Establishment of a company internal project team to proceed with
the Joint Venture preparation and negotiation.

01 - 05/ 1995
Preparation of the Feasibility Study (business plan, investment plan, financing,
market research); establish contacts to Chinese Authorities and supporting
institutions (e.g. banks)

06 - 07/ 1995
Approval of Feasibility Study within company and with Chinese Authorities.
Joint Venture Contract negotiations. Due Diligence check within chinese partner.

09 - 10/ 1995
Approval of Joint Venture Contract and articles of Association within company.
Final discussion on Joint Venture Contract with  chinese partner. Chinese language version of Joint Venture Contract, Cross check of English and Chinese contracts. 
Fix date of contract signing for November 1995 (visit of German chancellor Kohl to Beijing)

11/ 1995
Joint Venture Contract signature. Start approval process with MOFTEC.

12/ 1995
Approval by MOFTEC and issuance of business License

01/ 1996
Start operational business (all staff meeting, rent office space, office equipment, employ personnel etc.)

01/ 1996
Start application to open own subsidiary company in Germany (Feasibility Study, Financing scheme, Articles of Association)

06 /1996
Approval by Chinese Authorities to open the subsidiary in Germany (Chinese Embassy, Bonn, MOFTEC Beijing, Foreign Exchange Control)
Establishment of Sunda Solartechnik GmbH in Friedrichshafen. Start of operational
business from July 1997

07/ 1996
Intensify export relations and establish contacts to potential customers in Korea, Japan, India, and South East Asia

11/ 1996
Organizational change in domestic marketing and sales. Transfer sales responsability from JV partner to JV own sales group from direct customer sales

Joint Venture Planning and Realization -  Support and Information

General
Seminars on China held at various occasions and by different institutions
Back-up literature, articles, etc.
Discussion with exisiting JV and Representative Offices
Embassy and Trade Office (e.g. German Trade Office Beijing: updated list of German companies in China, support in all questions related to business in China, establishment of contacts, etc.)

Germany: 
BfAi, DEG (German Investment and development Co. Ltd.), GTZ (Technical cooperation), Ostausschuﬂ der deutschen Wirtschaft, etc.

China:
Chinese embassy, China Center for Business Cooperation and Coordination (CCBCC), China Council for Promotion of International Trade (CCPIT), IAS- Investment Advisory Services, etc. 

Legal procedures and requirements
Specialized Law Offices (e.g. P¸nder, Volhard, Weber, Axster Office Beijing)
Own legal division or legal personnel
Publications and literature on relevant laws and regulations

Business plan, Chinese business requirements
Own company requirements
Discussion and information with local foreign companies and existing JV  
Auditing companies (e.g. KPMG China Desk, Frankfurt)
Consulting Companies
Literature (Life and Death of a joint Venture, etc.)

Financing
Own company requirements and possibilities
Local banks (Bank of China, Construction bank, etc.)
Information from foreign commercial banks (e.g. Commerzbank, Dresdner Bank)
Venture capital companies
Joint Venture Financing programs by government or institutions (ECIP, DEG, etc.)

Chinese Partner
Due Diligence Study (with experienced Auditing company)
Back-up Information from secondary source if available and accessable
Company brochure, product leaflets, balance sheets, profit and loss statements
Own observations and discussions with senior management personal and managerial staff

Chinese Market Information
Own market research
Company brochure, product leaflets, balance sheets, profit and loss statements
Own observations and discussions with senior management personal and
managerial staff

Joint Venture Planning and Realization - Obstacles

Start up phase

Selection of JV Partner
Legal structure (Equity Joint Venture, Contractual Joint Venture)
Evaluation of potential business in China and export possibilities
Selection of own expert team to prepare JV discussion and negotiations
High start-up cost (travelling expenses)
Language and country requirements
Location requirements
Legal advise in preparation of Letter of Intent

Realization phase
Feasibility Study
Market research  study
Business plan
Investment, registered capital, total amount of investment
JV contract negotiations, definition of go and no go position
Language requirements (negotiation in Chinese language?)
Legal advise (Law of the PRC on Joint Ventures, Labour Law, etc.)
Articles of Association
Shareholding relation, Board of Directors, Board of Mangement
Due Diligence of Chinese partner
Location factors (Special economic zones, Land use rights)
Search and selection of Chinese mangement and staff
Establishment of Guanxi (visit to approval authorities and supporting institutions
Financing via local banks
Evaluation of investment (assets) by independant auditing company
Taxation (Income tax, Value added tax, etc.)
Search and selection of foreign expatriate staff
Registration of Joint Venture contract, Approval by MOFTEC, Planning commission, Industrial bureau, etc.

Operational Phase

Company organization
Training of Mangement, Staff and workers
Quality requirements in production, office and service divisions
Company rules and regulations
Teamwork between foreign and chinese management and staff
Financing via local banks
Bookkeeping, Accounting, Auditing, Reporting according to advanced standards
Human relations, Social factors
Business establishment, sales network, service network
Local sourcing of machinery, materials
Networking to decision leaders (Guanxi)

Joint Venture Planning and Realization -  Recommendations 

1. Selection and specification of an expert team to conduct the whole
Joint Venture Planning and Realization Process:

-	Board member
-	Legal person
-	Controller
-	Technician
-	Designated General manager for the Joint Venture
Time requirement:			ca. 1 - 3 months

2. Specify back-up support team and establish contacts

-	Consulting company
-	Auditing company
-	Law office
Time requirement:			ca. 1 - 3 months
Cost:						2.000 - 6.000 DM per day

3. Back-up research on market, potential partner, budget, general requirements

Time requirement:			ca. 3 - 6 months
Cost:						China visit 1 week/person: ca. 10.000,- DM

4. Selection of potential partner, technical or other cooperation if feasable

Time requirement:			ca. 2-12 months depending on the number of potential 								partners and the intensity of the selection process
Cost:						number of visits / length and details of cooperation

5. Project proposal, letter of Intent, feasibility study, contract negotiations,
Joint Venture Contract, Start of operations

Time requirement:			ca. 6 - 12 months depending on the intensity and progress 							of work
Cost:						depending on number of visits, volume of external service 							work

Main Conclusions:

Double Check on all data, information etc. received during the JV Planning and negotiation process

Visit to potential customers and dealers to check Chinese Market Requirements
before JV foundation

Discussion with JV partner Management and designated JV Management and staff
before foundation of JV

Plan to dispatch expatriate personnel for training and education temporarily during 
the JV start up phase

All key management positions must be guided and supervised by experienced foreign management (Production, Marketing and Sales, Accounting and Bookkeeping,
General Management)