Within China, the support of the central government can make or break a company. This is simply a necessary evil. If a company can garner favor with the correct people and secure support, the opportunity for profit is all but assured.
China Wind Systems Inc., a supplier of forged metal products to the wind, textile and industrial complex of China, works to provide rolled rings and other forged products primarily in Wuxi City, China. The company has recently completed construction of a state of the art manufacturing facility where it plans to focus its attention on the wind power aspect of the companyâ€™s business.
To understand the value of this company one must understand the commitment that the Chinese government is lending to the wind industry and, more to the point, its overall economy and â€œrecovery.â€ The general perception that the Chinese economy needs recovery is misleading. To begin with, falling from double digit growth to 6 or 7% is never positive when people are used to double digit growth. Still, most developed countries would most certainly enjoy being able to have 6 or 7% GDP growth. Add to the equation that the country has enacted a solid stimulus package, which most agree is the best package offered by any country, and one begins to understand the value and position that the company finds itself with.
To support this commitment to wind power and make use of its stimulus efforts, the Chinese government has committed the equivalent of $146,000 to the company in the form of a grant. As the company has just completed a new facility, it will use this grant money as working capital to move itself forward as industrial production and wind power projects begin to pick-up pace. At present, the company estimates that there is a 2,000 megawatt backlog within the country for gearboxes. It is here where the company feels it can benefit. It also feels that there is a real bottleneck in the countryâ€™s supply chain for wind power and that there are other aspects of the manufacturing sector for wind power where it can also benefit. Given current conditions and the needed commitment from the central government, China Wind Systems is uniquely positioned to profit nicely well into the future.