I am a boring engineer,” he says. “I work 16 hours a day and I don’t really spend money.
Behind this low-key facade, however, is an extraordinary story of a poor Chinese immigrant who came to Canada to advance his education, then created from scratch what has become one of the world’s largest and most successful solar energy firms, with annual revenue closing in on $3-billion.
In 13 years, Canadian Solar Inc. has built three solar panel factories in China and two in Canada; last year alone, it manufactured almost two gigawatts of panels, enough to power hundreds of thousands of homes. Its market cap is about $1.3-billion (U.S.), making Mr. Qu’s personal holding of 27 per cent worth more than $300-million.
But Mr. Qu is reluctant to consider himself a high-tech wunderkind.
“Lots of great companies were built in shorter times. In that regard I don’t think I’m such a superstar,” he said. “The superstars are the guys who do Internet, instant messaging, that kind of stuff.”
He does acknowledge, however, that building a company that makes physical products is more complex than expanding a firm based on software. “Real manufacturing and the energy business takes a much longer time and it is harder work and effort than [a company in] the virtual economy,” he says. “In that regard, I think we have chosen a difficult path. But I am glad we are doing something that eventually will change the energy infrastructure of the world.”
He is also keenly aware that what he has built could collapse if he isn’t careful. “I know that in any industry you can be leaders for a while, but if you don’t watch out and make sure you change your business model, you can be washed away in four or five years. Just look at what happened to Nokia or Nortel or BlackBerry. That is the life of being an entrepreneur. I am aware of it so I am prepared for it.”
That preparation began when Mr. Qu arrived in Canada in 1987, shortly after the Chinese government first allowed students to leave the country to study abroad. In his mid-20s at the time, he had an undergraduate physics degree from a Chinese university, and was teaching in a college in Beijing. But teaching was anything but lucrative, and he didn’t make enough to pay for any further overseas education. “I was making something like 76 renminbi per month, and that translates to less than $10,” he said. Consequently, “applying for study abroad meant applying for a scholarship.”
The University of Manitoba gave him that scholarship, an offer he still sees as extraordinarily welcoming, especially at a time when western countries didn’t understand the quality of education in China. “I was very grateful. Canada was a very open and fair society compared to many other countries.”
But wasn’t it a tremendous culture shock coming to a small city in the western prairies? Not as he recalls. “I didn’t feel it. I guess I was young. At that age, you can venture into any place, any culture, and you will survive. Canada is a lawful society, and the infrastructure on campus was good, and people take care of you.There must have been a culture shock, but when I look back I don’t remember it.”
After completing his masters degree in physics in Winnipeg, Mr. Qu moved to the University of Toronto to do a PhD in materials science. That’s where his interest in solar power took hold.
After graduation, he considered jobs in academia or management consulting, but took a position at Ontario Hydro (now called Ontario Power Generation), working on a solar power project inside the Crown corporation. When that project was sold to ATS Automation Tooling Systems in Cambridge, Ont., he went with it. ATS had also bought Photowatt, a French solar product manufacturing firm, and that gave Mr. Qu exposure to yet another culture.
It also gave him a sense of the social value of solar power. One of ATS’s projects was a Canadian government-supported scheme to help with rural electrification in China. His group developed tiny solar cell and battery systems that could power two lamps and a radio. “It was a very interesting project that gave me a chance to visit these remote areas. People really loved it. It made me think about how I could do more in solar … I felt fulfilment.”
But Mr. Qu admits that, over all, he was bored at ATS, which was losing money on the solar operation and didn’t give it many resources. It was time to venture out on his own.
“All this experience on the technical and manufacturing side, and experience in different cultures – Chinese, Canadian and French – and also experience in government programs, got me prepared to launch my own business.”
He started Canadian Solar in 2001, but at the beginning never dreamed of creating a multi-billion dollar company. “At that time, my vision was probably a small company working on renewables, which [I thought would be] good for human beings and would allow me to feed my family. I am a programmatic engineer. I do it step by step.”
The first step, however, was a big one. A business contact mentioned to Mr. Qu that Volkswagen’s Mexican operation was looking for a solar device to keep car batteries charged when new vehicles were sitting in outdoor parking lots, sometimes for months at a time.
He set to work, came up with a design, and won the contract. “The challenge was that I had a purchase order without a real company. I didn’t even know where the factory was going to be. I had to do my budgeting. Where was the money going to come from, where was the equipment going to come from?”
Canadian Solar ended up building a plant in China, and it lived off the Volkswagen order for a couple of years, shipping hundreds of thousands of units. Mr. Qu created a team, raised money, and in 2004 got another big break when the German government put in place incentives for solar panel installations, opening up an enormous market. The fact that Canadian Solar was already a key supplier to Volkswagen opened a lot of doors. “It meant a lot to my initial German customers. We were at the right place at the right time.”
For the next several years Canadian Solar – and most other solar companies – flourished, as more governments put incentives in place, and sales boomed. The government stimulus that followed the 2008-2009 recession also pumped up the industry, and more and more companies jumped into the fray – an ominous sign.
“In the U.S., they had a recovery plan. In China, they also had a big incentive plan. Everyone had easy access to money and easy access to debt. So, you saw those factories – not just solar factories but all kinds of factories – just mushroom,” he said. “We started to see everyone get into the solar business. The writing was on the wall.”
A perfect storm of issues, including the glut of supply and cuts to European subsidies during the financial crisis, pushed panel prices down and prompted a dramatic shakeout. Some of the biggest players collapsed, along with many small ones, and stock prices tumbled off a cliff. Canadian Solar’s shares went from over $50 in mid-2008 to below $3 in 2012. (They’ve since climbed back to almost $31.)
But Canadian Solar was one of the survivors. A strong balance sheet and conservative capital spending kept it afloat. And the drop in prices meant that solar became more competitive with other conventional forms of energy generation, making incentives less important – a trend that continues today.
Mr. Qu also made a crucial change at Canadian Solar during that period. He decided the company should be not just a cell and panel maker, but 0also get into the business of building solar farms – a segment of the business where the fall in component prices was actually an advantage.
Most of its projects are in Canada, the United States, China and Japan. In most cases, once solar farms are up and running, Canadian Solar sells them to independent power producers who then hold them for the long term.
Kent Brown runs one of those power producers, and his Calgary company BluEarth Renewables is in the process of buying several Canadian Solar projects. He describes Mr. Qu as a “visionary” who was smart to get into the solar business very early on, and then made clever strategic moves to ensure Canadian Solar was a survivor. “He was able to steer that company through difficult times, and come out well ahead of a lot of the other players, really emerging as one of the leaders in the sector,” Mr. Brown said. He is very low key, modest, unassuming, but extremely deliberate and very intelligent.”
Canadian Solar is expanding in Canada, and recently opened a panel-making facility in London, Ont., in addition to its first panel-making factory in Guelph. The corporate headquarters are also in the Guelph facility, which Mr. Qu visits about once a month.
And, he insists, despite the frequent characterization of his company as Canadian in name only, it really is Canadian. Indeed, the only time he becomes really animated during our chat is when I bring up the company’s nationality.
“It is a Canadian company,” he says, his voice rising slightly. “It is registered here. We pay Canadian tax. We have a major operation here. For 2014, Canadian revenue will probably be half of the company’s total revenue. So we do more business in Canada than any other places. So why are we not a Canadian company?”
And, he points out, “lots of companies do manufacturing in China. So what? Look at Apple. Where do they make their cellphones?”
In fact, he says, good Canadian companies should be international. “I hope that Canadians will develop this kind of international mindset.”
Mr. Qu, who is a Canadian citizen, does spend the majority of his time in China, where he lives near the company’s biggest manufacturing plant in Suzhou, just outside Shanghai. But he is on the road – or rather in airplanes – a great deal of time, and he uses that time to e-mail and read industry materials.
Okay, you’re an engineer and you work like mad, I acknowledge, but don’t you have any diversions? He said he does take the occasional ski vacation – often in Japan – and he swims every other day when he is at home, putting in 1,000 metres each time at a health club near his house.
But he’s not a big spender, and admits he doesn’t even know how to shop online. He leaves that up to his children.
Success hasn’t changed him much, although he says he gets less anxious about the business than he once did, since he has delegated a lot of the day-to-day work to his management team. Now he can be the big picture guy.
Since he has a little more free time than he used to, he’s even starting to read some novels. A current favourite author is Chinese writer Mo Yan, who won the Nobel Prize for literature in 2012, and whose novels often deal with politics and sex.
That should be a bit of a diversion for a “boring engineer.”
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