Case Study: Power Electronics: A Spanish SME

POWER ELECTRONICS – from ES

Founded in 1987, Power Electronics is a leading company specialised in the production of Power Electronics devices. 

SME Activities: Production of power electronics.
Size: 300 employees (500 worldwide), with a turnover of over €100 million.
Interests in Japan: Market expansion and establishing a lasting presence.

Power Electronics is the main Spanish manufacturer of soft-starters and variable speed drives. Power Electronics is a fast growing SME that has experienced outstanding growth in the last years, turning itself into the leading Spanish company in the field of high-power A.C. motors, and developing electronic soft-starters, speed drives and solar inverters since 1987. Despite being an SME, the company has positioned itself as a global company, establishing branches on all 5 continents.

WHY JAPAN?

Nowadays, Japan is not only one of the three biggest markets in the world, but it is also at the forefront of the promotion and propagation of solar power, with steep ambitions to drastically increase the percentage of solar power in its domestic energy supply. Therefore Power Electronics sees a lot of potential in the Japanese market, especially to sell its solar inverters.

STEPS TAKEN – 2012 EU-Japan Cluster Support Mission

Power Electronics’ interests in Japan first started a couple of years ago, as they had some Spanish clients who were moving their business to Japan. Through these, Power Electronics also met with related Japanese companies. Afterwards, the company analysed and studied the possibilities of becoming active on the Japanese market, which led to Executive Vice President David Salvo’s participation in the EU-Japan Centre’s EU Cluster Support Mission to Japan in 2012.

This mission helped Power Electronics in different ways. Apart from the interesting lectures, the most important aspect for the company was to find new clients/companies, and to strengthen the existing relationships it had with Japanese contacts. During this 2012 mission, the company participated in the “Green Innovation Expo”, and shortly afterwards visited other trade fairs and exhibitions in Japan. This was truly the moment that Power Electronics took off on that market, because it lay the groundwork for continuous relations with Japanese partners. Since then, representatives from Power Electronics have been travelling to Japan quite often for meetings and as of August 2014, they have already managed to close their first project in Japan, with another three in the pipeline. 

CHALLENGES

90% of all photovoltaic (PV) installations being installed in Japan are done by local Japanese companies, according to Japanese specifications. So for those Japanese companies, it can be very complicated to use an inverter from a company from outside of Japan. This is further complicated by the fact that the Japanese market is already relatively protected.

As usual when you are trying to enter a new market, the first project is always the most complex and most important. This is no different in the case of Japan. When you start, you have no references, nobody knows you, so the first client to buy (an inverter) from your company, is in fact placing a bet on you. So for Power Electronics it was crucial to accomplish its first deal and get it right. Once you have one project in Japan, you can show your other potential clients that you have the necessary skills and know-how, and that you are approved to work in the Japanese utilities. Afterwards, many doors open.

Regarding difficulties encountered, one was evidently language and culture, which over time could be overcome. Another difficulty was getting approval from the Japanese authorities. Power Electronics’ inverter had to be approved to be used in Japanese PV installations, so all documentation had to be translated into Japanese, which was really tough. That wasn’t everything, because once translated, the documents had to be sent to the client for approval, then again to the authorities, parts had to be amended, and so on... However, having gone through this process once, it becomes much faster for the next project.

CURRENT STATUS – NEXT STEPS

After a long and challenging process, Power Electronics’ efforts were finally rewarded with its first contract in Japan in the beginning of 2014. This contract stipulated the delivery of a one megawatt solar inverter for a PV installation to a Japanese company based in Osaka. Although this first contract was rather limited in scope, it truly opened the door to the Japanese market. Power Electronics’ Miguel Ángel Escribano, who is the Solar Division Director responsible for the Japanese market and who has been travelling there regularly, is carefully aiming for a 1.5-2% share of Japanese sales in the company’s total turnover for 2014. Moreover, he is confident that sales in Japan will continue to increase throughout 2015, and hopes for Japanese sales totalling 5-10% of Power Electronics’ total turnover by the end of the year.

 “I think of the work that we’ve been doing for the past 9 months, and will be doing the coming months, we will see the real results next year.” Miguel Ángel Escribano.

 In February 2015, Tokyo will be hosting PV Expo, which is the world’s leading B-to-B international exhibition specialised in the PV industry. In order to continue reinforcing Power Electronics’ presence on the Japanese market, the company will be present there with a booth.

 “We see the potential, and that is why we have decided to invest money and resources in that market.” Miguel Ángel Escribano.

Interview made with Miguel Ángel Escribano