Case (Greenone Tec)

9B14M072
Authorized for use only in the course Competitive Advantage at University of Macau taught by Jacky Hong from Jan 08, 2018 to May 18, 2018.
GREENONETEC: FIERCE COMPETITION UNDER THE SUN
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Solar entrepreneur Robert Kanduth received a shock when visiting customers during an initial tour
through an international solar energy trade fair in Brazil: “They told me that GREENoneTEC
representatives had already been there . . . The plagiarizers had even left GREENoneTEC business cards
— with a Chinese address.” It was just one of a series of incidents in which Chinese manufacturers tried
to convey the impression that they were offering high-quality European products. Outright violations of
GREENoneTEC patents had already been noticed. “The Chinese manufacturers can copy every product;
they just need to buy a module and take it apart. There is no superior product know-how,” said Kanduth,
“It is different, however, with our production and process know-how, which is quite unique.”
From 1992 to 2012, Kanduth had developed GREENoneTEC from a one-man business into the global
market leader in manufacturing flat plate solar thermal collectors for water heating (see Exhibit 1). The
rules of the game seemed to be changing, however, as Chinese players began to offer their cheap products
in more and more segments of the solar market. Could GREENoneTEC rely on the sustainability of its
technological and quality advantages under the changing circumstances?
THE GARAGE YEARS
In 1992, Robert Kanduth spent his evenings and weekends (as far as his daytime job as a production
manager at the local Philips plant allowed) experimenting with different technologies and processes for an
industrial production of flat plate collectors. He had discovered solar thermal collectors the year before in
a do-it-yourself construction group, the usual way of producing them at the time. He immediately saw the
product’s market potential and also recognized a lack of professional manufacturing.
For two years, Kanduth worked meticulously in his garage on developing machines and identifying
efficient manufacturing processes in addition to his full-time job. At first it was difficult to find customers
for the collectors, as the incumbent do-it-your-self industry was in the business of selling tools rather than
finished solar collectors. However, Kanduth did not give up, offering complete systems and installing
them personally, fulfilling all company roles on his own: “I often drove to Germany at 4:00 a.m. to do the
sales and at the same time, I was also alone in production,”1 he noted. For Kanduth, 70-hour work weeks
were not unusual at the time.
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THE PATH TO INDUSTRY LEADERSHIP
By 1995, Kanduth was ready to launch the industrial production of solar thermal collectors. Most
competitors sold their collectors under their own brands, thus limiting their production volume to what
they could sell on the retail market. GREENoneTEC followed a completely different strategy: it focused
exclusively on research and development (R&D) and production, leaving branding, sales, distribution,
and systems integration to marketing-affine partners such as Sonnenkraft, a new local solar brand. As an
original equipment manufacturer (OEM), GREENoneTEC could sell to any other solar systems supplier,
thus achieving considerably higher volumes than brand-oriented competitors.
A high-volume, low-margin strategy (GREENoneTEC usually did not calculate with earnings-before-tax
profit margins higher than ten per cent) allowed the company to offer high-quality products at low prices.
After gaining a strong position in the Austrian and German markets, GREENoneTEC followed a stepwise
further internationalization process. It had not been easy to find the right managers for doing business in
international markets, as Kanduth recalled: “There are many pretenders, who are [very successful at]
selling themselves — it takes a year before you notice that they are actually not able to manage the
business.”2

Fewer difficulties were faced in financing the business. Bank credits and constant reinvestment of profits
allowed the company to grow at rate of 20 to 40 per cent per year. GREENoneTEC’s 900-square-metre
production and office site soon became too small and Kanduth decided to invest EUR15 million into a
new plant in Sankt Veit. The town in Southern Austria was chosen because of its vision to develop into a
leading location for renewable energy and to become energy self-sufficient. The new plant was opened in
2001, and allowed the company to increase its sales volume from EUR13 to EUR21 million within a year.
RELATED DIVERSIFICATION
Kanduth soon realized that the solar industry also offered other opportunities besides the manufacturing
of solar thermal collectors.
In 2003, KIOTO Photovoltaics (KIOTO) was founded as GREENoneTEC’s sister company. Its plant for
manufacturing photovoltaic modules had a capacity of 120 megawatts in 2012. In addition to producing
photovoltaic modules for both private households and industrial buildings, KIOTO also planned,
constructed and operated large-scale solar power stations (a market that industry giants ABB and Siemens
planned to divest from in 2012, due to uncertain market conditions and low profitability3). KIOTO was
able to manage the whole value chain, obtaining land property rights and all necessary official
permissions, negotiating grid supply and insurance contracts, planning, constructing and installing, and
finally organizing the operational system management of the plant.
In 2006, the portfolio was supplemented with KIOTO Clear Energy AG, a company focused on
developing and producing innovative components for solar hot water production and heating support
(e.g., buffer tanks, freshwater stations or integrated heating circuit groups), thus enabling the group to
offer complete OEM solar heating systems solutions to its customers.
By 2012, KIOTO had become an integrated group of companies (see Exhibit 2) offering products and
services in all sectors of the solar industry. The solar thermal energy and photovoltaics businesses each
contributed approximately half to the group’s overall turnover of EUR130 million in 2011.
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PRODUCTION, QUALITY CONTROL AND LOGISTICS
Brazing, welding and bonding were the core technologies that GREENoneTEC used in its production
processes. These technologies were constantly developed according to the latest standards, as (for
example) in the use of ultrasound and laser welding. Production processes were automatized as far as
possible and included robot line manufacturing at an industry-leading speed (see Exhibit 3).
The company had invested EUR45 million into its Sankt Veit plant until 2012. The plant provided an
annual production capacity of 1.6 million square metres (m2) of collector space (in a three-shift mode).
The actual production volume amounted to 0.7 million m2 in 2011. More than 100 different types of
collectors and collector-mounting systems were produced according to individual OEM customers’
specifications. Unlike in photovoltaics, there was no standard solar thermal collector type or size.
GREENoneTEC therefore needed to optimize its manufacturing processes to achieve both volume and
flexibility, a capability that Kanduth regarded as one of the company’s core competences.
Each collector passed through several quality control steps during the production process. In addition,
indoor and outdoor testing facilities were used to examine the quality properties under extreme conditions

(such as high temperatures, external and internal shocks, mechanical stress, weathering or hail). The
durability of GREENoneTEC’s thermal solar collectors was estimated at around 40 years.
The company prided itself with having a seamless supply chain and effective logistics services. A
150,000m2 high-rack warehouse with a storage capacity of more than one month’s production volume
was used as a buffer, enabling constant production through the low-season winter months (thus also
allowing the continuing use of a well-trained permanent production team) as well as flexibility on the
delivery side, with a delivery reliability rate of more than 98 per cent even during peak months.
R&D AND INNOVATION
GREENoneTEC cooperated with customers, universities and international research institutes to create
new products and systems solutions. R&D efforts had always followed two directions: product innovation
and the optimization of production technologies and processes. Experiments with new materials could
lead to new production methods, while new technologies could enable the use of new materials (with
laser welding technology, for example, the less expensive aluminum could be used as an absorber
material instead of copper).
As an example of process innovation, GREENoneTEC had installed a new fully automated bending
machine, which increased the production capacity of meander absorbers to 70 per hour (compared to 20
to 30 per hour on conventional machines). On the product side, GREENoneTEC was researching a new
type of collectors able to provide process heat of more than 150 to 200 degrees Celsius for industrial
applications. For household use, KIOTO Clear Energy AG also developed a new type of integrated frost-
resistant solar system (already including a water tank in the collector module) that allowed a simple plug-
and-play installation.
Innovation at GREENoneTEC was strongly driven by Kanduth himself, who felt that, “I am not the
implementer but mainly the one with ideas. There was never a problem — no matter how complex — for
which we did not find a solution.”
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SALES AND DISTRIBUTION
GREENoneTEC’s marketing and sales team consisted of 17 people and included sales managers, product
managers, sales back office and key account managers (two in Germany; one for the United Kingdom,
Ireland and Scandinavia; one in each of France, Italy and Spain; and one for Poland, the Czech Republic,
Slovakia and the Baltics). Additionally, a KIOTO sales representative in the United States also worked
for GREENoneTEC.
Key account managers were trained technicians whose responsibilities also included defining the collector
specifications together with the customer. Marketing activities focused on the presentation of
GREENoneTEC as a company brand, the creation of technical data sheets and key account management
support, especially through customer events, trade fair appearances and the organization of customer
visits.
The international distribution of GREENoneTEC’s customers was similar to that of the average Austrian
solar company, which made approximately 40 per cent of its business in Germany, 40 per cent in other
European countries and 20 per cent in the rest of the world.4

As an OEM supplier, GREENoneTEC exclusively delivered to solar heating specialists, wholesalers and
systems integrators. These companies usually worked with 30 per cent margins and resold their branded
solar systems to plumbers and installers, who in turn demanded margins of up to 40 per cent plus
installation costs. In photovoltaics, both wholesalers and installers were satisfied with 5 to 10 per cent
margins, as in both cases, it was only seen as an add-on business. “If we in the solar thermal business had
the same margins and integral distribution chain as in photovoltaics, we would be able to produce our
energy 50 per cent cheaper than them,” explained Kanduth.
DEVELOPMENTS IN MAJOR WORLD MARKETS
There were two main types of solar thermal collectors available on the market: evacuated tube collectors
(ETCs — 77.8 per cent of the worldwide newly installed capacity in 2010) and flat plate collectors (17.9
per cent) (see Exhibits 4 and 5 for an overview of the global market leaders in both segments).5 The rest
were mainly cheap, unglazed water collectors. High-quality ETCs had a higher energy efficiency factor
but were usually also more expensive than flat plate collectors. The latter, however, were seen as more
durable. Especially with cheap versions of ETCs, glass could break more easily and also quickly lost its
efficiency when calcareous water caused chalk coats.6
The European Solar Thermal Market
The European solar thermal market was dominated by flat plate collectors. Despite rising raw oil prices
between 2009 and 2012 (an indicator for the cost of all fossil energy sources), the industry had been
facing a declining home market (see Exhibit 6) after a rapid growth period until the peak year 2008. It had
always been strongly dependent on government subsidies. There were even some voices claiming that the
market had been artificially inflated by high subsidies in several countries, notably Germany.
When the German government decided to discontinue its solar thermal energy subsidy scheme in 2010,
the market collapsed by more than a quarter within a year. Austria faced a more than 17 per cent decline
of its solar thermal collector market between 2010 and 2011, after the most populous province (Lower
Austria) decided to cancel its subsidy scheme.7
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Still, the long-term outlook remained positive. A 2009 European Commission Directive required
European Union (EU) member states to submit national renewable energy action plans. According to
these plans, 5.56 per cent of the total heat supply should come from renewable energy sources by 2020.8
Following the action plan trajectories, the solar thermal industry would expect an average annual growth
rate of more than 15 per cent.9 It remained unclear, though, whether the EU member states would really
be able to reach their self-imposed targets.
However, one trend was worrying for GREENoneTEC. Sales and marketing director Alexander
Eichwalder estimated that 60 per cent of newly installed collectors in Europe were delivered by the
heating industry, which typically consisted of large companies. More and more of these companies were
implementing in-house production of collectors, thus no longer requiring OEM partners. “The challenge,”
said Eichwalder, “therefore lies in finding new customers outside of the traditional heating industry.”
The Chinese Solar Thermal Market
The Chinese market for solar thermal applications was in many ways exceptional:10

 It had outgrown the EU market by more than 16 times (see Exhibit 7).
 In 2010, 94 per cent of the newly installed glazed water collector capacity were evacuated tube
collectors, as compared to only 7 per cent in Europe.
 Additionally, there were 2,800 companies competing in the Chinese solar thermal market. Most of
them were rather small, but around 100 of them had a standardized way of producing solar water
heaters and sold them as brands. Their share of the total market had grown from 40 per cent to 70 per
cent over recent years. It was estimated that 1,000 solar thermal companies had closed down their
business in 2010 and 2011.
 The three big players, Sunrain, Himin and Linuo Group, had professional nation-wide distribution
systems and also offered after-sales service and technical support for resellers. Sunrain, for example,
had more than 2,000 people employed in sales — almost 100 more than in production. Sunrain’s
turnover from solar water heating had doubled from RMB1.54 billion (EUR197 million) to RMB 3.1
billion (EUR397 million) between 2009 and 2011.11
 Domestic hot water solar systems (priced between US$390 and US$940) were primarily sold to retail
customers in one of the country’s 50,000 solar shops (most of them run on a franchise basis). One of
Linuo Group’s typical shops could sell around 1,600 systems a year. Further, experts estimated that
only around 30 per cent of the market in rural China had already been tapped.
 Although households accounted for 90 per cent of the 2011 market volume (see Exhibit 8), the
industrial sector was expected to develop into an important growth market for solar thermal solutions,
largely due to tighter emission and energy-saving regulations.
Unlike in photovoltaics, the growth in solar thermal systems was attributable more to natural demand than
to subsidies; only 5 per cent of the square metres of newly installed collector space were subsidized.12
More and more Chinese cities, however, decided to foster the installation of solar thermal systems on
public buildings, with an investment subsidy of 30 per cent.13
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Due to the high domestic market demand, Chinese solar thermal system producers were not very export-
oriented. Between 2011 and 2017, the industry planned to increase its export business from US$20
million to US$250 million, which would still account for less than 2 per cent of the total industry
turnover.14 Linuo (6 to 8 per cent export rate) had already opened sales subsidiaries in Germany and the
United States. Himin (10 per cent export rate) maintained sales offices in Malaysia and Vietnam, with
new openings planned in Germany and Belgium.15
European solar thermal solution suppliers were not well represented in the Chinese market yet: “We have
a very large market,” said Hongzhi Chen, deputy secretary-general at the China Solar Thermal Industry
Federation, “So far, only a few European players have [ventured into] it — mostly as material providers,
for example, for flat plate collectors. If you start in this market today, you will be big in two or three
years.”16
The Solar Thermal Market in Other World Regions
Interestingly, the United States was not a major market for the solar thermal industry. Although second in
size of worldwide installed collector capacity, 88 per cent of total installed square metres were cheaper

unglazed collectors (allegedly being more cost effective for swimming pools); glazed collectors —
primarily flat plate collectors — (with a newly installed capacity of 225,383 m2) gained a 19 per cent
market share of all new installations in 2010.17 With a lack of trained installers, limited awareness of the
solar thermal technology in the general public, high subsidies for photovoltaics, strong competition from
cheap natural gas and high price differences (US$7,000 for a solar water heater compared to US$1,000
for an electric or gas water heater, both including installation), the market was still considered a difficult
one; however, there was also high development potential, as several states had decided to introduce
subsidies for solar thermal water heating systems.18
With an eye on the future potential of the U.S. market, KIOTO had opened a new flat plate collector
production plant in Mexico in 2009. Mexico itself was also a promising market. Along with Turkey, India
and Brazil it formed the cohort of emerging markets with a growing demand in alternative energy sources
(see Exhibit 7). When Mexico introduced subsidies for solar thermal systems in 2007, Chinese products
(especially evacuated tube collectors) quickly gained a 40 per cent market share; the very high failure
rates of the collectors in the Central American climate, however, forced the Mexican government to set
minimum quality standards.19 This also led to a higher demand for the more durable flat plate collectors.
To date, European producers were just able to occupy limited market niches for higher-priced products in
emerging markets. Brazil had high import duties and was currently mainly served by domestic producers,
which were also expected to turn their eyes toward the world market.20
New market opportunities could also emerge in countries with less tradition in using solar technologies.
In 2012, GREENoneTEC delivered the solar modules for the world’s biggest solar thermal plant,
covering more than 36,000 m2 of collector space and providing warm water for 40,000 students, faculty
members, and other staff at the Princess Noura Bint Abdulrahman Women’s University in oil-rich Saudia
Arabia’s capital, Riad. Competition in the tender was fierce, but GREENoneTEC won the order volume
of more than EUR3.6 million with a technology and special design that was specifically adapted to the hot
climate and sandstorms. The reference project was also a door opener for getting into the last round of
tenders for other large-scale installations (20,000 to 30,000 m2 each) commissioned by the Chilean ore
mining industry. Copper ore needed to be washed with hot water; for that purpose, tonnes of oil were
transported to the mines. Solar thermal water heating would radically reduce costs — a potential that was
increasingly seen also in other industrial process applications around the world.
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AN INDUSTRY IN TRANSITION
Although solar thermal energy was still more efficient (with an efficiency factor of 60 to 80 per cent and a
price of 3-4 euro cents per kilowatt-hour (kWh)) than photovoltaics (efficiency factor 12 to 20 per cent; 8-
9 euro cents per kWh),21 experts attributed at least a portion of the decline of the solar thermal market to a
substitution effect due to a rapid decrease in the price of photovoltaics, for which consumers received
‘real money’ (through feeding the public electricity system) instead of just cost savings.22
The cost for photovoltaic modules — and, relatedly, the cost of photovoltaic electricity — continued to
fall (see Exhibits 9 and 10). Although not as steep as in photovoltaics, the solar thermal industry also
experienced a considerable learning curve: “Every doubling of the overall installed collector area in
Germany has led to a reduction in production costs by 15 per cent,”23 noted a German solar consultant. In
contrast to development in the photovoltaics market, however, lower overall manufacturing prices for
solar thermal systems did not reach the end customers yet, as installers in Europe claimed between 37 and
50 per cent of the retail price.24 “The installers are not motivated to risk the climb on the roofs if their
margin is not high,” said an Italian manager at a solar thermal conference.25 If they did not get the
margins, they would simply do something else, such as equipping bathrooms. In light of the mass retail-

oriented Chinese market or a mere ten per cent installers’ share in Brazil (retail price of a 200-litre unit:
EUR600), European companies only slowly began to question the efficiency of their traditional
distribution chain via plumbers and installers.26
A 2012 report by the Austrian Ministry for Traffic, Innovation and Technology warned: “To get the
Austrian solar thermal market back to the predicted growth path, end customer prices . . . must be reduced
rapidly and significantly.”27 GREENoneTEC’s management understood the challenge well. For
Eichwalder, “One focus must be on the simplicity of the solar system. Most systems in Europe tend
towards ‘over-engineering.’ In the future the end consumers will not be willing to spend EUR4,000 or
more to get an installed solar hot water system.”28
Rising material costs were an additional challenge for the solar thermal industry. The price of copper had
increased by more than 150 per cent between 1995 and 2011, and the price for aluminum alloys by almost
50 per cent. At the same time, the share of material costs of the total collector production costs had
increased from 52 per cent to 65 per cent (see Exhibit 11).29 Cost pressure forced many small firms to
rethink their business model: “More and more smaller collector producers are outsourcing certain
production steps due to the uncertain market conditions and primarily focusing on sales,”30 said
Eichwalder. Thus, from being GREENoneTEC’s competitors, these companies turned into potential new
customers.
COMPETITIVE CHALLENGES AHEAD
Meanwhile, the European photovoltaic industry faced sunset. As Kanduth explained, “In Germany, 70 per
cent of the modules come from China. That is why Germany lowered the subsidized standard rates from
56 to 22 euro cents per kWh. The market is breaking down there. At the same time, the Germans want the
energy transition away from nuclear power.”31
No longer able to match the Asian low-cost competitors with prices 20 to 30 per cent below local market
standards, Germany’s leading photovoltaic cells manufacturer, Q-Cells, had to file insolvency in April
2012, after losing a quarter of its revenues in 2011 (compared to the previous year). Several other German
manufacturers were already bankrupt or at least under severe pressure. Deutsche Boerse’s index for the
Page 8 9B14M072
world’s leading solar companies had lost more than 80 per cent of its value from the end of 2009 to the
end of 2012.
“In photovoltaics, with electricity-producing modules, China floods the world market with lowest prices.
The United States defends themselves with tariffs, Europe does nothing,”32 Kanduth complained, “The
whole world — and especially Europe — . . . are incredibly afraid of the introduction of tariffs although it
can be proven that Chinese producers are entering the market with dumping prices.”33
Considerably lower labour costs (the cost for a qualified production worker in China could be ten times
lower than the monthly average of EUR3,000 in Western Europe) were not the only reason for this
development. Allegedly, China had invested EUR50 billion into photovoltaics within five years and a
state-owned Chinese bank financed projects worldwide, which were constructed with Chinese modules.34
China did, however, impose tariffs on European imports. Consequently, KIOTO Photovoltaics was one of
the companies which together launched the EU ProSun initiative with the aim to lobby against — in the
initiative’s own words — “destructive dumping and illegal subsidies.”35 The initiative called on the EU
Commission to start anti-dumping investigations against China.

Although Kanduth noted the vastly inferior quality of Chinese products, Chinese producers started to
actively promote the quality of their products. Changzhou-based Trina Solar, for example, claimed that it
put its power modules through 36 in-house tests and offered a ten-year product guarantee and a 25-year
energy performance guarantee.
HOW TO COMPETE AND GROW?
Despite decreasing sales and profits in 2010 and 2011 (see Exhibits 12 and 13), GREENoneTEC still held
a strong position, especially in the European market, and considered itself an innovation leader in the
industry. Would the company be able to maintain its competitive advantage in a changing environment?
One thing was clear to Kanduth — GREENoneTEC needed to continue to follow its OEM strategy: “We
do not have our own product brand and we will not have one in the future. GREENoneTEC is not allowed
to offer anything else than collectors.”
The other parts of KIOTO group were a different story. Their development possibilities were less limited
by a business model. The main question here was which part of the solar business to focus both energy
and investments on. Did photovoltaic module production still have a future in light of Chinese low-cost
competition? Was the construction and operation of photovoltaic power stations an option when at the
same time, powerful players left the markets as their profitability expectations had not been met? Should
the group shift its efforts toward developing new, innovative components and integrated systems for solar
heating? Or should KIOTO change its strategic direction altogether and start offering branded products?
With Chinese players close behind them in the global solar thermal market, would GREENoneTEC and
KIOTO be able to reach the finish line first?
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EXHIBIT 1: GREENONETEC TIMELINE
Year Event
1991 Robert Kanduth builds his first solar collector in a do-it-yourself group.
1992 Kanduth becomes an entrepreneur and delivers his first solar collector in a hand-painted
Volkswagen van.
1994 The company is renamed GREENoneTEC and launches the industrial production of solar
collectors at a 900 m2 site (production and office spaces combined) in Ebenthal, Austria.
1995 GREENoneTEC receives the first of a number of prizes, the Innovation Price of the Austrian
province of Carinthia for its FK 7000 tray collector.
1996 GREENoneTEC receives the ISO 9001 quality certification.
1998 Development of a wood-frame in-roof collector.
Co-organization of a local trade fair for solar technology and bioenergy.
2001 Headquarters and production are moved to a new 85,000 m2 site in Sankt Veit.
2002 GREENoneTEC registers a new patent for a full-surface absorber.
2003 KIOTO Photovoltaics is founded and enters a new segment of the solar energy market.
2004 The KIOTO R&D centre opens in Hof near Vienna/Austria.
2005 GREENoneTEC produces, delivers and installs 205 solar collectors within 24 hours — a new

world record.
2006 KIOTO Clear Energy AG is founded, focusing on the production of innovative solar thermal
components for central heating manufacturers.
GREENoneTEC is one of the first European solar thermal collector manufacturers to install a
fully-automatized robot production line.
2008 EUR7.2 million invested into the European Logistics Centre (a 150,000 m2 high-rack
warehouse).
GREENoneTEC exports to 40 countries around the world.
2009 KIOTO S.A., a 100 per cent subsidiary of KIOTO Clear Energy AG, invests EUR4 million into a
new flat plate collector production plant in the Mexican city of El Salto (Guadalajara) with a
yearly production capacity of 100,000 m2.
2010 EUR4 million invested into the world’s fastest robot production line for tray collectors (yearly
production capacity 450,000 units).
GREENoneTEC wins the tender for producing collectors for the world’s largest solar thermal
plant in Riad, Saudia Arabia (36,305 m2).
2012 Together with more than 1,000 guests, Kanduth celebrates both his 50th birthday and the 20th
anniversary of GREENoneTEC.
Source: Case author, compiled from GREENoneTEC and KIOTO company documents.
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EXHIBIT 2: KIOTO GROUP OVERVIEW
Source: KIOTO company document.
EXHIBIT 3: PRODUCTION STATISTICS OF SELECTED AUSTRIAN AND GERMAN COLLECTOR

PRODUCERS (PRODUCTION LINES FOR FLAT COLLECTOR ASSEMBLY
WITHOUT GLASS WASHING)
Company Cycle time (min.) Collectors per 8-hour shift Workers per shift and line
GREENoneTEC 1.5 320 5
Sun Master 9.6 50 3
Roth 4 120 3 (including packaging)
Viessmann 2 (in peak times 1.5) 240 n.a.
Winkler 3 160 3
Minitec 4/2.4 112/187 6/10
Kingspan 2 n/a 12
Kingspan is included as a vacuum tube collector producer for comparison. It produced one vacuum tube every six seconds.
As 20 tubes are equivalent to one collector, this represents a cycle time of two minutes.
Source: Solrico/B. Epp, “Alle zwei Minuten ein neuer Kollektor,” Sonne Wind & Wärme, issue 8, 2010, p. 162.
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EXHIBIT 4: GLOBAL TOP TEN FLAT PLATE COLLECTOR PRODUCERS
Global rank
GREENoneTEC (AUT) 600 000
1
Prosunpro (CN) 400 000
2
Ezinç (TR) 321 000
3
Rheem (AUS) 270 000
4
Chromagen (IL) 230 000
5
Five Star (CN) 200 000
6
Eraslanlar (TR) 200 000
7
Wolf (DE) 169 000
8
Space Age (IN) 145 000
9
10
Nimrod (IL) 120 000
‐ 100 000 200 000 300 000 400 000 500 000 600 000 700 000

m2 produced in 2011

Source: “World Map of Flat Plate Collector Manufacturers 2012,”
www.solrico.com/fileadmin/medien/pdf/Europe_map_of_FPC_2012.pdf, accessed February 25, 2013.
EXHIBIT 5: GLOBAL TOP TEN EVACUATED TUBE COLLECTOR PRODUCERS
Global rank
Sunrain (CN) 6 000 000
1
Himin (CN) 2 880 000
2
Linuo Paradigma (CN) 1 779 109
3
Sunshore (CN) 750 000
4
Tjsun (CN) 520 000
5
Huayang (CN) 375 000
6
Sunpower (CN) 168 000
7
High‐New Technology (CN) 120 000
8
Shentai (CN) 100 000
17 10 9
Sunda (CN) 100 000
GREENoneTEC (AUT) 25 000
‐ 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000

m2 produced in 2011
Source: “World Map of Vacuum Tube Collector Manufacturers 2012,”

http://www.solrico.com/fileadmin/medien/pdf/World_map_VTC_2012.pdf, accessed February 25, 2013.
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EXHIBIT 6: EU AND SELECTED EUROPEAN COUNTRY MARKET SIZES FOR GLAZED SOLAR
THERMAL COLLECTORS (COLLECTOR AREA IN M²)
m² in operation m² newly installed

2011 2009 2010 2011
Total Total Total Total Flat plate Vacuum collectors
Austria 3,988,088 356,166 279,898 230,189 221,495 8,694
Belgium 323,283 50,700 42,500 45,500 35,500 10,000
Cyprus 713,359 34,709 30,713 28,437 26,794 1,643
Czech Republic 378,066 51,669 91,717 65,000 49,000 16,000
Denmark 583,605 54,496 64,651 62,401 61,897 504
France 1,824,900 265,000 256,000 251,000 242,200 8,800
Germany 14,994,000 1,615,000 1,150,000 1,270,000 1,152,000 118,000
Greece 4,087,200 206,000 214,000 230,000 228,500 1,500
Italy 3,073,930 475,000 490,000 415,000 373,500 41,500
Netherlands 474,595 45,260 40,834 33,000 33,000 0
Poland 909,390 144,308 145,906 253,500 187,000 66,500
Portugal 781,295 173,762 182,271 127,198 126,308 890

Spain 2,369,861 391,000 336,800 266,979 249,728 17,251
Sweden 337,022 21,309 20,699 20,807 15,654 5,153
Switzerland 1,023,698 145,640 144,772 140,000 130,000 10,000
United Kingdom 656,998 89,100 105,200 91,778 72,953 18,826
EU27+Switzerland 37,519,126 4,246,170 3,705,879 3,659,489 - -
Source: ESTIF, Solar Thermal Markets in Europe: Trends and Market Statistics 2011, European Solar Thermal Industry
Federation, Brussels, 2012, p. 13.
EXHIBIT 7: NEWLY INSTALLED SOLAR THERMAL COLLECTOR AREA (IN M²) IN MAJOR WORLD
MARKETS (2011) WITH GROWTH RATES 2010-11 IN BRACKETS
China 57 000 000 (+16%)
EU27 3 519 489 (‐1.5%)
Turkey 1 805 675 (+9%)
India 600 000 (n/a)
Brazil 517 517 (+9%)
Mexico 180 000 (+0%)
0 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000
Source: ESTIF, Solar Thermal Markets in Europe: Trends and Market Statistics 2011, European Solar Thermal Industry
Federation, Brussels, 2012, pp. 8; 13.
Page 13 9B14M072
EXHIBIT 8: DISTRIBUTION OF SOLAR THERMAL SYSTEMS PER APPLICATION 2010 (TOTAL

INSTALLED GLAZED COLLECTOR CAPACITY)
100% 3% 2% 1% 2%
8% Other (solar district heating, solar
90% 18%
process heat, solar cooling)
80%
43% 44% 10%
Solar combi systems (DHW and
70%
space heating for single and multi
60% family houses)
50% 7% Large DHW systems (multi family
9%
90% houses, tourism, public sector)
40%
71%
30% DHW systems for single family
houses
45% 47%
20%

10%
0%
Germany Austria Europe total China
Europe total includes EU27, Albania, Macedonia, Norway, Switzerland and Turkey.
DHW: Domestic hot water systems.
Source: W. Weiss and F. Mauthner, Solar Heat Worldwide: Markets and Contribution to the Energy Supply 2010, IEA Soar
Heating & Cooling Programme, Gleisdorf (Austria), 2012, pp. 39-40.
EXHIBIT 9: COST DEVELOPMENT OF PHOTOVOLTAICS AND SOLAR THERMAL SYSTEMS
14 000
12 000
10 000
8 000
photovoltaics [€/kWel]
6 000
4 000
Solar thermal
(incl. storage) [€/kWth]
2 000
Solar thermal
(excl. storage) [€/kWth]
0
1984 1987 1995 1998 2002 2008 2010 2011 2012
Source: Institut für Thermodynamik und Wärmetechnik (ITW), University of Stuttgart.

Page 14 9B14M072
EXHIBIT 10: KEY FIGURES OF THE AUSTRIAN SOLAR MARKET
Newly installed photovoltaic capacity in kWpeak 2008: 4,686

2009: 20,209
2010: 42,902
2011: 91,674
Total installed photovoltaic capacity in kWpeak 2011: 187,172
Average photovoltaic module price per kWpeak 2010: EUR 3,052
(manufacturer price) 2011: EUR 2,430
Average list price (for end customers) for a solar 2008: EUR 454
thermal collector per kWth 2009: EUR 437
2010: EUR 410
Average list price (for end customers) for a solar 2008: EUR 1,011
thermal system per kWth 2009: EUR 984
2010: EUR 923
Source: P. Biermayr, M. Eberl, H. Ehrig, C. Ferchner, C. Kristöfel, P. Eder-Neuhauser, N. Prüggler, A. Sonnleitner, C.

Strasser, W. Weiss, and M. Wörgetter, Innovative Energietechnologien in Österreich Marktentwicklung 2011,
Bundesministerium für Verkehr, Innovation und Technologie, Vienna, 2012, p. 171; R. Bointner, M. Bayr, P. Biermayr, C.
Friedl, A. Köppl, L. Kranzl, F. Mauthner, R. Tichler, and W. Weiss, Wachstums und Exportpotenziale Erneuerbarer
Energiesysteme, Bundesministerium für Verkehr, Innovation und Technologie, Vienna, 2012.
EXHIBIT 11: COMPOSITION OF MANUFACTURING COSTS OF FLAT PLATE

COLLECTORS IN GERMANY
100%
15% Other variable costs
90%
28%
80% 14% Glass cover
70% 6%
12% Insulation material
60%
8%
50% Metal costs (absorber,
40% frame/tray)
30% 65%
52%
20%
10%
0%
1995 2011
Source: Solrico/S. Banse and J. Berner, “Lowering Costs, Maintaining Efficiency,” Sun & Wind Energy, issue 4, 2012, p. 64.
Page 15 9B14M072
EXHIBIT 12: GREENONETEC INCOME STATEMENT 2010/2011
INCOME STATEMENT (in 1,000 EUR) 2011 2010

Sales 53,220 60,419
Other revenue 1,374 1,037
Cost of goods sold -30,484 -32,163
Gross profit 24,110 29,293
HR expenses -11,046 -11,745
Depreciation & amortization -2,439 -3,084
Other operating expenses -5,669 -5,702
EBIT 4,956 8,762
Interests - 427 - 665
Taxes -1,117 -2,076
Net profit 3,412 6,021
Source: Austrian Commercial Register (figures summarized by case author).

EXHIBIT 13: GREENONETEC BALANCE SHEET 2010/2011
BALANCE SHEET (in 1,000 EUR) 12/31/2011 12/31/2010

Assets
Cash and cash equivalents 3,011 5,646
Accounts receivable 2,914 1,139
Inventory 3,862 4,109
Other current assets and accruals 749 724
Total current assets 10,536 11,618
Property, plant, and equipment 25,859 26,087
Patents and rights 130 211
Other long-term assets 0 77
Total assets 36,525 37,993
Liabilities
Accounts payable 1,022 1,294
Short term credit liabilities 4,518 2,463
Accruals 3,585 4,109
Other short-term liabilities 708 700
Total current liabilities 9,833 8,566
Long-term debt 6,916 9,032
Other long-term liabilities 0 0
Total liabilities 16,749 17,598
Investment subsidies 1,528 1,559
Shareholdersʼ equity
Common stock 2,900 2,900
Retained earnings (incl. yearly profit) 15,348 15,936
Total shareholdersʼ equity 18,248 18,836
Total liabilities and shareholders’ equity 36,525 37,993
Source: Austrian Commercial Register (figures summarized by case author).

Page 16 9B14M072
ENDNOTES
1
A. Winkler, “Kärnten soll Musterland werden,” Kleine Zeitung, April 7, 2012, p. 34.
2
J. Skocek, “Kioto Gruppe, Produzent von Solarsystemen,” http://wirtschaftsblatt.at/home/1233875/index, accessed
February 19, 2013.
3
“ABB plant Einschnitte in Energiesparte,” http://www.handelsblatt.com/unternehmen/industrie/siemens-rivale-abb-plant-
einschnitte-in-energiesparte/7521838.html, accessed February 28, 2013.
4
P. Biermayr, M. Eberl, H. Ehrig, C. Ferchner, C. Kristöfel, P. Eder-Neuhauser, N. Prüggler, A. Sonnleitner, C. Strasser, W.
Weiss, and M. Wörgetter, Innovative Energietechnologien in Österreich Marktentwicklung 2011, Bundesministerium für
Verkehr, Innovation und Technologie, Vienna, 2012.
5
W. Weiss and F. Mauthner, Solar Heat Worldwide: Markets and Contribution to the Energy Supply 2010, IEA Soar Heating
& Cooling Programme, Gleisdorf (Austria), 2012, p. 20.
6
B. Epp, “Can European Solar Thermal Compete?,” Renewable Energy World, March-April, 2011, p. 18.
7
Weiss, and M. Wörgetter, Innovative Energietechnologien in Österreich Marktentwicklung 2011, Bundesministerium für
Verkehr, Innovation und Technologie, Vienna, 2012, p. 171.
8
ESTIF, Solar Thermal Markets in Europe: Trends and Market Statistics 2011, European Solar Thermal Industry Federation:
Brussels, 2012, p. 18.
9
Ibid, p. 19.
10
B. Epp, “If You Start in the Solar Thermal Market Today, You’ll Be Big in Two or Three Years,”

http://www.solarthermalworld.org/content/if-you-start-solar-thermal-market-today-youll-be-big-2-or-3-years, accessed
February 21, 2013; B. Epp, “China’s Solar Thermal Valley: The Sky is the Limit,” Renewable Energy World, May-June, 2012,
pp. 32-35; B. Epp, “Solar Thermal Shake-out: Competition Heats Up in the Chinese Market,” Renewable Energy World, July-
August, 2012, pp. 47-49; W. Weiss and F. Mauthner, op. cit.
11
Exchange rates as per July 27, 2012.
12
B. Epp, “If You Start in the Solar Thermal Market Today, You’ll Be Big in Two or Three Years,” op. cit.; B. Epp, “Solar
Thermal Shake-out: Competition Heats Up in the Chinese Market,” op. cit.
13
B. Epp, “If You Start in the Solar Thermal Market Today, You’ll Be Big in Two or Three Years,” op. cit.; B. Epp “China:
Beijing Mandates Solar Hot Water Systems,” http://www.solarthermalworld.org/content/china-beijing-mandates-solar-hot-
water-systems, accessed February 21, 2013.
14
B. Epp, “Solar Thermal Shake-out: Competition Heats Up in the Chinese Market,” op. cit.
15
Ibid.
16
B. Epp, “If You Start in the Solar Thermal Market Today, You’ll Be Big in Two or Three Years,” op. cit.
17
W. Weiss and F. Mauthner, op. cit.
18
B. Epp, “The Second Big Chance,” Sun & Wind Energy, issue 10, 2010, pp. 54-67.
19
S. Banse and J. Berner, “Lowering Costs, Maintaining Efficiency,” Sun & Wind Energy, issue 4, 2012, p. 63.
20
B. Epp, “Can European Solar Thermal Compete?,” op. cit.
21
R. Hackstock, “Solarwärme im Gespräch mit Robert Kanduth,” http://blog.solarwaerme.at/tag/greenonetec/, accessed
February 20, 2013; ESTIF, Solar Thermal Markets in Europe: Trends and Market Statistics 2011, European Solar Thermal
Industry Federation: Brussels, 2012; KIOTO Photovoltaics product brochures.
22
R. Hackstock, “Solarwärme im Gespräch mit Robert Kanduth,” op. cit.
23
S. Banse and J. Berner, op. cit.
24
B. Epp, “Can European Solar Thermal Compete?,” op. cit.
25
Ibid.
26
Ibid.
27
Weiss, and M. Wörgetter, op. cit. p. 14.
28
J. Berner, “Generating Inexpensive Solar Heat,” Sun & Wind Energy, issue 2, 2011, p. 55.
29
S. Banse and J. Berner, op. cit.
30
D. Becker, “Vorsichtig Optimistisch,” Sonne Wind & Wärme, issue 3, 2012, pp. 36-39.
31
A. Winkler, “Kärnten soll Musterland werden,” Kleine Zeitung, April 7, 2012, p. 33.
32
Ibid, p. 34.
33
R. Hackstock, “Solarwärme im Gespräch mit Robert Kanduth,” op. cit.
34
Ibid.
35
“Prosun,” http://www.prosun.org, accessed February 22, 2013.

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9B14M072

Copyright © 2014, Richard Ivey School of Business Foundation Version: 2014-07-28

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THE GARAGE YEARS

THE PATH TO INDUSTRY LEADERSHIP

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PRODUCTION, QUALITY CONTROL AND LOGISTICS

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R&D AND INNOVATION

SALES AND DISTRIBUTION

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DEVELOPMENTS IN MAJOR WORLD MARKETS

The European Solar Thermal Market

The Chinese Solar Thermal Market

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The Solar Thermal Market in Other World Regions

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COMPETITIVE CHALLENGES AHEAD

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HOW TO COMPETE AND GROW?

EXHIBIT 1: GREENONETEC TIMELINE

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EXHIBIT 2: KIOTO GROUP OVERVIEW

EXHIBIT 3: PRODUCTION STATISTICS OF SELECTED AUSTRIAN AND GERMAN COLLECTOR

EXHIBIT 4: GLOBAL TOP TEN FLAT PLATE COLLECTOR PRODUCERS

‐ 100 000 200 000 300 000 400 000 500 000 600 000 700 000

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EXHIBIT 5: GLOBAL TOP TEN EVACUATED TUBE COLLECTOR PRODUCERS

‐ 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000

Source: “World Map of Vacuum Tube Collector Manufacturers 2012,”

m² in operation m² newly installed

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China 57 000 000 (+16%)

EU27 3 519 489 (‐1.5%)

Turkey 1 805 675 (+9%)

India 600 000 (n/a)

Brazil 517 517 (+9%)

Mexico 180 000 (+0%)

0 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000

EXHIBIT 8: DISTRIBUTION OF SOLAR THERMAL SYSTEMS PER APPLICATION 2010 (TOTAL

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EXHIBIT 9: COST DEVELOPMENT OF PHOTOVOLTAICS AND SOLAR THERMAL SYSTEMS

Source: Institut für Thermodynamik und Wärmetechnik (ITW), University of Stuttgart.

EXHIBIT 10: KEY FIGURES OF THE AUSTRIAN SOLAR MARKET

Newly installed photovoltaic capacity in kWpeak 2008: 4,686

Source: P. Biermayr, M. Eberl, H. Ehrig, C. Ferchner, C. Kristöfel, P. Eder-Neuhauser, N. Prüggler, A. Sonnleitner, C.

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EXHIBIT 11: COMPOSITION OF MANUFACTURING COSTS OF FLAT PLATE

EXHIBIT 12: GREENONETEC INCOME STATEMENT 2010/2011

INCOME STATEMENT (in 1,000 EUR) 2011 2010

Source: Austrian Commercial Register (figures summarized by case author).

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BALANCE SHEET (in 1,000 EUR) 12/31/2011 12/31/2010

Source: Austrian Commercial Register (figures summarized by case author).

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