$125m in China-focused funding has battery-maker looking East

Massachusetts’ Boston-Power — a maker of lithium-ion battery cells, modules and systems — has won $125 million in new funding led by GSR Ventures, a Beijing- and Silicon Valley-based VC firm that invests in tech companies operating in China.

The company plans to use the funds to scale up manufacturing, R&D and business development activities in China. With the new support for building business there, Boston-Power also announced it will “reallocate” its global resources and shift a number of positions and responsibilities away from its current headquarters in Westborough and, presumably — though details are “still being finalized” — much farther East. (US politicians, please note: apparently, investing in clean technology does boost the economy.)

Oak Investment Partners and Foundation Asset Management (FAM), both existing Boston-Power investors, also participated in this latest round of funding. The Chinese government, meanwhile, is coming forward with support for the company in the form of a variety of grants, low-interest loans and related financial and tax incentives.

Boston-Power plans to use some of the funding to build a world-class R&D and electric-vehicle (EV) battery engineering facility in China. It also aims to construct a state-of-the-art manufacturing facility in China that will be able to produce 400 megawatt-hours (MWh) of lithium-ion battery cells a year by the end of 2012.

According to Boston-Power, the new funding and incentives will help it move its business more deeply into China, which is the world’s largest market for cleantech and energy storage products.

Boston-Power noted that its team in Westborough will maintain responsibility for intellectual property development, research and development, global customer support, sales and business development and partnerships with advanced research organizations in the Boston area.

As part of its investment in Boston-Power, GSR Ventures Managing Director Sonny Wu will serve as chairman of the board of directors.

“China is building world-class companies in the clean technology space and is investing substantial amounts of resources and public policy to accomplish that goal,” Wu said. “There is significant and rapidly expanding demand for Boston-Power’s batteries here, as highlighted by the government’s unprecedented support for electric vehicles. GSR Ventures identified and aggressively pursued this opportunity and we welcome Boston-Power to the list of companies in which we’re investing … ”

Wu co-founded GSR Ventures in 2004. Raised in China, he studied engineering physics at the University of British Columbia, the University of California at Berkeley and the Massachusetts Institute of Technology, as a Sloan Fellow.