More Solar Winds: New Dawn Coming? 看好光伏产业东西合璧
Instead of lamenting the latest blow to the embattled solar sector that this time is coming from Europe, I’m going to take a different approach today and say that perhaps the ongoing flood of resistance from the west towards Chinese solar subsidies could actually have some positive long-term effects. The reason is this: Beijing, for all its good intentions, has shown it can throw money at developing industries to quickly establish big new manufacturers with major production capabilities. But those fast-rising powerhouses tend to be relatively bad at innovation, with many of the major new advances in the solar sector still coming from the west even as a growing number of players in the US and Europe go bankrupt.
In response to the very real threat of anti-dumping tariffs first from the US and now from Europe, many Chinese solar panel makers have scrambled in recent months to link up with western-based partners or to open their own western-based operations, which perhaps is what the industry has needed all along. Such pairings can provide a potent combination of manufacturing expertise from China with innovation and technological expertise from the west to create truly world class companies that can not only build economical products in the present but also develop even better ones for the future.
All that said, let’s take a step back to the present, where embattled Chinese solar cell makers are facing yet another major setback with word that a group of European companies led by Germany’s SolarWorld (Frankfurt: SWV) have filed a formal complaint with the European Commission over allegations that Chinese companies receive unfair subsidies through government support policies like tax breaks and cheap land for building factories. (English article)
Suntech (NYSE: STP), an industry pioneer and the oldest US-listed Chinese company, predictably issued a statement denying the allegations and saying it would cooperate fully with any investigation, and I expect we’ll see similar announcements from other players in the next few days. (company announcement) Investors seem to be largely looking past the news, perhaps because this investigation has been rumored for months (previous post) and also because solar shares are now trading at ridiculously low levels, with many losing three-quarter of their value or more over the last year as the sector remains stuck in a major supply glut.
Suntech shares actually rose slightly in the trading day after news of the latest probe came out, and other players like JA Solar (Nasdaq: JASO) also rose, while Trina (NYSE: TSL) fell marginally. Word of this latest probe comes after the US ruled in May that the Chinese players receive unfair subsidies and is getting set to impose fairly significant punitive tariffs of around 30 percent or more later this year. (previous post) China responded last week by accusing US makers of polysilicon, a main ingredient used to make solar cells, of receiving similar unfair support and launching its own investigation.
In response to all the trade war noises, most of the major Chinese players have announced a range of initiatives to either pair with western partners. In some cases they are working with partners to develop and promote their products, and in other cases they are building or expanding their own off-shore manufacturing facilities.
For the reasons I’ve already mentioned above, I think this is an important new development because it could finally provide some much-needed innovation to the Chinese companies who now supply more than half of the world’s solar cells, while also giving the western players a chance to earn some money from the sector. At the end of the day, this kind of east-west partnerships could actually help to accelerate the industry’s march to sustained profitability and the elusive target of creating products that are economically attractive to buyers, rather than dependent on government subsidies to make them competitive with traditional energy sources like oil and coal.
Bottom line: A new wave of east-west partnerships could breathe new life into the embattled solar sector, accelerating its drive to sustained viability.
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