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SNEC EXPO-Trade Dispute Escalation Leads to Rational Response from China: Company Mergers and Reorganization

published: 2013-05-29 14:28

The SNEC PV Power Expo is one of the largest exhibitions for the photovoltaic industry, opening this year in Shanghai on May 14th. The day earlier, APVIA Day, held the Solar Leader Dialogue and Trilateral Dialogue of PV Industry Leaders (CEO) from Europe, Asia, and North America, which featured talks on the problem with EU and North American sanctions provoking Chinese PV trade barriers, resolution and reduction of the negative impact, and the future outlook for the PV industry.

The editor-and-chief of Photo International Michael Schmela expressed that if the North American solar power industries continue to impose tariffs on Chinese solar power battery panels, the European situation will become tense. Although there is still no final decision, there is talk that the tariff may reach as high as 68% or as low as 47%.

With both sides still in discussion and no final decisions being made, the European Photovoltaic Industry Association council member Dr. Murray Cameron, COO of Phoenix Solar AG, states that the EPIA will just wait and see the outcome.  The final decision on whether or not to impose a punitive tariff still has six months left to discuss.

Leaders in the solar industry expressed that the trade barriers imposed on the PV industry will cause more harm than good. Damaging Chinese exports and industries will not necessarily increase profit for trade protected manufacturers. The American Solar Energy Industries Association believes that the imposition of the tariff will have no real effect on the market and that solar energy products will maintain a continued drop in price. The only change will come from the ratio of imports into the country, with the quantity of Chinese imports decreasing. The major importer for the American economy has shifted away from China towards other manufacturing countries such as Mexico, Malaysia, and Thailand to name a few. That being said, within the perimeters of the tariff, these other solar energy manufacturers could possibly used Chinese raw materials in their exports. In comparison to America, Europe is much more strict. European market plans to implement restrictions toward long term industry chains such as silicon-based cells, solar batteries, and modules. This will undoubtedly lead to an even larger scaled conflict.

The China Association for Hydrogen Energy chairman Dinghuan Shi expressed that the actions taken by America and Europe have caused the trade situation to become tense, leading to the Chinese government adopting self-defense counter measures. For products that have been effected by the tariff, China will reduce the import of silicon wafer raw materials that are still not completely self-sufficient. At the same time, the main import products have created an unfavorable influence towards these country’s manufacturing equipment which has lead to other industries directly imposing counter measures.  

Michael Schmela expressed clear concern during the meeting, pointing out that the American high tax levy and the possible punitive tariff imposed by Europe should have had a large effect on the Chinese market, but the reactions by the Chinese government and market were almost all more indifferent than anticipated.
The Chinese government has expressed a more rational method for dealing with this conflict. With silicon wafer case that was originally scheduled to be decided upon in March has yet to produce results, the government tries it’s best to avoid a trade war. On the other hand, a trade war acts as a large stimulus for Chinese domestic PV markets who have yet to mature, causing a surplus of 90% for original export products. This shows a need for nurturing the local market and China has released a series of policies towards increasing the rate of development.

Hanergy CEO Dr. Dianbo Feng expressed that the strong competitiveness in price that Chinese battery modules have is due to two reasons: the first being cheap labor and the second being reduced cost of production due to the mass production scale of Chinese manufacturers. Even though the current energy securities and trade protections placed on China by Europe and North America has brought about the current difficult situation for Chinese industries, the future potential for these industries should not be looked at lightly. The key for jump starting the domestic market lies in the consumption of current products, fast mergers, and the transition and upgrade for enterprises.

Trina Solar chairman and CEO Jifan Gao also believes industries need to change the direction of their thinking towards cooperation and instead of competition. To avoid wasting resources on researching the same technology, companies instead should merge so that manufacturers can gain more profit with less input.

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