China Photovoltaics stuck in three difficulties: profit, export, and capital chain

Chinese PV companies have become increasingly difficult to survive in an international "comfortable" environment, falling into three major difficulties: falling profits, poor performance in the export market, and severe shortage of the capital chain. Too many redundant constructions and disorderly competition in China are also the root causes of the collapse of companies.

Faced with the losses of European and American markets, some companies have expressed their hope and determination to actively explore emerging markets. However, industry experts have warned that in the face of the new environment, companies may have problems such as not understanding the market and cultural differences, and need to be cautious in the process of emerging market deployment.

China's PV trapped profits, exports, and capital chain are three difficulties. Since 2011, the global photovoltaic industry has faced a crisis of losses and closures. In today's “gloomy”, the Chinese PV industry is not immune to the three major difficulties. .

Difficulty 1: Overcapacity and slumping prices drove the overall profit of the industry down.

Since 2011, overcapacity has led to a sharp drop in the price of solar energy products. Polysilicon prices have dropped from 70-80 US dollars/kg at the beginning of last year to the current 20-30 US dollars/kg, and solar module prices have dropped from 1.7 US dollars/W last year. At the midyear of 0.85 US dollars/Watt, the overall gross profit margin of the industry was less than 10%.

The profit space has also shrunk dramatically. Many companies reported last year that many large-scale PV companies have fallen into losses, with the largest loss reaching US$1 billion. In the first half of this year, it was still not optimistic. From the quarterly earnings report released by the company, the biggest loss was at 185 million U.S. dollars.

Dong Yongchun, the person in charge of Shenzhen Hainatong Solar Energy Co., Ltd., said that the export price of the company’s products has dropped by 50% this year. Although the export volume can still be basically maintained, the profits of the enterprise’s battery components have fallen by more than 150%. It is capital preservation management.

Dilemma 2: Intense competition, reduced demand, and poor export market performance.

Affected by the global economic downturn, the demand for foreign PV products has been significantly reduced this year, and China's photovoltaic product exports have also dropped sharply. According to the data released by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, in the first half of 2012, China's total exports of photovoltaic cell modules was US$9.448 billion, a year-on-year decrease of 34%, which was a significant drop from the previous 100%.

Among them, in the first half of this year, the export of photovoltaic modules to the EU dropped by 40.77%. In the past, China’s exports to Europe accounted for 73% of the global export share. This year it also fell 3.3% year-on-year.

In addition, from January to June this year, although China's exports of photovoltaic modules to the United States increased by 5.18%, the monthly analysis showed that there was still a 156% export growth rate for the United States in January. By June, it had no growth, but it had fallen by 54%.

Difficulties 3: Deterioration of the external environment and severe shortage of funding chains.

Some companies have stated that the bigger companies are taking more risks, the greater the demand for funds, and the more likely to be trapped in capital. Gao Danfeng, the person in charge of Dongfang Risheng New Energy Co., Ltd., said that small companies only do one of the links in the industry chain, their capital requirements are relatively small, the risk is relatively large, and large companies are all covered by the upstream and downstream industrial chains, and the company's size requires a large amount of capital flow. , but also take greater risks, such as Jiangxi LDK, Wuxi Suntech has now encountered great trouble.

Chen Huiqing, deputy director of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said that the lack of foreign demand, the price plummeted led to poor corporate export performance, the sharp decline in available cash flow, coupled with the decline of the enthusiasm of banks and other financial institutions for photovoltaic, resulting in the entire industry facing funding Tension or even breaking of the chain.

Repeated construction and disorderly competition are the root causes of the industry's difficulties. China's photovoltaic industry has fallen into such a predicament. Some people believe that the successive anti-dumping and countervailing punishments in the United States and Europe are the main reasons. The industry insiders said that the domestic photovoltaic industry relied heavily on foreign markets. Once the market shrinks and multiple trade barriers exist, companies cannot bear it. Then, Chinese companies that have repeatedly been penalized by foreign markets need to be more Find the cause.

Some companies stated that the friction in international trade is a normal phenomenon and that China's photovoltaic industry is affected so much that it should consider its own problems. According to Gu Xinfeng, the person in charge of Arteson Solar Power Technology Co., Ltd., trade barriers such as double counter-insurgency in China are actually very common. In recent years, almost all of China's manufacturing industries have received such lawsuits. It is only in these two years that they have come to the photovoltaic industry. At present, the predicament of the domestic photovoltaic industry is mainly its own repeated construction too much, lack of foreign demand, domestic demand can not be digested, it will inevitably appear in the market. This round of industry reshuffle is expected to return to a rough balance between supply and demand in the coming years.

Some experts also believe that China's photovoltaic industry has serious redundant construction, and unreasonable disorderly competition is the root cause of its repeated shocks.

Hong Ruijiang, deputy director of the Institute of Solar Energy Research at Sun Yat-Sen University, said that at present, there is a significant surplus of photovoltaic industry capacity in China, and it is difficult to fully digest short-term pre-emptive investment and repeated construction. In addition, there is a general lack of excellent technologies. Talent, managerial talent and effective capital flow have made it difficult to withstand the crisis. The repeated protection of the government makes it difficult for companies to properly develop through market restructuring in the market competition. In fact, the collapse of the enterprise is a normal phenomenon. There are also many foreign companies that have closed, restructured, and sold off. This is the need for resource integration within the industry. A regulatory mechanism for normal business competition.

Sun Yunlin, Sun Yat-Sen University Solar Energy Research Institute, said that for Chinese companies, it is necessary to form an orderly competitive situation in the survival of the fittest in the market, consolidate the development strength of the entire industry, and form a stable industry development structure. Faced with this round of reshuffling of the photovoltaic industry, we must be more rational to face, and promote the transformation and upgrading of the industry, and finally the formation of a similar giant companies led the home appliance industry, SMEs to help stabilize the pattern.

Aiming at the layout of new markets in foreign countries still needs to be cautious in the face of exports blocked by Europe and the United States. Some experts believe that Chinese companies should actively explore new markets and accelerate market transfer. Zheng Leopeng, executive vice president of the Guangdong Solar Energy Association, said that although Europe accounts for the largest share of the global photovoltaic industry, there are still new markets for photovoltaic applications in Japan and Africa. This is a good choice for China's PV market transfer.

Many companies have also targeted emerging countries other than the US, Europe and the United States, and stated that they are already setting up new markets and are already laying out in new markets. Li Pan, head of Dongguan Huayuan Optoelectronics Technology Co., Ltd., said that now the company has basically focused on emerging markets such as Southeast Asia and Africa, while the traditional European and American markets only account for 10%-20% of the market share.

Gu Xinfeng also stated that the situation in the second half of this year may be even more severe due to the EU's anti-dumping case. To advance the layout, the company has begun to launch markets in Southeast Asia, Africa, and South America, which account for about 10% of the total.

However, some experts believe that for many Chinese companies, entering the emerging markets is a market strategy that has to be fought for in the face of the obstruction of the European and American markets and the economic downturn. In particular, in the face of Africa, there are still many uncertainties in the African market. In the process of “walking into Africa”, they are faced with the problems of unstable economic and political situations in Africa, cultural differences, and relatively small spending power in the African market.

Liu Hongtao, general manager of the Commercial Bank of China in the China Banking Group, said that Chinese products sold in Africa are mainly simple and practical products such as flashlights, camping lights and other daily necessities. This kind of product has a low price, but it belongs to the range that African people can afford. For some large-scale photovoltaic projects, most of them belong to aid projects, and the real city has very few withdrawals. Therefore, for the beginning of photovoltaic market in Africa, weak market purchasing power, and unstable environment, Chinese PV companies need to be more cautious in the process of market deployment.