|(Xinhua File Photo)|
By Tang Danlu
BEIJING, Oct. 29 (Xinhuanet) -- A comprehensive package of new polices from the central and local departments has brought rays of hope to the struggling Chinese photovoltaic (PV) solar industry.
The industry, considered a promising and emerging one in China with strategic importance for the transformation of the national economy, was suffering a grim situation in the past few months.
Since last year, the United States and the EU have both launched punitive tariffs stemming from anti-dumping and anti-subsidies investigations aiming at the Chinese PV solar companies.
It has hurt the survival and development of those firms, which have heavily relied on overseas markets.
The debt of China’s top ten largest PV solar companies adds up to 111.0 billion yuan (about 17.5 billion U.S. dollars) and the liability ratio of the whole industry has been over 70 percent, according to the statistics released by MaximGroup, a U.S. investment management institution.
Actually, not individual, but multiple, reasons resulted in the severe status quo of the industry.
The industry developed so fast that its production capacity easily outweighed domestic demand. And excessive production capacity means this is a large-scale crisis for the whole industry, rather than just a problem of individual companies.
Furthermore, the export-oriented PV solar industry in China is vulnerable to the external economic environment. If the foreign market weakens, disaster for the whole industry is almost inevitable.
Trade protectionism moves by the western countries additionally made the situation worse.
Most Chinese photovoltaic enterprises have a limited understanding of marketing. In fact, they are duplicating the old Made-in-China practices in a new industry.
They attempted to compete with lower prices in the global market, not with more advanced technology and innovation. That’s why they are easily deemed as targets by developed countries.
Meanwhile, the sharp price drop of PV products around the world also influenced Chinese PV solar industry.
In the past six years, prices of photovoltaic modules decreased 86.6 percent, system prices were down 83.3 percent and solar electricity prices dropped 76.2 percent, according to China Daily.
To overcome the difficulties, companies should increase their input in research and development and make innovation their most competitive strength. They must attain more experience of the changing international market as fast as possible to adjust their production and marketing strategies accordingly, experts suggested on the economic newspaper 21st Century Business Herald.
Moreover, the Chinese government should do more in the framework of the WTO to help Chinese companies defend their legal interests.