As Europe slaps duties on US$15 billion of solar panels, their Chinese producers are preparing to counterattack with devices assembled from South Africa to Istanbul that will avoid the import taxes.
Trina Solar Ltd (天合光能), JinkoSolar Holding Co (晶科能源) and Canadian Solar Inc (阿特斯陽光電力) are among Chinese companies preparing to shift manufacturing abroad, dodging penalties imposed by the EU in the bloc’s biggest ever anti-dumping action.
China is pivoting as the EU this month set provisional tariffs on solar goods of 11.8 percent, a rate set to quintuple in August. At stake are imports from Yingli Green Energy Holding (英利綠色能源), the world’s largest panel maker, and more than 100 other Chinese makers of silicon-based panels, cells and wafers.
Jinko’s yet-to-be-completed factories in South Africa and Europe could be used as “back-up solutions,” depending on how high the EU raises its duties, company global branding director Dany Qian (錢晶) said in an interview in Munich.
As Chinese and EU officials held talks in Beijing last week to head off the planned jump in duties, its companies are preparing for the worst — years’ long battle over whether Chinese suppliers unfairly benefit from state subsidies and by dumping, or selling below cost, in the biggest solar market.
Jinko is setting up plants in South Africa and Portugal that could export to Europe duty-free. Canadian Solar, which has most of its operations in China, may open factories in Taiwan, Malaysia or Thailand, chief commercial officer Yan Zhuang (莊岩) said.
The trade spat with EU adds to China’s struggles to increase output. Manufacturing is shrinking at a faster pace this month, a trend that threatens to stem an economic recovery in the eurozone from the currency bloc’s longest-ever recession.
Chinese solar manufacturers have begun setting up overseas to avoid duties in the EU and the US, as well as to satisfy rules in countries like India that demand local content in products, Zhuang said.
“Overseas manufacturing is a trend,” Zhuang said in an interview at a solar conference in Munich.
The Canadian-based company that produces in China is also looking at manufacturing in South Africa, Saudi Arabia or Turkey, he said.
Suntech Power Holdings Co (尚德電力), the Wuxi-based panel-maker that was once the world’s biggest and whose main unit now is in bankruptcy proceedings, said last week it would provide “tariff-free” versions of all its standard modules for European customers. The panel components will be made “outside of mainland China,” to avoid the EU penalties, it said in a statement on Monday last week.
China Sunergy Co (中電光伏) this month said it started shipping modules from its plant in Istanbul and would deliver about 6.4 megawatts of product from the middle of this month to August to “a well-known” French customer.
Levies will jump on Aug. 6 to a range of 37.2 percent to 67.9 percent unless an accord is reached. EU governments have until Dec. 6 to decide whether to turn the provisional duties into “definitive” five-year measures.
The levies will increase prices for European solar-plant builders and homeowners who install them on rooftops. They were expecting to benefit fully from solar-module prices that declined last year because of a supply glut and weaker demand.
Trina Solar, the world’s second-biggest module maker, based in Changzhou, also has the option to set up shop elsewhere, Trina Europe president Benjamin Hill said in a separate interview.
About 48 percent of Trina’s shipments last year were to Europe, according to a Feb. 26 presentation posted on the company Web site. Trina said last week the EU tariffs may close access to some European markets.
When it comes to overseas production, maintaining quality levels is key, Zhuang said.
“The cost of labor is not everything that matters,” he said. “People are used to a certain quality for our panels that are made in China.”
Chinese panel-makers may benefit from surging demand at home, where Jinko sees installations reaching 8 gigawatts this year and 10 gigawatts next year 2014, Qian said.
Phono Solar Technology Co (輝倫太陽能), a Chinese state-owned module maker and project developer, expects 10 gigawatts this year and 12 gigawatts next year, the company said last week in Munich.