Recently, the China Photovoltaic Industry Association made a rare statement, saying that after the introduction of the Inflation Reduction Act, the United States violated regulations and provided a large number of photovoltaic subsidies, distorting the global photovoltaic market.
In fact, this is just a microcosm of the challenges faced by the international development of China’s photovoltaic industry. The US government adjusted the policy content of the 301 tariffs on China, and the tax rates of photovoltaic cells, components and other products will be increased.
However, internationalization is a path that China’s photovoltaic industry has to take. Domestic photovoltaic companies started to layout overseas markets early, but they were more limited to the sales link, and the layout of overseas production capacity was not given enough attention.
In the middle of this year, due to the intervention of the United States in the production capacity of Chinese companies in Southeast Asia, the channel for exporting photovoltaic products to the United States through Southeast Asia was cut off. Photovoltaic manufacturers have also re-examined their overseas layout, realizing the disadvantages of overseas production capacity concentration, and have also begun to promote overseas production capacity construction on a larger scale, moving from the 1.0 stage to the 2.0 stage.
Many industry insiders said in an interview with reporters that the entry of photovoltaic companies into the 2.0 era means that the investment model of enterprises will be more flexible, and enterprises should focus on promoting the localization of the entire value chain from production, product development and marketing. In addition, industry insiders suggest that overseas companies should not gather together when going abroad, but can disperse their layout along the “Belt and Road”.
New challenges in going overseas
“Recently, the United States has frequently accused China’s new energy industry of having a large number of subsidies, but it has expanded its own production capacity by implementing exclusive and discriminatory subsidy policies. This is a typical “double standard” behavior, which will lead to “overcapacity” in the US photovoltaic industry and impact the healthy development of the global photovoltaic industry.” The China Photovoltaic Industry Association pointed out in a recent article that the United States has built a high protectionist wall, adopted multiple trade restrictions, and set up photovoltaic tariff barriers layer by layer.
At the same time, through bills such as the Inflation Reduction Act and the Infrastructure Investment and Employment Act, it has implemented exclusive and discriminatory industrial policies, provided large-scale subsidies suspected of violating multilateral rules to its local photovoltaic industry, and seriously distorted the market-oriented operation of the global photovoltaic industry chain and supply chain.
After the implementation of the Inflation Reduction Act, the photovoltaic production capacity planned to be built in the United States has increased significantly. According to statistics from consulting firm Wood Mackenzie, the production capacity of photovoltaic modules in the United States will exceed 120GW in 2026, which is three times the demand for local photovoltaic installations at that time.
The Inflation Reduction Act is just the tip of the iceberg of the challenges faced by China’s photovoltaic industry in its international development. This bill directly led to many photovoltaic companies around the world investing and building factories in the United States. Similarly, in order to get rid of their dependence on China’s photovoltaic manufacturing industry, the European Union, India and other countries have formulated plans to build local supply chains, posing a potential challenge to China’s photovoltaic manufacturing industry.
At the same time, various trade barriers emerge in an endless stream. Recently, the US government adjusted the policy content of the 301 tariffs on China. The tax rate for photovoltaic cells and modules is the same as the administrative review results announced in May, which is determined to be adjusted from 25% to 50%. The regulated products of this 301 tariff have additionally added polysilicon and monocrystalline silicon wafers exported from China, and the tax rate is 50%.
The reporter noticed that in the past, Southeast Asia, led by Thailand, Malaysia, Vietnam and Cambodia, was the base for China’s photovoltaic manufacturing global layout. Against the background of the US anti-circumvention investigation, the production capacity of Chinese photovoltaic companies in Southeast Asia faces survival difficulties. In response to the changes in the situation, the destinations for Chinese photovoltaic companies to invest and build factories are more diverse, and many companies choose to bind with Europe, the United States, the Middle East, Turkey, Africa, India and other regions.
A person in charge of a first-line component manufacturer told reporters that the current international trade frictions continue, including the increasingly strengthened trade barriers in Europe, the United States, India and other places, and Chinese companies need to be more cautious in deploying production capacity overseas.
The person in charge believes that policy changes should be combined with their own reality, and the feasibility of investment should be comprehensively evaluated from multiple dimensions, including market, policy risks, national credit, infrastructure, completeness of the industrial chain, energy prices, labor quality, etc., to ensure the sustainability of operations. “At the same time, adhere to a balanced global layout to minimize policy risks and quickly seize the opportunity of market demand rotation.”
Going out in groups
Against the background of changes in the trade environment, the overseas capacity layout of Chinese photovoltaic companies is undergoing a round of migration.
A leading manufacturer with a multi-link layout told reporters that Chinese photovoltaic companies have begun to consider new development methods including joint investment with local companies and overseas factory construction to build global production capacity. Some leading companies have successively announced plans for new production capacity in the United States, the Middle East, Vietnam and other places, and there is no shortage of upstream and downstream companies in the industrial chain cooperating to go overseas.
Due to lower political risks, good diplomatic relations and open business rules, the Middle East has become a “new hot spot” for China to seize overseas. Recently, many photovoltaic companies such as Junda Shares and GCL Technology have successively announced new developments in the Middle East. Companies such as TCL Zhonghuan and Trina Solar have also successively disclosed plans to go overseas to the Middle East.
For example, JinkoSolar plans to establish a joint venture in Saudi Arabia to build a 10GW high-efficiency battery and component project, with a total investment of approximately US$985 million, with the main source of funds being the joint venture’s own or self-raised funds. TCL Zhonghuan plans to jointly establish a joint venture in Saudi Arabia to build a 20GW photovoltaic crystal wafer factory with an annual output, with a total investment of approximately US$2.08 billion.
In addition, many companies have expressed their willingness to increase their overseas layout. For example, Tongwei Co., Ltd. mentioned that the company has always paid close attention to and actively studied the opportunities of overseas production capacity. The relevant team has also conducted multiple surveys in the early stage, and continued to conduct all-round demonstrations on opportunities and challenges such as overseas trade policies, stability of production factors, industrial supporting facilities, investment intensity, and cooperation models.
A person in charge of a leading silicon material manufacturer told reporters that at present, the global industrial chain is deeply restructured, and China’s photovoltaic full overseas expansion has become inevitable. At the same time, Europe, America, India and other countries are increasingly paying attention to the autonomy and controllability of their own industrial chains. The “tariff stick” that is constantly being waved has forced China’s photovoltaic industry to change from “going overseas in a roundabout way” through Southeast Asia to going overseas in an all-round way, and from going overseas with a single technology and product to going overseas with an industrial chain including equipment and raw materials.
The person in charge predicts that within 3 to 5 years, China’s photovoltaic industry will complete the first phase of going overseas with the entire industrial chain, facing global key regions such as the United States, Europe, Southeast Asia, India, the Middle East, North Africa, and South America, learn from the experience and lessons of the first phase of going overseas, make reasonable use of WTO rules, and establish new advantages in global operations.
It is worth mentioning that although the barriers to the US market are high, the higher gross profit still attracts manufacturers to enter. Recently, JinkoSolar’s Florida factory received US tax credits, marking the first time that a Chinese photovoltaic company has received incentives for clean energy projects in the United States. In addition, Canadian Solar, JA Solar, and Longi have all announced the construction of factories in the United States.
According to Trina Solar, the company’s shipment target in the US market this year is more than 4.5GW, and at the same time, it will accelerate the construction of related facilities at the US base, which is expected to be put into production within the year.
Towards the 2.0 stage
The above-mentioned leading manufacturers judged to the reporter that in the future, we can further take advantage of the opportunity of my country’s promotion of the “Belt and Road” initiative to jointly plan the energy transformation development blueprint with the countries that jointly build the “Belt and Road”, and give full play to the advantages of the “Belt and Road” in trade and financing.
Photovoltaic continues to help facilities interconnection, so that the corresponding countries and regions will gradually get rid of their dependence on traditional energy, build a more sustainable, safe and reliable energy infrastructure, and ultimately achieve a continuous positive cycle of the “Belt and Road” economy.
Lv Jinbiao, deputy director of the Silicon Industry Expert Group of the China Nonferrous Metals Industry Association, also holds a similar view. He told reporters that the ban on circumventing the US restrictions on Chinese photovoltaics through Southeast Asia eventually gave us the inspiration that we should not go out in a group, but can be dispersed in the direction of the “Belt and Road”.
“The most important thing about going out is to evaluate and prevent political risks. It is more feasible to cooperate with international capital or local national core capital to export the technical management and industrial chain supporting advantages of Chinese companies.” Lv Jinbiao emphasized that there is no second region outside of China that has a complete and competitive full industrial chain supporting China’s photovoltaic manufacturing.
In an interview with reporters, Qian Jing, vice president of JinkoSolar, analyzed that the characteristics of the global manufacturing 1.0 era are that the products produced by wholly-owned companies are targeted for supply to specific markets rather than local use; in the global manufacturing 2.0 era, JinkoSolar will adopt a flexible and flexible cooperation model, combining global marketing with localized manufacturing, exporting technology, patents, experience, and services to the world, replicating its powerful production and manufacturing system and quality assurance, and deeply binding with partners, coordinating resources, complementing each other’s advantages, and win-win markets.
According to Qian Jing, in the overseas 2.0 era, the investment model of enterprises will be more flexible, and they can adopt bilateral or multilateral joint ventures. They can use various forms such as capital investment, technology investment, management investment, and resource investment, stand on the shoulders of local giants, leverage their strengths, and coordinate resources; at the same time, promote the localization of the entire value chain, and gradually localize all links such as production, product development, and marketing.
Of course, there are also new challenges in the overseas 2.0 era. The above-mentioned first-line manufacturers reminded that Chinese photovoltaic companies need to pay close attention to changes in international trade policies and adjust corporate strategies and investment deployments in a timely manner. Before investing in overseas markets, fully evaluate local investment risks and identify potential problems to avoid capital waste due to policy changes after the project is invested. At the same time, continue to invest in research and development to improve the technical level and cost-effectiveness of photovoltaic products to cope with competition in the international market.
In addition, it is also necessary to establish cooperative relationships with overseas photovoltaic companies, scientific research institutions, etc. through participating in or establishing international cooperation platforms, share resources, and jointly develop markets; establish and improve compliance management systems to ensure that the company’s international business complies with international and local laws and regulations, and strengthen brand building and marketing to enhance the company’s visibility and influence in the international market.
