China’s Solar PV Manufacturers Prepare for Future Adversity

Even though there’s no apparent indication that the Wuxi Suntech’s bankruptcy filing has made an impact on the sense of urgency from China’s banks, ReneSola’s loan seems a good sign 

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Wuxi Suntech’s bankruptcy sounds the alarm within China’s solar energy PV industry.  The lack of fresh funding to fuel the struggling companies and the relentless cutthroat competition that triggers the price destruction is on everyone’s minds. Nothing seems to work in favor of this business, once regarded as the “stellar industry of the century.”

Nevertheless, as another tsunami of anti-dumping and anti-subsidy tariffs by the EU is still ahead and ready to deliver another heavy blow to China’s solar PV industry, have the leaders of these companies prepared to withstand the impact?

According to an interview conducted by Dong-Fong Daily News, featuring the CEO of ReneSola Ltd. (ADR)(NYSE:SOL) Xianshou Li, the company has recently secured a loan of RMB 320 million from China Development Bank.  The funding will be vital to support the continuity of Renesola’s production and sustain the healthy growth that has picked up momentum since last year’s Q4.

Even though there’s no apparent indication that the Wuxi Suntech’s bankruptcy filing has made an impact on the sense of urgency from China’s banks, ReneSola’s loan seems a good sign that China is determined to pour in more resources to bring relief to its solar PV manufacturers. Perhaps this will speed up the process of keeping drowning companies afloat, and mitigate the series of consequences triggered by Wuxi Suntech’s condition.

CEO Xianshou Li says, “The authority is keeping an eye on us and it wants to see who will be able to live on.” The increasing risk of the solar PV industry has made the Chinese bankers more cautious, especially under the current credit market sentiment of tighter control. The old rule of survival of the fittest may prove to be reality in this rough climate.

To counter the possible effects of the EU’s anti-dumping and anti-subsidy measures, Renesola Ltd. is actively planning to outsource its overseas production facilities. It has expanded the reach into India, Eastern Europe and Taiwan, and this process is still on-going and even expanding. 

The move toward the globalization and increasing volume of OEM production requires further investment and a more sophisticated logistics system to operate smoothly; therefore, the question arises whether Renesola Ltd. is ready for it.  From the observation of China’s mainstream supply chain it shouldn’t be much of a daunting task, because since its globalization operation, planning has been adapted according to experience working with manufacturers in Taiwan with facilities throughout China.     

Mr Li also holds an optimistic view toward the outlook of Renesola Ltd. revenue growth. He pointed out that the company will be focusing on the production of modules and he expects to see the volume double, which will put Renesola Ltd. into the top five module suppliers globally.

Renesola Ltd. is also boosting production of polysilicon this year, aiming for as much as a 36% increase compared to last year’s results.  The shifting of major product mix and global outsourcing seems to be a vital move to ride out the incoming tidal wave of the EU’s anti-dumping and anti-subsidy sanctions.