China's photovoltaics smashed Asia and Africa to set off a wave of emerging markets

Chinese companies, like breaking into the messy back garden, have entered the wild and vibrant PV market in Asia and Africa. What kind of efforts and self-sufficiency do they need?

Jia Erying, 58, is very busy recently. Let him be too busy to breathe, in addition to the daily meetings and activities, as well as Jinglong "the production line is fully loaded."

On June 19, Jia Erying rushed back to Shijiazhuang, Hebei Province, from the headquarters of Xingtai Jinglong Group. In his office, he is the executive deputy general manager of Jinglong Group. He used a strong Hebei accent to introduce to reporters: "When some domestic enterprises stop production or even go bankrupt, our production line of Jinglong is basically full operation, even orders. They are all produced."

The full production of Jinglong is not unrelated to market adjustment. In terms of the market, Jinglong's strategy has shifted from relying on traditional European markets to trying to enter emerging markets such as Asia Pacific, the Middle East and Africa. As a subsidiary of Jinglong Group, JA Solar has sold more than 60% of its products to Europe, and has now dropped to 10%. Conversely, products sold in emerging markets such as the Asia Pacific region have exceeded 50%. This change has also made Jia Erying feel gratified. Seizing the emerging markets is becoming an important weight for Jinglong to get out of the PV market.

In fact, in addition to Jinglong for more than two years, domestic PV companies, including Yingli, Trina Solar, GCL-Poly, and Huihui Sunshine, have made significant adjustments to their market strategies in response to the current downturn. Market environment and trade protection in Europe and America.

Domestic PV companies are undergoing a difficult round of adjustments.

Wu Dacheng, secretary general of the PV Professional Committee of the China Renewable Energy Society, believes that emerging markets are the future direction of PV development. He said that the US, Japan and China markets are on the rise and deserve attention. At the same time, the governments of South America, Africa and Southeast Asian countries have strong market support for the photovoltaic industry. Especially in these emerging markets, those areas that are remote and have no electricity are more urgent about electricity.

A new skylight to save domestic PV companies seems to have opened. A wave of photovoltaic development into emerging markets has also swept through.

The temptation of emerging markets

In the face of the EU's willingness to conduct a "double-reverse" investigation of China's photovoltaics, more and more Chinese PV companies are no longer staring at the European market, but are beginning to switch to emerging markets. This also means that the era of China's photovoltaic industry relying heavily on the European market is coming to an end.

Emerging markets are being seen as the next hope by many Chinese companies. In addition to China, Japan, the United States and other countries, including Southeast Asia, Africa, the Middle East and other regions, the installed capacity of photovoltaics will show rapid growth in the next few years. Today, contributions from emerging markets have increased from 2% in the previous year to nearly 10% in 2012.

Take Japan, the fastest growing market, as an example. From April 2012 to March 2013, the photovoltaic industry in Japan added 1.56 GW of new installed capacity, a three-fold increase over the same period of the previous year. According to Jia Erying, due to the huge demand in the Japanese market, Jinglong has also increased the development of the Japanese market. “Relying on the high quality and high conversion efficiency of our products, at the beginning of this year, our products have already ranked first in the Japanese market.”

In the first quarter of this year, Jingao had 100 megawatts of high-efficiency monocrystalline silicon components sold to Japan, and orders exceeded expectations. "The successful development of the Japanese market has not only changed the situation in which the previous components of Jinglong lost money, but also the profits are considerable." Jia Erying said. From the current average selling price, the Japanese market has a higher profit margin and good payment terms.

Not only in the Japanese market, JA Solar also has projects in Iran, Israel and other places in the Middle East. “Before, the five projects signed by JA Solar and Siemens in Israel are located in the Alava Desert and the Negev Desert.” Jia Erying said that the Alava and Negev desert areas are rich in sunshine resources, suitable for solar photovoltaic power generation, but The "efficient durability" of battery component products is extremely demanding. In order to increase the development of emerging markets, Jinglong even set up four international sales teams - Europe, Asia Pacific, Americas, Middle East and Africa.

Another photovoltaic giant, Artes, is also increasing sales in emerging markets. Its sales in emerging markets have also exceeded the European market this year. According to Artes' quarterly report, Artes module shipments reached 263 million US dollars, of which the Asian market accounted for 57.4%, while Europe was less than 25%. Artes attributed its business boost to the expansion of the lucrative Japanese market. It is not difficult to find that Artes is gradually adjusting its corporate strategy and paying more attention to emerging markets such as Southeast Asia, South America and South Africa.

In fact, all domestic PV companies are vigorously expanding into emerging markets. Among them, GCL-Poly wants to start the Thai market and invest in PV projects in Thailand; Nanjing CLP is mainly concentrated in the Bulgarian and Indian markets; Chint Solar's exports in the Southeast Asian market account for about 15% of the company's total exports; Sunshine has localized production plants in Poland, South Africa and India.

Some analysts pointed out that by 2017, the demand for photovoltaics in emerging markets in Asia Pacific and Central Asia will exceed 3 GW. The region will grow rapidly over the next five years, offering a wealth of business opportunities. Sun Haiyan, president of Trina Solar's Asia Pacific Middle East and Africa region, also predicted that the total market volume in the Asia Pacific region will show explosive growth in the next two years, reaching three times the current level.

At the same time, due to the availability of affordable Internet access, sufficient lighting and economic development, the emerging markets such as Brazil, Chile, South Africa and Saudi Arabia will also become the countries with the most investment potential.

Nowadays, the development of emerging markets is becoming a big cake for domestic PV companies, and all companies are going forward.

Closed reality

For Chinese PV companies that are optimistic about emerging markets trying to make a lot of money, it is not easy to really have a place in different markets.

Previously, the development of experienced Chint Solar in emerging markets has caused trouble in India. Chint Solar's 24 MW thin-film photovoltaic power plant in India, because Indians believe in trees as gods, can not be cut down to cause their 1 MW project to be postponed. In the view of Luchuan, vice president of Zhengtai Solar, the photovoltaic power generation business is actually a long-term fixed asset investment, so investment risk considerations must be placed first.

“In terms of construction risks, factors such as land disputes and cultural relics protection need to be clearly identified before the project is constructed, so as to avoid unnecessary troubles,” he concluded.

In the view of Zou Xiyuan, chief operating officer of GCL-Poly, the Indian market is not as simple as the obstacles caused by religion. He told reporters that GCL-Poly has no projects in India. Its market is relatively closed, especially in terms of policy closure. For example, in India, if the country invests in a power station, it requires local production of battery components, and Indian companies prefer to buy cheap products, as long as the price is cheap, he will consider, which will lead to vicious competition between enterprises.

At the same time, the payment uncertainty of Indian companies is very large, and it will be a great pressure for enterprises to not pay back their debts for a long time. All of these make the Indian market relatively closed, and domestic talents dare to do it, and foreign companies generally do not dare to do it.

As far as the Japanese market is concerned, there is also a high threshold. Before entering the Japanese market, there are complex certifications. Among them, including Japanese residential top solar system certification and solar module certification. With these two items alone, many companies are excluded.

An Zeng, deputy general manager of Jinglong Group, said that due to the country's land area, Japan cannot develop large-scale large-scale ground power stations like the inland areas of China, and more are photovoltaic rooftop power stations. “They require photovoltaic modules to have a high efficiency per unit area. If the same panel requires 270 watts of power in the country, then it will reach 275 or 280 watts in Japan,” he said. At the same time, the Japanese market has special requirements for the attenuation rate of battery components. The attenuation rate of components is generally not more than 3% per year.

Not only in the Indian and Japanese markets, but even in Southeast Asia, Africa, the Middle East, etc., it is not easy for Chinese companies to enter these markets smoothly.

In Africa and the Middle East, for example, the region's lighting conditions far exceed the existing major PV markets in the world, and in some areas it can even reach twice the level of light in the western regions with better domestic light. In addition, good direct light makes concentrating technology an option for the Middle East and Africa.

However, in the climatic conditions of the region, PV modules are subject to the high temperature environment that is rare in other parts of the world. And in the desert environment, the temperature difference between day and night is very large, and the dust particles everywhere can become a new challenge for PV developers. Even if the technical aspects of the product are left out, the bigger challenge comes from the local protection and closure of the market.

“In the Middle East and Africa, large-scale renewable energy projects often operate in a tender. In this form, some governments are trying to increase the proportion of local products in their products. At the same time, bidding methods are more likely to lead to a high degree of bureaucracy. Delays in doctrine and project development."

In fact, other unfavorable factors in emerging markets include fragile grid infrastructure, lack of financing support, bureaucracy and frequent project delays, which will become challenges for domestic PV developers.
Extremely saturated market

For a long time, many people in the industry have turned the market's shrinking of the Spanish PV policy into a painful lesson.

From 2007 to the first half of 2008, the Spanish government introduced an incentive policy that was almost equivalent to the traditional electricity price. In addition to factors such as rising global oil prices, the photovoltaic industry is in a booming cycle. However, since the beginning of 2009, Spain's policy has changed, the subsidy ceiling is 500 megawatts, and the market has shrunk to 80%. Affected by the global financial crisis, many companies began to lay off employees, forcing the Spanish PV market to also turn to the domestic market, as much as possible to purchase locally, which led to the violent ups and downs of the Spanish PV market.

According to this, Zou Xiyuan said that the sudden changes in the Spanish market have led many companies to turn to the South American market, especially Argentina. The reversal of the Spanish policy winds, whether this policy change will reappear in emerging markets that have just warmed up. When PV companies exploring emerging markets are faced with various flaws, whether the local market can truly digest the surge of photovoltaic capacity will inevitably cause some concern.

Analysts believe that the current capacity of emerging markets, except for India and Japan, rarely exceeds the demand for Giva-class markets. I am afraid that a small number of Chinese companies will be able to meet local demand when a large number of Chinese companies transfer shipment targets. These things are prone to saturation. To this end, it is debatable to rely solely on emerging market consumption products.

Taking the Japanese market as an example, in the first quarter of 2013, China shipped more than 700 megawatts of photovoltaic modules to Japan, accounting for about 40% of the domestic market in Japan. It is predicted that the Japanese PV market will be self-sufficient in 2014, when the Chinese PV market may not be able to continue to maintain its existing market share. From the perspective of market requirements and demand, Japan's extremely high barriers to entry, I am afraid, can only meet a few first-tier companies to share this photovoltaic feast.

Zou Xiyuan raised doubts about the rapid influx of domestic PV modules to the Japanese market and whether the Japanese policy will be tightened in the future. He believes that the rapid occupation of the Japanese market by large-scale PV modules is bound to cause tensions in the Japanese government. In order to protect domestic enterprises, Japan’s “double-reverse” move of trade protection in Europe and the United States will be sooner or later.

However, An Zeng, deputy general manager of Jinglong Group, is showing an optimistic attitude towards the status quo of Jinglong in the Japanese market. In his view, although the current shipments of Jinglong in the Japanese market have surged, and their silicon wafers and battery products are 1 to 2 cents more expensive than similar products, he believes that high-quality products will definitely have a market. . In March of this year, the average price of domestic components was 0.66 US dollars per watt, while the price of Japanese PV modules was about 10%-20% higher than that of China, which is the key to their ability to make profits in a bad market.
An Zeng now believes that after the Fukushima nuclear accident, Japan has eagerly changed its dependence on nuclear power, and new energy sources such as photovoltaics have become their main focus. The most important thing is: At the beginning of the establishment of the Jinglong Group, it had a joint venture with Matsushita Semiconductor Co., Ltd. in Japan. Their internal technology and management are inseparable from Matsushima, so their products have great competition in the Japanese market. force. When the reporter visited a factory in the base of Xingtai in Jinglong, the words of Songgong Company were still written at the gate.

For Chinese companies, whether emerging markets can truly shoulder the burden of filling the vacancies in the US and Europe, while not causing policy tightening in these emerging markets, may still be a question.

"Come out of the sea" mode

In the face of various restrictions in foreign markets, it has been suggested that the factory be directly located overseas. The reason is: more in-depth market, more support in tariffs, loans, etc., but the problem is that individual companies are weak and may encounter even greater difficulties.

To this end, industry experts have proposed that PV companies can adopt the strategy of “carrying out the sea”, exploring emerging markets as the best part of the industry chain, teamwork to rationally distribute profits, and maximizing the use of various resources to create a new model.

In this regard, Zou Xiyuan expressed his approval. In his view, domestic PV companies have always liked to fight alone, it is difficult to do everything. Therefore, it may be better to find a way to go out in the form of a team. This will also change the Chinese concept of “being a chicken head”, which requires the wisdom of the photovoltaic giants.

At present, the wafers of PV companies such as Artes, Hanwha and Tianhe are basically from GCL-Poly. Zou Xiyuan said that in fact, these are virtual integrations between enterprises, and they are playing their respective advantages. In the future, strengthening cooperation in the development of the market will be more conducive to domestic PV companies.

In the view of Anzeng, the whole industry chain model adopted by domestic enterprises in the past has gradually been abandoned by major enterprises. At present, the overall industry situation is not good, and one of the links has too much loss, which may drag the whole enterprise down. However, it is more difficult to open up new overseas markets in the future and to form close alliances among companies. He believes that it is better to cooperate with each other to make superior products.

However, when many people pay attention to corporate collaboration, Jia Erying pays more attention to the internal development of the company. In his view, financing is the most important factor in expanding overseas markets. The state can set up a photovoltaic fund, and the government will come up with funds to make a policy. Which companies need liquidity, which companies should not support, and funds need to come up with medium- and long-term plans, which should not be less than three years.

He said, "For those enterprises that are indeed on the verge of bankruptcy and insolvency, try to let the enterprises find their own ways, but they cannot abduct the banks and the government. For competitive high-quality enterprises, try to help them tide over the difficulties. In the process of exploring emerging markets, it is more emboldened."

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