On March 24, Suntech's stock price closed at $0.422, and the U.S. investment firm Maxim even set a $0 target for Suntech's stocks.

On March 13, Suntech announced it would close its factory in Goodyear, Arizona as of April 3.

Will Wuxi Suntech be taken over by the Wuxi Municipal Government during the restructuring period? An anonymous staff member at Wuxi Suntech told Beijing Review that the company has no comment and would not agree to an interview, but "the company is working as usual."

Wuxi Suntech now has two choices. First, the local government and the China Development Bank input capital to rescue the company, but Shi must offer unlimited liability guarantee with his personal assets; second, Suntech is delisted from the stock exchange and Wuxi Suntech becomes a state-owned enterprise. The two schemes are now both in negotiation.

Industry in trouble

Wuxi Suntech's bankruptcy brings to light industry-wide difficulties. Problems such as oversupply and halted exports have sent some photovoltaic companies into a desperate struggle in recent years.

In October 2012, the United States decided to impose anti-dumping and countervailing duties on Chinese-made photovoltaic products. Wang Zhixin, media head of another famous Chinese photovoltaic producer Yingli Group, says his company won't be deterred by the duties and will never abandon the U.S. market. In the future, the company will strengthen its innovation and adopt a diversified strategy to increase profits, he says. But by the end of February this year, Yingli's performance was down. Because of its stronger capital chain, it avoided the same fate as Wuxi Suntech.

Shanghai Chaori Solar Energy Science and Technology Co. Ltd. also faced debt problems at the beginning of the year. Wang Bohua, Secretary General of the China Photovoltaic Industry Alliance, says in 2012 almost all of China's photovoltaic companies, including Wuxi Suntech and Yingli, were losing money.

Liang Tian, Director of Public Relations of Yingli, says Wuxi Suntech's restructuring is a warning to companies in the industry to improve their strategic outlook and upgrade their technology—and to improve the sound development of the industry—or they could face the same fate.

According to Liang, oversupply in the photovoltaic industry is also a problem faced by Europe and the United States. Companies in China should work together to get through this difficult period, and the industry still has a bright future, he said.

The Chinese Government is also trying to shift focus away from foreign markets to the home market. According to the 12th Five-Year Plan (2011-15) on Solar Power Technology Development, by 2015 China's total installed capacity of solar power should reach 21 gigawatts. In 2012, the figure was only 4.5 gigawatts.

State Grid Corp. of China has already begun to connect solar power from qualified photovoltaic projects, both corporate and individual ones, into grids for free. The purchase price of solar power is double that of thermal power.

Wang thinks the photovoltaic industry's development will not stop just because some industrial leaders face difficulties, although it may experience a slowdown. Since oversupply and vicious price competition cannot be solved in the short term, it will take some time for the photovoltaic industry to recover.

To overcome difficulties, the photovoltaic industry must improve in three aspects, says Wang. First, the role of the market should be fully tapped to discard outdated production methods and avoid the intervention of local governments. Second, the Central Government should better regulate the development of the industry, restrict redundant construction and avoid rush investment and vicious price competition. Third, the government should strengthen support of independent innovation by enterprises and enhance the core competitiveness of the industry.

Email us at: lanxinzhen@bjreview.com