A way out
Experts suggest building factories overseas could present a viable solution. Also, the untapped domestic market represents a diamond in the rough.
A report from China New Energy Chamber of Commerce said China has become the world's largest solar market, having surpassed Germany in 2013. The focus of the global solar market is now shifting from Europe to Asia, according to the report.
With its 1.3-billion-strong population, China is certainly an immense market. Turning to the domestic market instead of the more and more difficult global market should be an obvious choice for Chinese PV makers. So what's with the holdup?
Ren, the CIConsulting researcher, said there are many roadblocks standing in the way of a healthy domestic solar industry.
"Many policies haven't been formulated or implemented, such as connecting generated solar power to the national grid, supervision of the industry, subsidy standards and preferential loan policies," Ren said. "Formulation and implementation of these policies should be expedited."
Ren said anti-dumping and anti-subsidy investigations have bankrupted an array of PV companies but they may also present a good opportunity for a technological upgrade and transformation of growth patterns in the beleaguered industry.
A transformation of growth patterns needs support from all sides. The Chinese Government, which has been scrambling to boost domestic demand to offset declines in orders from Europe—previously the dominant buyer of Chinese solar products—issued a document on boosting the healthy development of the PV industry last July.
"It requires support from the Central Government, local governments and investors. Massive capital input and building a strong research and development team are equally important," said Shen Hui, an expert in solar power in Zhongshan University.
Meanwhile, Chinese PV makers' export destinations have greatly diversified, signaling a change in the global business landscape.
Statistics from the CCCME show that China's PV exports shrunk by an alarming 18 percent in 2013. Exports to the EU used to account for 65 to 70 percent of the total while that percentage shrunk to 37 percent in 2013 in parallel with exports to the North American continent shrinking to between 15 to 18 percent.
The Asian market, on the other hand, rose to 45 percent of China's PV exports. Japan imported $3 billion worth of PV products from China, becoming its biggest export destination. The Indian and South African markets are also booming, according to the CCCME.
"On the one hand, the growth potential of African, Central Asian and South American markets should never be underestimated. On the other hand, turning to the domestic market is a wise choice. Cultivating a robust domestic consumption market is the guarantee of a healthy PV industry," Ren said.
However, before China fully completes its economic restructuring, the business revenue of Chinese PV makers won't greatly improve in the near future. A price war is still inevitable, warned Ren.
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