It just doesn’t matter – because everybody will lose in the US and China solar trade war?

Feb 9th, 2013 | By | Category: Articles, Featured Posts, Market Impact

Journalists and analysts are in agreement when reviewing the pro’s and con’s of the US and China solar trade war. It’s interesting how they try to figure out who would be the winner or the looser. Gordon Orr, Chairman Asia of McKinsey and Company made clear in his article that the complexities of global production networks aren’t that flexible and easy to substitute than many people think – and consumers in the US and in China will be hit hard if they would carry on that way.
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Dupont and Suntech set a sign for cooperation

A few days ago signed Suntech and DuPont a new expanded and strategic partnership. Maria Boulden, global sales manager for Dupont Photovoltaic Soltions, explained, that the two will explore technology advancements in backsheets: their construction and how that affects their longevity, and how backsheets might even improve the module’s power output.
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Old partnerships without relevance for SolarWorld

Business Insider pointed out that SolarWorld once had a lucrative partnership with one of those cheap Chinese manufacturers and quote the German FT: „While Asbeck is singing high praises about German quality manufacturing, he is pursuing his luck in far away Asia. According to estimates by Commerzbank, SolarWorld will have 20 percent of its solar modules made by Chinese manufacturer Suntech — and sell the products under the brand name Solarworld. It’s good business. After all, production costs are significantly lower in China. “
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(article from 2009)

And at the end – It just doesn’t matter?

Eric Wesoff,editor-in-chief of greentechmedia, published the last months news and articles on this issue and came („with the help of a number of industry insiders“) to a conclusion and summarizes the discussion in a very straight manner: „It just doesn’t matter.“ In his resume the tariffs are likely, China will remain dominant in regionalized manufacturing, and pricing will largely be unaffected. He published eight long-term results of the actions of CASM and a tariff on Chinese manufactured solar:

  • Will regionalized manufacturing result in significantly higher module pricing? Probably not. For example, Mexico’s low labor costs and close proximity to the U.S. keeps the cost within pennies per watt of China today.
  • There’s no need to worry about product shortages in the U.S.
  • Financial returns may be impacted slightly in the near term as things get sorted out, but the U.S. pipeline of business should not be significantly affected.
  • China’s exchange rate issues and increasing labor and transportation costs make regional manufacturing attractive with or without tariffs.
  • SolarWorld will still be manufacturing in Oregon with a cost-per-watt disadvantage. In fact, SolarWorld may have to set up shop in a region with lower cost than the U.S (like Mexico) to be competitive.
  • The U.S. might lose solar jobs, but more from the failure to extend the 1603 tax grant than any trade-related price change.
  • Higher environmental standards in Taiwan will improve the toxic side of solar panel manufacturing.
  • Chinese solar industry employment could drop, but the growth of China’s domestic market could mitigate the issue.

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