The Chinese government is pushing for a drastic shakeout of the country's overcrowded solar cell industry, supporting only a quarter of players and practically telling the rest to get out of the business. The Ministry of Industry and Information Technology has announced a list of 134 producers of silicon materials, solar panels and other components of photovoltaic systems as meeting certain conditions, as measured by 2012 production, capacity utilization and technical standards.Bye bye subsidized loans, export tariff refunds, and ultimately financial viability. Even in this part of the world, the alternative energy revolution seems to have bitten the dust before it got started as matginal Chinese manufacturers are being fed to the 120 hungry dogs of cold, hard market reality.
In a sector said to have more than 500 companies, the ministry's move means that three-quarters didn't make the cut -- including the core subsidiary of Suntech Power, which went bankrupt in March, and Jiangsu Shungfeng Photovoltaic Technology, Suntech's startup rescuer.
These firms will not be able to get credit lines from financial institutions and thus will have a tough time borrowing, according to industry insiders. They will also no longer be eligible for refunds of export tariffs, a huge blow to companies that depend on overseas business. On the home front, it will be difficult for them to participate in state-run utilities' auctions, sharply curtailing their opportunities to win orders.
settlement last August with the European Union which was previously set to slap anti-dumping tariffs on its solar panels, we now get word on the extent of China's subsidies for the industry. At year-end 2013, the PRC's government rolled back the industrial benefits allotted to this industry, and there is now expected to be a bloodbath on the production floor of China's manufacturers. How bad will things get? Try a 75% "death sentence" rate as only a quarter or so of firms will remain eligible for government support. From the Nikkei Asian Review: