Solar firms search for light at the end of tunnel

"I think this manufacturing model can be copied in other countries as well, because it is closer to our target markets and the production costs are relatively low," he said.

Besides markets in Southeast Asia, solar industry in India and Latin America has also the potential to become the next manufacturing hub for Chinese solar firms.

Lyu Jinbiao, vice-president of GCL-Poly Energy Holdings Ltd, said the company plans to build a photovoltaic industrial park in overseas markets.

"The trend is obvious that more Chinese solar firms are going global to source solar cells to offset mounting pressure in the traditional solar markets where they fear there might be further profit-cutting by future action on dumping duties," he said.

Efforts by Chinese firms are a reflection of their confidence of a recovering global solar market.

With Europe likely to increase its renewable energy budget, and rooftop solar panels set to be a top priority, many countries are likely to increase imports of Chinese solar products.

Chen Jie, director of both the solar energy center of the National Institute of Clean and Low-Carbon Energy and the Beijing Engineering Research Center for Nanostructured Thin Film Solar Cells, said producing solar products in other Asian locations has become a widespread strategy used by Chinese solar makers.

But whether this strategy can successfully help those companies avoid import duties really depends on the location of where solar cells are made, he said.

"Some solar companies actually produce the solar cells in China and assemble them into solar modules in Southeast Asia. In such cases, they may still have to pay for the import duties according to the regulations by the EU," Chen said.

China's solar firms are suffering heavy losses in recent years due to plummeting prices of solar products caused by vicious competition and an excessive production.

"When supply has outpaced demand, overcapacity must be reduced and market demand should not rely on the government subsidies," Chen said.

However, in terms of capacity, most solar companies are not that rational about production.

Chen said the top priority for solar panel makers is to make technical breakthroughs rather than to find ways to circumvent import tariffs.

"Innovation is the key to everything," he said. "Si-wafer based PV companies in Europe are developing next-generation technology called 'one cell on module' meaning that one module is made of one cell. If that technology is getting promoted widely in Europe, they wouldn't even need trade barriers to squeeze out Chinese companies, who are lagging far behind the European firms."

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