Solar firms search for light at the end of tunnel

Companies opt to relocate plants to Southeast Asia to cut labor costs, reports Lyu Chang.

The label of "made in China", which was synonymous with the global solar industry, is in danger of fading out as a growing number of firms move their plants overseas to skirt spiralling import duties.

Hit hard by the steep tariffs imposed by the United States and the European Union and coupled with rising labor costs in coastal cities, major solar panel manufacturers such as Trina Solar Ltd and Jinko Solar Holding Co Ltd are speeding up construction of factories in countries like Thailand and Malaysia.

Experts said it has already become a trend that more Chinese companies are moving their manufacturing bases abroad, especially to Southeast Asia, which will have a positive impact on local solar cell industries.

Though it is only a fraction of China's solar capacity which is expected to reach 40 gigawatts this year, the Southeast Asia solar industry is growing rapidly.

During the first six months of the year, Southeast Asia has attracted 4.5 gW of solar power generation capacity from China, among which solar capacity in Thailand reached 2 gW and that in Malaysia more than 1.5 gW.

Trina Solar, a photovoltaic modules maker based in Changzhou, Jiangsu province, has set up regional headquarters in Southeast Asia, where demand for solar panels is rising steadily.

In May, the company started the construction of its factory in Thailand with an investment of $160 million, aiming to boost its solar panel output in the global market.

Trina Solar's plant in Thailand is expected to be put into operation at the end of this year or early next year with an annual capacity of 700m W for solar cells and 500 mW for solar panels.

A solar panel, or module, consists of a series of silicon cells which are joined together to form a circuit.

The company, which was founded in 1997, has also cooperated with a local Malaysian company for original equipment manufacturing to develop 500 mW of solar modules as part of the company's localization strategy.

"Southeast Asia has become a very important regional manufacturing center for us, because the location of these plants are closer to emerging markets and thus it will boost our sales there," said Gao Jifan, chairman and chief executive officer of Trina Solar.

The solar maker had widely sold its products to Europe, the world's largest solar market, as well as the US, but it has shifted its focus toward emerging markets to balance out the difficulties in the traditional markets, putting more efforts on the domestic market in recent years, where Chinese solar companies can enjoy more government subsidies.

"This is something that we have been doing during the past few years and the future uncertainty has just accelerated that process," he said.

Experts said exports from China account for 70 percent of the world's solar products, but some of these companies have turned to emerging markets after countries like Germany, Italy, Spain and the US have claimed that Chinese solar firms have been selling panels below their market value, imposing higher tariffs on solar products made in China.

Gao said the company will search for places in overseas markets that are suitable for manufacturing, original equipment manufacturing or outsourcing to increase solar capacity as a quick response to the market.