China's photovoltaic industry oligarchs are coming to the four major problems to be solved

At the end of 2014, the Ministry of Industry and Information Technology issued a heavy document supporting the development of photovoltaics. "Opinions on Further Optimizing the Market Environment for the Merger and Reorganization of Photovoltaic Enterprises" proposed that by the end of 2017, a number of backbone photovoltaic enterprises with strong international competitiveness will be formed. Supporting the formation of 15 PV giants.

Experts said that after fierce market competition, the photovoltaic industry in the next few years will certainly be the share of more than 80% of the photovoltaic oligopoly, and the documents issued by the Ministry of Industry and Information Technology will further accelerate the reshuffle of the photovoltaic industry. However, experts also pointed out that the four major problems that are currently plaguing the merger and reorganization of the photovoltaic industry are also urgently needed to be solved.

Photovoltaic companies accelerate mergers and acquisitions

According to the "Opinions", based on the characteristics and current situation of industrial development, with the overall goal of improving industry concentration, cultivating advantageous backbone enterprises, enhancing industrial core competitiveness, and optimizing industrial regional layout, by the end of 2017, a group of strong international competitiveness will be formed. The backbone of the photovoltaic enterprises, the top five polysilicon enterprises accounted for more than 80% of the country's output, the top ten battery components enterprises accounted for more than 70% of the country's output, forming a number of global vision and leading strength of photovoltaic power generation integrated development and application enterprises.

In this regard, Chairman of the Board of Directors of GCL-Poly, Zhu Gongshan, said in an interview that “the future photovoltaic industry will have several PV leading enterprises occupying more than 80% of the market share. These leading PV companies will guide the development of the entire PV industry.”

Zhao Yuwen, an expert in the photovoltaic industry, also said that after fierce market competition, the photovoltaic industry in the next few years will certainly be the market share of more than 80% of the photovoltaic oligopoly. The documents issued by the Ministry of Industry and Information Technology will further accelerate the reshuffle of the photovoltaic industry.

“Actually, the leading PV industry leaders have already emerged. Among them, GCL-Poly, Harun Solar, Shunfeng Optoelectronics, Yingli Energy, Hanergy Photovoltaic and Trina Solar, which have formed the entire industry chain, are likely to become photovoltaics in the future. Oligarchs in the industry." In Zhao Yuwen's view, "As these companies' market share further increases, some companies that do not have competitive advantages will face a situation of being eliminated."

To this end, the "Opinions" pointed out that the backbone photovoltaic enterprises are encouraged to implement mergers and acquisitions. Encourage key PV companies that meet the requirements of the standard to give full play to the advantages of capital, technology and brand, and implement mergers and acquisitions for PV companies with poor operating conditions but certain technical strength. Support backbone PV companies to conduct cross-border mergers and acquisitions, optimize resource allocation on a global scale, and improve international management capabilities and levels.

In addition, the "Opinions" also pointed out that it is necessary to guide upstream and downstream enterprises to strengthen cooperation and encourage upstream and downstream enterprises in the PV industry chain to establish long-term and stable cooperative relations and improve the structure of the industrial chain through strategic alliances, signing long-term orders, technical cooperation, and mutual participation. It will focus on promoting deep cooperation between polysilicon enterprises and battery and component companies, upstream manufacturing enterprises and downstream power generation companies. Support key PV companies with good operating conditions and leading technology to implement mergers and acquisitions in upstream and downstream enterprises, improve the structure of the industrial chain, and improve the profitability of the entire industry chain. Encourage key enterprises and related companies in the related industries such as power and chemical industry to implement mergers and acquisitions.

Zhao Yuwen told reporters: "In the new round of PV enterprise competition, enterprises will face the dual pressure of large capital demand and shrinking profits. Some small and medium-sized battery and component enterprises will be the focus of restructuring and mergers and acquisitions. Especially in some financial strengths. Under the impact of leading enterprises with a large market share, some small and medium-sized enterprises with insufficient financial strength will experience a rapid decline in market share. The collapse or merger in the competition is an inevitable outcome."

Four major problems still to be solved

For China's photovoltaic industry, 2014 is a year of ups and downs. With the introduction of the "Opinions", the photovoltaic industry will have a good start in 2015, but the four major problems that have plagued PV companies' mergers and acquisitions are also urgently needed to be solved.

The first is the issue of industry attributes. On the one hand, it is a production problem. Since polysilicon production is a system engineering, simple merger and reorganization cannot produce economies of scale. Once the polysilicon production equipment is dismantled, the reusability is low, which also makes the merger and reorganization of this link difficult. On the other hand, it is a problem of production equipment. With the advancement of technology, the price of production equipment is continuously decreasing while the performance is greatly improved. This also makes some enterprises purchase more new equipment instead of acquiring the original enterprise when expanding production. This also makes mergers and acquisitions more difficult.

The second is the valuation problem brought about by the similar technology. Photovoltaic products are only one component in the photovoltaic system, which belongs to industrial products. The competitiveness is mainly reflected in the cost performance. Under the circumstance of convergence of photovoltaic technology in China, China's PV companies have strong homogeneity. In the case that the production scale of major enterprises has been large, enterprises are not willing to continue to expand production capacity in the market. Even if they have the desire to expand production, they tend to purchase new equipment for expansion.

The third is the intervention of local governments. Because PV companies contribute more to GDP and can create more jobs, local governments are not willing to close down or be merged. In particular, some enterprises are cultivated by local governments. For example, through the support of local financial institutions, if these enterprises fail, they will bring a series of problems. Therefore, local governments can only try to help these enterprises to support.

The fourth is the “resource-for-project” plan of the local government. At present, the power of examination and approval of photovoltaic power plants has been decentralized to local governments, and local governments can support the development of local enterprises in disguise through the issuance of “roads”. For example, the “roads” are used to tilt to local enterprises; resources are exchanged for projects, “roads” are exchanged for enterprises to set up factories in the local area; and other local resources are exchanged for photovoltaic projects, which are not conducive to the promotion of mergers and acquisitions.

Insiders pointed out that at present, the photovoltaic industry is at the "critical point" stage of price breakthrough and the trough and reshuffle period of the whole industry. Photovoltaic enterprises need to make full use of local advantages to build each enterprise in the industrial chain into a high level of technology. And the market-competitive manufacturing enterprises, through collaborative manufacturing, form a photovoltaic power generation industry chain manufacturing enterprise with low comprehensive energy consumption, low material consumption, high production efficiency and high technical level, and create a group of world-class high-quality photovoltaic manufacturing. Brand.

The above analysts said that the photovoltaic industry not only needs policy guidance and industrial autonomy growth, but also needs a series of cooperation, mergers and acquisitions, and restructuring at the enterprise level. Under the background of industrial chain optimization, a smart manufacturing, advanced manufacturing, and lean are established. The high-end manufacturing system that is manufactured can make China's PV companies not afraid of any international pressure and maintain a long-lasting leading position in the world.

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