China-based solar firms have become a target for Europe- and US-based solar firms that are on the brink of bankruptcies. To protect the domestic solar industry, countries have been setting up measures to keep out competitors with lower production costs. Once an industry leader, China-based vertically integrated solar firm LDK has reportedly being taken over by three state-run corporations. The world's largest solar cell maker, China-based Suntech, has been in question as the debt ratio of the firm remains high.
The preliminary punitive duties on China-made solar cells announced by the US government have been causing China-based solar firms to outsource solar cells. This has been raising production costs and making China-based players bet further on Europe's solar market.
At the same time, China's Ministry of Commerce has decided to start anti-dumping and anti-subsidy investigations against US polysilicon firms and anti-dumping investigations against South Korea's polysilicon firms. The investigations are likely to cause prices of polysilicon to increase which will further increase the production costs of China-based downstream solar firms.
This counter-attack by the China government is likely to hurt domestic solar product makers. These firms have been facing shrinking markets and low product prices. With the investigations, the firms will need to deal with increasing production costs as well.
LDK has been rumored to face financial troubles for quite a while. The firm used to be the world's largest solar wafer firm, but has struggled with market downturns and growing financial problems.
According to China media reports, the municipal government of the city where LDK is located has reportedly helped to solve the firm's financial troubles.
Suntech has been seen as facing financial woes as well. In its first-quarter 2012 financial report, Suntech indicated liabilities of US$3.575 billion while assets were US$4.378 billion, a debt/asset ratio of up to 81.7%. Banks have reportedly lowered the amount of loans available to Suntech.
Article translated by Jackie Chang
