Japan

Entering the Japanese market is notoriously hard for foreign companies as they run into major implicit and explicit barriers. Like the Chinese, the Japanese have made it an art to keep out foreign companies in order to boost their local manufacturers. The solar panel market is no different from other markets like electronics, mobile phones etc. However the Feed in Tariffs fixed by the Government to boost solar energy has primed the Japanese market to experience a massive boom this year as IRR on solar investment will exceed 30%. The Japanese market is dominated by the big Japanese solar companies like Sharp, Kyocera, Mitsubishi and others. However a global glut of solar panels has led to crash in the prices and suppliers are looking at every market to survive.

Japan after the Fukushima disaster had set out on a plan to increase the share of renewable energy in the electricity mix which is abysmally low. Japan has very low capacity in wind and solar energy compared to the more environmentally conscious developed countries like Germany. Japan which had led the solar market in the period till 2005 abruptly stopped its support. Though that time period had led to the birth of the Japanese solar industry (which is second to the Chinese even today), the industry had faltered as domestic demand went into decline.

However with the setting of a crazily high Feed in Tariff of 52c/KwH, solar demand is set to increase exponentially in Japan. Note Japan is already one of the biggest markets globally and has a large solar manufacturing industry. This is ideal grounds for a subsidy led solar boom like what happened in Spain in 2008 and Czech in 2010 with pernicious results. Japanese solar companies like Sharp, Solar Frontier, Mitsubishi will benefit the most. This is despite their much higher solar panel costs and prices compared to the global leaders like Trina. The  reason is because of implicit barriers that Japan erects. Non-Japanese companies like First Solar, Sunpower have not been able to penetrate the Japanese market in a significant way because of these implicit hurdles. Note this is common to other markets and  industries  as well like LCD, computers, mobiles, rice etc.

How to Enter the Japanese Market

The best way to enter the Japanese market is to tie up with locally connected domestic companies, as breaking into the market for a foreign company on their own steam is almost impossible. Sunpower which is one of the biggest solar panel suppliers entered the Japanese market by tying up with Toshiba a couple of years ago, while Suntech bought a local Japanese installer. Now other Asian companies are taking a similar route. While Talesun which is a relatively new Chinese solar panel supplier has tied up with a construction material supplier, a small time thin film company from Taiwan has allied itself with a number of small developers to make an entry into the market.