Who will be the Solar Leader – China or Japan

The Asian countries of China and Japan have a host of companies manufacturing solar panels at very cheap prices. It is becoming very difficult of consumers to choose from a  wide variety of solar modules available in the market. The Chinese and Japanese Government are known for protecting their domestic manufacturers. The Chinese government have crossed all limits in supporting their domestic companies and even turning them into zombie companies. The CDB has extended grants in keeping alive companies like Suntech (STP) and LDK Solar (LDK) unnecessarily disrupting the demand-supply balance. The Japanese government in order to support their local solar industry introduced generous government subsidies which led to a huge PV Panel boom. The only way for a foreign company to sell in Japan is through a partnership deal/ JVs with Japanese companies.

Read more about Japanese Solar Panels here.

It is estimated that out of the 35 GW in solar panels demand expected this year, around 20 GW will be accounted by China and Japan.

The major Chinese solar panel companies are Yingli Green Energy, Trina Solar, Renesola, Hanwha Solar, Jinko Solar, Canadian Solar. The major Japanese Solar Panel companies are Sharp, Kyocera, Mitsubishi, Solar Frontier and Panasonic. The Chinese solar industry is relatively larger than the Japanese solar industry, with almost more than 20 leading solar panel companies in China. It recently reached a volume and price agreement with the European Commission, after Europe started an anti-dumping investigation against China. Japan on the other hand, was the leader in solar installations till 2007, but the lack of Government support then and the fierce Chinese competition shook its position. But things changed after the Fukushima disaster back in 2011 and Japan became very aggressive in its solar plans. Now Japan is set to become the largest solar market by revenues, though it is not the leader in terms of solar installations anymore.

Read more about Chinese Solar Panels here.

The Japanese had become the biggest players in the solar panel market due to the strength of their domestic market. This market is booming again and the Japanese company Sharp has seen its Q213 revenues double to $850 million from a year ago and plans to ship 1.6-1.8 GW this year. Though Japanese companies are going strong now, I don’t think that the Japanese will be able to displace the Chinese. The supply chain in China is extremely cost competitive and Japanese companies cannot compete with the Chinese. They are sourcing most of the components from Taiwan and their own factories in other parts of Asia. Size wise also Chinese companies have become very big. I think that like other industries such as cell phones, the Japanese companies will be restricted mostly to their home markets.