4 Ways Chinese Solar Panel Companies are already Short Circuiting Future US Import Duties

The US Import Sanctions on Chinese Solar Panel imports will become a non-event soon as Chinese solar panel producers are easily short circuiting the sanctions. They are using a number of  strategies to protect themselves from the upcoming duties and anti-dumping measures. This shows that globalization makes the use of specific duties on a nation quite useless and only benefits the lawyers . The reason is that private companies are much more faster and nimble compared to the slow moving bureaucrats .

The Chinese solar panel producers are using different methods to short circuit the upcoming sanctions

a) Buy Solar Cells from Taiwanese Solar cell makers which have huge capacities without the competitiveness of the Chinese solar panel makers.Note Taiwan does not have strong low cost integrated solar players like China. They also lack the heft of the South Korean chaebols like Samsung and LG. So they can be easily exploited by the Big Chinese Solar Companies.

b) They will set up factories in low cost locations in places like East Europe, Malaysia, Mexico .These companies will  export solar cells and fabricate solar panels in these locations. Note most of the value addition is done till the solar cell stage with solar module being mostly an assembly exercise. Setting up a 100 MW solar panel plant is also quite cheap these days

 China-based makers concerned, due to worries about possible punitive measures imposed by DOC, are planning to set up PV module factories in Southeast Asia, Mexico and East Europe to cope with the potential negative impact, according to industry sources in Taiwan.The PV module factories to be established will each have an annual production capacity of 100-300MWp, with solar cells to be imported from China, the sources indicted. The selection of Southeast Asia, Mexico and East Europe is based on consideration of total production cost and cost of shipping PV modules to the US market, the sources pointed out.

c) They will set up solar factories in the US itself where they will import cells and make the modules.

d) The Chinese have already built massive inventory stocks in the US of Chinese solar panels .There was a massive surge of solar panel imports in December which indicates that this strategy has already been employed.

The US Department of Commerce has found a large surge in Chinese solar imports, which could trigger 90-day retroactivity if it finds duties are warranted.In the latest developments in the spat between US and Chinese solar manufacturers over potential dumping of Chinese solar products into the US market, the US Department of Commerce has taken action against the surge of Chinese solar cell and panel imports ahead of Commerce’s first preliminary determination on duties, now scheduled for 2 March, 2012.

Note Solarworld which has led the petition against the cheap Chinese solar panel imports has already filed an extension to include Chinese made solar cells as well. However, does not look like that will help also as the making of solar cells can also be outsourced cheaply to Taiwan, Malaysia and other places