The headquarters of Suntech in Wuxi, Jiangsu province. (Photo/CFP)
Suntech Power Holdings, the world's largest producer of solar panels, has become the first giant in the industry to fall after the Wuxi Intermediate People's Court on March 20 announced the bankruptcy and reorganization of Wuxi Suntech, the company's major subsidiary.
As the domestic photovoltaic industry is facing grave difficulties, with many firms actively closing plants, laying off employees and seeking government subsidies, the Chinese-language Beijing Business Today has asked which company will be next.
The global solar-cell manufacturing industry has been in a nose-dive since 2011, when manufacturers in China aggressively expanded production capacity only to encounter the global economic slowdown and anti-subsidy and anti-dumping probes in their major export markets of the US and European Union. Speculative reports about Suntech's bankruptcy were doing the rounds as early as October 2011, but proved to be only slightly premature.
In 2011, Suntech suffered a net loss of US$1 billion, compared with a net profit of US$237 million the previous year, forcing the company to adopt a series of measures in 2012 to turn the situation around. It has tried everything, including laying off workers, closing plants, replacing top executives and seeking government subsidies. In August last year, Suntech replaced founder and CEO Shi Zhengrong with chief financial officer David King, but the ensuing internal power struggle brought with it further problems.
Last week, Suntech announced the appointment of a new president, Zhou Weiping, a longtime Wuxi Guolian executive who was previously the chairman of the company's futures trading subsidiary. But Zhou's appointment is seen as a move to protect the interests of the government and domestic banks, and he is unlikely to reverse Suntech's quandary, the report said.
Statistics show that China's solar panel manufacturing industry has an overcapacity rate of more than 90%, with more than 85% of producers having suspended operations totally or partially.
Wuxi Suntech's bankruptcy seems like just the beginning. The winter for China's photovoltaic industry won't end until the conclusion of the country's 12th five-year economic development plan or the early 13th five-year national plan, and 2013-2014 will be the key years for the industry's restructuring, the report said.
Wang Bohua, secretary-general of the China Photovoltaic Industry Alliance, sees further mergers and acquisitions in the industry ahead, probably leading to three to five giants left standing from the current eight major companies.