The Art of PV War

The U.S. Department of Commerce today handed down it’s preliminary report on alleged dumping by Chinese solar manufacturers in the US market.

The landmark findings handed down concluded that Chinese manufacturers were guilty of dumping solar cells and panels into the U.S. market, and imposed preliminary margins of 31.14 % for Trina, 31.22 % for Suntech, 31.18 % for others and 249.96 % for China-wide companies that did not participate in the case.

Effectively, it means that IF the findings are validated, the price of those products to buyers will rise by the margins specified; between 31.14% and 249.96% .

Its important to note that it is NOT a  done deal yet; commerce wont release its final determinations until the end of July,and there is speculation that could be delayed even further.

The issue of protectionism is a fascinating one in this ever more global economy.

We clearly need the volumes, scale and arguably the competitive pressure that China has brought to the PV market.  Without it, the price of PV would not have dropped as significantly as it has. So that’s a good thing.

What is not so good is that many of the major manufacturers have lost money (approaching $1Billion dollars in some cases) to get there, so is it real?

Maybe, maybe not. Manufacturers in many industries lose money all the time in carefully executed strategic plays to gain market share, build new markets or cross sell other products. People and businesses are staggeringly inventive when it comes to how to ultimately make money and are quite happy in many cases to lose a bit along the way.

BP Solar as one example, (my former employer) lost money for decades before making a profit, because it had a long term strategic view on the market. For a whole variety of reasons, that didn’t work out so well in the end (!) but the strategy was sound.

Sun-Tzu’s (Art of War) and Alexander the Great understood and engaged in the practice of “losing the battle but winning the war” and it may be that we are seeing just a hint of this in the whole trade dispute looming before us.

The next battle could just as easily be counter tariffs on non Chinese EPC companies seeking to gain a slice of the action in what is likey to be the worlds single largest PV market within a couple of years – China.

Sun-Tzu said ” If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected.”

Who knows if the Chinese PV industry’s intentions were ever that well considered. In principle, I’m against the pillaging of  any market and gross distortions in global trade. But equally, I’m in favour of support mechanisms that provide reasonable opportunities for indigenous manufacturing.

We know all too well that the impacts of indigenous politics can be highly complex but it strikes me that escalating it to the level of a full blown, international  Trade war might just melt our brains.

Solar Business