A solar-powered car made by Hainan Yingli New Energy Resources Co, a subsidiary of Yingli Green Energy Holding, is exhibited at a trade fair in Haikou, Hainan province, in November. Yingli is planning to shift its focus from Europe, its current largest source of business, to emerging markets. Shi Yan / for China Daily

Leading solar panel producer is exploring opportunities in emerging economies, as it faces tougher conditions in the European Union, its biggest traditional market

The world's biggest maker of silicon-based solar panels by capacity, Hebei province-based Yingli Green Energy Holding Co says it is planning to give more attention to emerging markets, including China, and less to Europe, its current largest source of business.

In an interview with China Daily, Rebecca Jarschel, its marketing communications manager Europe, says the move has been prompted by the recent launch by the EU of an investigation into the Chinese solar panel industry.

Jarschel says: "We expect emerging markets, including China, South America and South Africa, to grow stronger and stronger.

"We hope that markets other than the EU will grow as fast at it has, and we certainly hope our dependence on the EU will be less in the future."

Yingli is shifting its focus as anti-dumping and countervailing investigations initiated by the EU and the United States - the top two overseas markets for the Chinese industrial companies - prepare to put the brakes on overseas demand for many made-in-China photovoltaic products.

"This is going to present real challenges, not only for Yingli, but also for other major companies in our sector," Jarschel adds.

"The debt crisis is also still there (in Europe), but we think the economy is recovering.

"The industry is facing a period of change, as we are also unlikely to be able to depend on government subsidies in future."

Late last year, the US announced punitive duties from 18 percent to 250 percent on billions of yuan worth of Chinese solar products for the next five years.

Then the EU also announced the launch of anti-subsidy and anti-dumping probes into Chinese PV products.

Statistics show that more than 90 percent of Chinese PV solar products are exported, 70 percent going to the eurozone and 10 percent to the US. More than 70 percent of Yingli's output went to the European market.

Jarschel insists the company will weather the ill effects of the investigations on its overall business, adding, "we are already expanding into new and emerging markets, including Turkey, Israel, China and South America".

"The more important the emerging markets become, the less dependent Yingli will be on the EU," she says.

During the four quarters ending Q3, 2012, Yingli incurred losses, and the company is expected to continue doing so in the final quarter of the year.

Miao Liansheng, its president, recently suggested that China would account for 40 percent of its sales in 2013, and the other emerging markets 10 percent, as governments pledge to boost their solar power capacity.

A report released by the National Energy Administration in September said it expected China itself to expand its installed solar power generation capacity to 21 gW, or 21 million kilowatts, by 2015 - a five-fold increase from 3.6 million kW at the end of 2011.

To boost the country's struggling photovoltaic industry, Beijing said in December it will accelerate support for the sector, as well as encourage mergers and restructuring among manufacturers to help cut overcapacity.

More than 2.8 gW of solar capacity will be installed across the country under the next batch of the government's "Golden Sun Program", and it will provide another 7 billion yuan ($1.12 billion; 1.19 billion euros) in subsidies to domestic solar PV pilot projects, officials have said.

Yingli's latest financial report showed home orders accounted for 28 percent of total revenues in the third quarter, up from 14 percent on the second quarter.

But Western competitors are also expected to accelerate their expansions into China.

In December, for instance, SMA Solar Technology AG, Germany's biggest solar company, bought a majority 72.5 percent stake in Jiangsu Zeversolar New Energy Co.

Pierre Pascal Urbon, CEO of SMA Solar, called it an essential move to gain access to the Chinese market, as developed markets decline, and predicted China will become the world's biggest market for the technology.

Rebecca Jarschel said her company expects competition in China to intensify.

"Many of our European counterparts have become involved in helping the Chinese develop their expertise," she says.

IMS Research, a leading supplier of market research for the electronics industry, has predicted that Africa, too, will expand its installed solar power capacity by as much as eightfold between now and 2017.

And NPD Solarbuzz, considered the leading consultancy in the photovoltaic industry, recently predicted that Latin America and the Caribbean will see explosive growth in solar power demand, by as much as 45 percent annually over the next five years.

Yingli has been quick to capitalize on that potential, already signing a sponsorship agreement for the football World Cup in Brazil in 2014, after successfully introducing the first Chinese commercial display during the 2010 World Cup in South Africa.

Late last year it signed a cooperative agreement with the largest PV power station in Peru.

But there are also limitations in emerging markets, experts have warned.

In China itself, for example, it is seen as technically difficult to integrate PV technology into the country's power transmission network, run by the State Grid Corp of China.

Despite the economic and regulatory hurdles facing it in Europe, Jarschel says Yingli is still expanding in the region, its largest market, although the pace has slowed.

Business there is expected to account for just 45 percent of revenues this year, down 25 percent, according to recent media reports quoting Miao Liansheng.

"We are still firmly in the European market, and we are still hiring people, with new teams and offices opening up", particularly in eastern Europe, notably Poland, Jarschel adds.

Currently, Yingli has 80 people working in Europe and it expects to increase that to 100 in the next few weeks, at a time when its competitors are cutting their numbers, Jarschel says.

Germany remains the company's largest single country market, and in October, Yingli announced plans to establish its European headquarters in Switzerland, as it continues to hold a dominant market position in the region, it says.

"We are still increasing shipments there, but we also recognize margins are falling," Jarschel adds.

Since the start of last year, many European countries, including Germany, the United Kingdom and France, have announced plans to reduce or halt subsidies for PV products manufacturers.

According to Jarschel, the key element in Yingli's competitiveness is its level of innovation.

"If you look at the figures, Yingli is still expanding its investment in research and innovation, working with technical experts worldwide on ways to improve the efficiency and performance of our products."

The company has a 12,000-square-meter research and development center in Spain, and also has cooperative agreements with various leading European research institutions, mostly in Germany.

"Companies that invest heavily in technology and innovation have a good chance of survival" even when market conditions are worsening, she added, insisting that her company's market-leading technology is what makes it stand out, even against Western competition.

In many European markets, such as Germany, where government subsidies have been readily available in the past, when they stop, companies will feel the effect, she says.

"Even some German companies have been reluctant to invest in strengthening their levels of innovation, and when the policies change, it will be a big blow.

"But, in several markets, even in Europe, our customers can install our solar power stations at the same price or even lower (than local suppliers).

"We have reached parity, and we don't need subsidies."

Contact the writers at dingqingfen@chinadaily.com.cn and huangtiantian@chinadaily.com.cn

(China Daily 02/08/2013 page21)