Hummer: There is no dumping in China PV

Wolfgang Hummer, director of the German Solar Energy Market Research Center, said in an exclusive interview that Chinese PV products have a cost advantage and have nothing to do with dumping. If China's PV companies receive domestic government subsidies, then German PV companies have also received substantial funding from their governments. Imposing punitive tariffs is undoubtedly turning "win-win" into "double-lost."

"German PV companies underestimate the pace of development of their Chinese counterparts"

In July this year, the German solar giant SolarWorld teamed up with more than 20 PV companies in Europe to submit a complaint to the EU, accusing China's PV companies of receiving government subsidies and dumping products at low prices in Europe. On September 6, the European Commission announced the launch of an anti-dumping investigation on China's photovoltaic products. On September 25, the Solar Industries Alliance (EU ProSun), headed by SolarWorld, submitted an application to the European Union for the initiation of a countervailing investigation on China's PV products.

Humel believes that it is not reasonable to blame Chinese companies for dumping and subsidies. In fact, German PV companies will also receive government support. According to him, SolarWorld will not have today's development without government subsidies. Between 2003 and 2011, the company received a total of approximately 137 million euros in subsidies from the government, most of which came from the government's 35% investment grant to support the development of photovoltaic companies. In addition, there are some subsidies that are difficult to prove, such as research funds, state guarantees, etc.

Humel said that SolarWorld has been the leader of the German PV market for many years, with strong growth and good returns. However, this company underestimated the speed of development of its Chinese counterparts. Suddenly, this German market leader began to lose money. Corporate executives do not believe that the reasons are too high cost and lack of innovation, but blame China. They believe that if Chinese companies do not receive subsidies from the government, they will remain profitable as before.

Humer said that such accusations are not justified. Just as at the Olympic Games, people found that Chinese athletes performed better and better, but they cannot blame opponents for unfair competition because others have become stronger.

"It is wrong for German equipment manufacturers to make money in China but not to sell it back in China."

Talking about the disadvantages of German companies, Humel said that the high cost of labor in Germany, employees are not willing to work overtime, lack of flexibility, in addition, Germany's electricity, land, aluminum, glass and other prices are much higher than China. In summary, the production cost of the solar cell template in Germany is too high to compare with China. In addition, from the perspective of corporate financing, German companies have chosen more bank loans, and many Chinese PV companies have been listed on the US Nasdaq and other capital markets, with financing advantages.

Different from automotive products, solar cell and template manufacturing are not complicated. The quality of products manufactured in China and Germany is not very different. “Why do people spend 20% more money and buy Germany that is comparable in size and energy efficiency is not necessarily higher than Chinese products? Template?” Humel asked.

Humel admitted that China's successful export of photovoltaic products to Germany is related to the export of photovoltaic production equipment from Germany and Switzerland to China. Before 2011, Germany and Switzerland exported a lot of PV production equipment to China. Now, China will sell the photovoltaic cells and other products back to Germany. “It's normal that this is trade.” “Equipment manufacturers have made Chinese money, After the product is released, it will not allow China to sell it back. This is not right," he said. "Free trade will use comparative advantage and everyone will benefit."

Humel also said that some German photovoltaic companies that filed for bankruptcy were “planted” on thin-film solar modules. They invested heavily in research and development in this regard. Although they succeeded in the laboratory, they failed to achieve mass production. This is a mistake in the strategy of the company itself and has little to do with competition from China.

In fact, few German companies like Solarworld have put their production lines in Germany. Most of the photovoltaic companies have already turned production lines to foreign countries, or directly reprocessed solar cells imported from China as raw materials.

Humel said that in accordance with EU regulations, the EU enterprises accused of Chinese PV companies dumping capacity needs to reach 25% of the entire EU PV industry. Solarworld spent a lot of effort to make up this ratio, because many companies do not want to sue China. They need to import cheap products such as solar cells from China.

"The European Union's determination of whether Chinese products are dumped proves that China's photovoltaic products' export prices are lower than the domestic market prices. In fact, some enterprises that do not have export trade prices are lower than those exported to foreign countries," Humel said. An important condition for the determination of dumping is that the outcome of the judgment needs to be favorable to the EU as a whole. If there is an unnecessary trade war, the EU will not determine dumping.”

As for what decisions the EU will eventually make, Humel believes that this may depend on the development of the European debt crisis. When the economy is bad, some populist politicians will support the collection of tariffs and vowed to keep domestic jobs, at least in the United States. Therefore, the deeper the debt crisis in Europe, the higher the unemployment rate in Europe, the greater the possibility of EU tariffs on Chinese PV companies.

In addition, Humel said that it is undeniable that China has a cost advantage in terms of labor, raw materials, and other aspects. Even if the EU imposes tariffs on Chinese PV companies, the tax revenue ratio is not expected to exceed 20%. "The United States accused China of not being a market. In the economy, we chose a third country, Thailand, as a reference, but there is no photovoltaic industry in Thailand. This is ridiculous. We cannot do it,” he said. “So, even if the EU imposes tariffs, it will not be too high.” According to him, China does not dump, but in order to "balance", the EU may eventually impose another part of the "double reverse": the countervailing duty.

"Improve punitive tariffs will undoubtedly turn "win-win" into "double-lose"

The Sino-European trade disputes involved more than US$20 billion, which is the largest case of anti-dumping in EU history. German Chancellor Angela Merkel made it clear at the end of August that he opposed the EU's punitive tariffs on China because the dispute could further expand and eventually lead to a double-lost situation. Humel fully agrees with this view.

Humel said that for Germany and even the European Union, it is not a good thing to impose punitive tariffs on Chinese products, and the increase in product prices may lead to a decrease in demand, which will affect the job market. Imposing punitive tariffs is undoubtedly turning "win-win" into "double-lost." "What is certain is that punitive tariffs imposed on Chinese products will not be good for Germany because the market will be destroyed." And Germany's "energy transition" may become longer.

Humel stated that many Germans do not believe that Chinese companies are successful because of government subsidies because they do not believe in the progress of Chinese manufacturing. "So, to solve the problem, we should make an explanation so that those who do not understand know that Chinese products have been very different from before."

In addition, Hummer believes that the high cost of German products is their own problem and they cannot blame others. The low prices of China's photovoltaic products are inextricably linked with the numerous advantages of its industries. Both Chinese and German governments are subsidizing their own PV companies in different forms. However, the Chinese government's subsidies for the photovoltaic industry are by no means the key factor for Chinese products to occupy the German market. In contrast, Germany should think about how to make changes and reduce costs. Since the fall of the Berlin Wall, Volkswagen has begun to transfer production lines to countries such as Poland, where people work flexibly and wage levels are low. This is the international division of labor. It is like producing clothing. Some people design someone to produce. The same is true for solar cell production.

In this Sino-European trade game, the European photovoltaic industry claims to have been aggrieved, but careful calculations, they suffer from competition is only a few PV product manufacturers, raw material exporters, equipment manufacturers can earn pours. In contrast, what has Chinese companies acquired? Employees are working hard and the environment is polluted. It is only some hard-earned money.

For more people, this is not a very difficult account. The Chinese government has repeatedly stated its position after the EU launched an anti-dumping investigation, reminding the EU that, in the current economic situation, unilateral trade restriction measures taken without consultation are not in the interests of both parties. If German PV manufacturers should look for their own reasons and adjust their direction in due course, then Chinese companies may have to do more than win the lawsuit.