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Chinese Solar Companies Skimp on Quality As Price War Escalates

The solar manufacturing boom in China and the domestic competition for market share are prompting some manufacturers of solar components to sacrifice quality for the sake of higher profits, an executive at the world’s largest solar manufacturer has said.  

“We’ve noticed that people have started to sacrifice quality to cut costs, which is a dangerous signal,” Zhong Baoshen, chairman of Longi Green Energy Technology Co., the world’s top manufacturer of solar modules and solar PV solutions, said at an event in China on Friday, as quoted by Bloomberg.  

Some Chinese manufacturers are saving on costs as the price of Chinese solar panels has crumbled amid overcapacity. Companies are looking to survive in the race to the bottom in China’s solar component market and some are skimping on quality and testing. 

“When people are slashing costs or skimping on raw materials, there comes a risk,” said Longi’s Zhong. 

Longi said earlier this month it would lay off about 5% of its workforce amid a complex and very competitive solar PV market in China. 

China leads globally in solar components manufacturing and holds an 80?95% share of the supply chains in the industry, depending on the manufacturing segment.

Faced with cheap imports from China, the U.S. and the EU are looking to support their own supply chains and manufacturers, whose panels are more expensive, and often, with higher quality than the Chinese ones. 

Despite the struggles of the EU solar manufacturing industry faced with cheap Chinese panels, the bloc cannot close its borders to cheap solar imports, according to European Commissioner for Energy, Kadri Simson.  

“There are different proposals how we can support our industry, but clearly we cannot close our borders because we need solar panels,” Simson said earlier this month. 

“We have to support our industry, but we need all the products to meet our very ambitious targets,” Simson said, as carried by Reuters.

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In the United States, solar component manufacturers need more government support and stricter enforcement of trade laws if America wants to create its own solar supply chain and cut dependence on cheap imports from China and Southeast Asia, a report commissioned by the Solar Energy Manufacturers for America (SEMA) Coalition showed last week.

By Michael Kern for Oilprice.com

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