**Abstract**
Chinese companies, like a group of determined explorers stepping into a wild and untamed garden, have entered the dynamic and rapidly growing photovoltaic markets in Asia and Africa. What kind of strategies, efforts, and self-reliance do they need to succeed? Jia Erying, 58, is currently overwhelmed with work. Between daily meetings, conferences, and managing a fully operational production line at Jinglong, he finds little time to catch his breath.
On June 19, Jia Erying returned to Shijiazhuang, Hebei Province, from the headquarters of Xingtai Jinglong Group. As the executive deputy general manager of the company, he spoke to reporters with a strong Hebei accent: “While some domestic enterprises are halting production or even going bankrupt, our production lines at Jinglong are running at full capacity, producing all the orders we receive.â€
The full operation of Jinglong is closely tied to market adjustments. The company has shifted its focus from traditional European markets to emerging regions such as the Asia-Pacific, Middle East, and Africa. As a subsidiary of Jinglong Group, JA Solar previously sold over 60% of its products to Europe, but that figure has now dropped to 10%. Meanwhile, sales in emerging markets have surpassed 50%. This shift has brought Jia Erying a sense of satisfaction, as seizing these new markets has become a key strategy for Jinglong to recover from the challenges of the global PV industry.
In fact, for over two years, many domestic PV companies—including Yingli, Trina Solar, GCL-Poly, and Huihui Sunshine—have been making significant strategic adjustments in response to the downturn in the European and American markets and increasing trade protectionism.
Domestic PV companies are going through a tough period of transformation. Wu Dacheng, secretary general of the PV Professional Committee of the China Renewable Energy Society, believes that emerging markets represent the future of the industry. He highlights that the U.S., Japan, and China are rising markets worth watching, while governments in South America, Africa, and Southeast Asia provide strong support for the solar sector. Especially in remote areas without electricity, there is a pressing need for solar power.
A new opportunity seems to be opening up for Chinese PV companies. A wave of solar development into emerging markets is now sweeping across the industry.
**The Temptation of Emerging Markets**
Faced with the EU's willingness to conduct a "double anti-dumping" investigation on Chinese photovoltaics, more Chinese PV companies are no longer focusing solely on the European market but are shifting their attention to emerging regions. This signals the end of an era where China's solar industry heavily relied on the European market.
Emerging markets are seen as the next big hope by many Chinese companies. Beyond China, Japan, and the U.S., the installed capacity of photovoltaics in Southeast Asia, Africa, and the Middle East is expected to grow rapidly in the coming years. In 2012, contributions from emerging markets rose from 2% to nearly 10%.
Take Japan, the fastest-growing market, as an example. From April 2012 to March 2013, Japan added 1.56 GW of new solar capacity, a threefold increase compared to the same period the previous year. According to Jia Erying, due to the huge demand in the Japanese market, Jinglong has increased its focus on this region. “Thanks to the high quality and efficiency of our products, our products ranked first in the Japanese market this year,†he said.
In the first quarter of this year, Jinglong sold 100 megawatts of high-efficiency monocrystalline silicon modules to Japan, exceeding expectations. “The successful development of the Japanese market not only changed the previous loss situation for Jinglong’s components but also brought considerable profits,†Jia Erying noted. From the current average selling price, the Japanese market offers higher profit margins and better payment terms.
Jinglong is also expanding into the Middle East, with projects in Iran and Israel. “Previously, five projects signed with Siemens in Israel were located in the Alava and Negev deserts,†Jia Erying explained. These desert areas have abundant sunlight, ideal for solar power generation, but require highly efficient and durable components. To support this expansion, Jinglong has established four international sales teams: Europe, Asia-Pacific, Americas, and Middle East-Africa.
Another major player, Artes, is also increasing sales in emerging markets. Its sales in these regions have exceeded those in Europe this year. According to Artes’ quarterly report, module shipments reached $263 million, with the Asian market accounting for 57.4%, while Europe was less than 25%. Artes attributed its success to the growth of the lucrative Japanese market and is gradually adjusting its strategy to focus more on emerging markets like Southeast Asia, South America, and South Africa.
Indeed, all domestic PV companies are aggressively expanding into emerging markets. GCL-Poly is entering the Thai market and investing in solar projects in Thailand; Nanjing CLP focuses mainly on the Bulgarian and Indian markets; Chint Solar exports about 15% of its total exports to Southeast Asia; and Suntech has localized production plants in Poland, South Africa, and India.
Some analysts predict that by 2017, demand for photovoltaics in emerging markets in Asia-Pacific and Central Asia will exceed 3 GW. The region is expected to grow rapidly over the next five years, offering numerous business opportunities. Sun Haiyan, president of Trina Solar’s Asia-Pacific, Middle East, and Africa division, also predicts explosive growth in the Asia-Pacific market, reaching three times the current level in the next two years.
At the same time, due to the availability of affordable internet access, sufficient lighting, and economic development, countries like Brazil, Chile, South Africa, and Saudi Arabia are also becoming highly attractive investment destinations.
Today, the development of emerging markets is becoming a big opportunity for Chinese PV companies, and all players are moving forward.
**Challenges in the Real World**
For Chinese PV companies optimistic about emerging markets and eager to make profits, it is not easy to truly establish themselves in different markets.
Chint Solar, for instance, faced challenges in the Indian market. A 24 MW thin-film solar power plant in India was delayed because Indians believe trees are sacred and cannot be cut down. Luchuan, vice president of Zhengtai Solar, emphasized that photovoltaic power generation is a long-term fixed asset investment, so risk assessment must come first.
“In terms of construction risks, factors such as land disputes and cultural heritage protection need to be clearly identified before the project starts, to avoid unnecessary troubles,†he concluded.
Zou Xiyuan, COO of GCL-Poly, pointed out that the Indian market is not just about religious issues. He told reporters that GCL-Poly has no projects in India. The market is relatively closed, especially in terms of policy. For example, in India, if a country invests in a power station, it requires local production of battery components, and Indian companies prefer cheaper products, leading to intense competition between enterprises.
Moreover, the payment uncertainty of Indian companies is high, which puts pressure on companies that may face long delays in debt repayment. All these factors make the Indian market difficult to enter, and while domestic companies dare to try, foreign firms generally avoid it.
The Japanese market also has high entry barriers. Before entering, companies must go through complex certifications, including residential solar system certification and solar module certification. With just these two requirements, many companies are excluded.
An Zeng, deputy general manager of Jinglong Group, explained that due to Japan’s small land area, large-scale ground-based power stations like those in inland China are not feasible. Instead, rooftop solar installations are more common. “They require photovoltaic modules to have high efficiency per unit area. If a panel needs 270 watts in China, it needs 275 or 280 watts in Japan,†he said. Additionally, the Japanese market has strict requirements for the degradation rate of solar modules, typically no more than 3% per year.
It is not just India and Japan that pose challenges. Even in Southeast Asia, Africa, and the Middle East, it is not easy for Chinese companies to enter these markets smoothly.
In Africa and the Middle East, for example, the region’s lighting conditions far exceed those of major PV markets worldwide, with some areas even having twice the light levels of other regions. However, the extreme heat and large temperature fluctuations in desert environments, along with dust, present new challenges for PV developers. Even if the technical aspects of the product are solid, the bigger challenge comes from local market protection and closure.
“In the Middle East and Africa, large-scale renewable energy projects often operate through tenders. Governments try to increase the proportion of local products, and bidding methods can lead to bureaucratic delays and project setbacks,†one expert noted.
Other unfavorable factors in emerging markets include weak grid infrastructure, lack of financial support, bureaucracy, and frequent project delays—challenges that domestic PV developers must overcome.
**Extremely Saturated Market**
For a long time, many in the industry have viewed the shrinking Spanish PV market as a painful lesson.
From 2007 to mid-2008, the Spanish government introduced an incentive policy almost equivalent to traditional electricity prices. Alongside rising global oil prices, the PV industry experienced a boom. However, starting in 2009, Spain changed its policy, setting a subsidy cap of 500 MW, and the market shrank by 80%. Affected by the global financial crisis, many companies began laying off employees, forcing the Spanish PV market to turn inward, purchasing locally as much as possible, leading to volatile swings in the market.
According to this, Zou Xiyuan said that the sudden changes in the Spanish market caused many companies to shift to the South American market, especially Argentina. The reversal of the Spanish policy raises concerns: will similar policy changes occur in newly warming emerging markets? When PV companies explore these markets, facing various flaws, whether the local market can truly absorb the surge of photovoltaic capacity remains a concern.
Analysts believe that the current capacity of emerging markets, except for India and Japan, rarely exceeds the demand of Giva-class markets. It is feared that a small number of Chinese companies may struggle to meet local demand when a large number of Chinese companies shift their shipment targets. Such situations could lead to saturation. Therefore, relying solely on emerging market consumption is debatable.
Taking the Japanese market as an example, in the first quarter of 2013, China shipped over 700 MW of photovoltaic modules to Japan, accounting for about 40% of the domestic market. It is predicted that the Japanese PV market will become self-sufficient in 2014, and Chinese PV companies may not be able to maintain their existing market share. From the perspective of market requirements and demand, Japan’s extremely high entry barriers mean only a few top-tier companies will be able to benefit from this solar feast.
Zou Xiyuan raised doubts about the rapid influx of Chinese PV modules into the Japanese market and whether the Japanese government might tighten policies in the future. He believes that the large-scale occupation of the Japanese market by Chinese PV modules is bound to cause tensions with the Japanese government. In order to protect domestic companies, Japan may eventually adopt similar trade protection measures as those seen in Europe and the U.S.
However, An Zeng, deputy general manager of Jinglong Group, remains optimistic about the company’s position in the Japanese market. In his view, although the current shipments of Jinglong in Japan have surged, and their silicon wafers and battery products are 1–2 cents more expensive than similar products, he believes that high-quality products will definitely find a market. In March of this year, the average price of domestic components was $0.66 per watt, while the price of Japanese PV modules was about 10–20% higher than that of China, which is the key to their ability to make profits in a difficult market.
An Zeng now believes that after the Fukushima nuclear accident, Japan urgently wants to reduce its reliance on nuclear power, and new energy sources such as photovoltaics have become its main focus. Most importantly, when Jinglong was established, it had a joint venture with Matsushita Semiconductor Co., Ltd. in Japan. Their internal technology and management are closely tied to Matsushima, giving their products great competitive strength in the Japanese market. When a reporter visited a factory in Jinglong’s base, the words of Songgong Company were still written at the gate.
For Chinese companies, whether emerging markets can truly shoulder the burden of filling the gaps left by the U.S. and Europe, while avoiding policy tightening in these markets, remains uncertain.
**"Going Out to Sea" Model**
Faced with various restrictions in foreign markets, some suggest that companies should set up factories directly overseas. The reasoning is that this allows for deeper market penetration and more support in tariffs, loans, etc. However, the problem is that individual companies may be too weak and face even greater difficulties.
To address this, industry experts have proposed that PV companies adopt a "going out to sea" strategy, exploring emerging markets as the best part of the industry chain, working together to distribute profits rationally and maximize the use of various resources to create a new model.
In this regard, Zou Xiyuan expressed approval. In his view, domestic PV companies have always liked to act alone, making it difficult to handle everything independently. Therefore, it may be better to find a way to go out in the form of a team. This will also change the Chinese concept of “being a chicken head,†requiring the wisdom of photovoltaic giants.
Currently, the wafers of PV companies such as Artes, Hanwha, and Tianhe are largely sourced from GCL-Poly. Zou Xiyuan said that in fact, these are virtual integrations between enterprises, each playing to their strengths. In the future, strengthening cooperation in market development will be more beneficial for domestic PV companies.
In Anzeng’s view, the entire industry chain model adopted by domestic enterprises in the past has gradually been abandoned by major companies. At present, the overall industry situation is not good, and one link suffering too much loss may drag the whole enterprise down. However, it is more difficult to open up new overseas markets in the future, and forming close alliances among companies is essential. He believes it is better to cooperate with each other to produce superior products.
However, when many people focus on corporate collaboration, Jia Erying pays more attention to internal development. In his view, financing is the most important factor in expanding overseas markets. The state can set up a photovoltaic fund, with the government providing funds through policy. Which companies need liquidity, which should not be supported, and funds need to have medium- and long-term plans, not less than three years.
He said, “For those enterprises that are indeed on the verge of bankruptcy and insolvency, try to let them find their own ways, but they cannot rely on banks or the government. For competitive high-quality enterprises, try to help them tide over the difficulties. In the process of exploring emerging markets, it is more emboldened.â€
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