The settlement was similar to punitive tariffs in many ways, since Chinese panel makers agreed to raise their prices to levels agreed to by both sides to offset the unfair advantage they received from their home government support. But now European panel makers are reportedly complaining that many Chinese firms are finding loopholes to avoid the higher fees they agreed to charge in the settlement. The Chinese panel makers of course deny any wrongdoing.
I’ll be very direct and say I believe the European companies in this instance. I haven’t seen any of the evidence myself, but my years of experience following Chinese companies is full of this kind of unethical and unprofessional behavior. The typical pattern often sees Chinese firms sign agreements with western firms, and then take steps to undermine those same agreements. Money and profits are always the main motivators for such actions, which ultimately hurt trust and lead to this kind of friction.
The Chinese solar panel makers took similar action after the US imposed anti-dumping tariffs on their products last year. In that case the Chinese firms used a loophole to avoid the tariffs, and now the U.S. is taking action to close that loophole. These latest accusations in Europe are almost certain to result in a reopening of the EU investigation, and I’m fairly certain that this time the result will be the imposition of punitive tariffs. That’s not surprising, but it certainly won’t help an industry where protectionist signals have been rapidly growing this year.
Meantime, let’s look quickly at the more positive news coming from Wanxiang, an auto parts maker that made headlines last year with its purchase of bankrupt high-tech battery maker A123 Systems. Wanxiang was interested in A123′s technology used to make the kind of high-performance batteries that power electric vehicles and store energy generated by solar and wind plants. Efficient energy storage is critical for the economic viability of all of these applications, especially for small-scale power generators who rely on stored energy at times when there’s no sun or wind to make power.
Now Wanxiang has announced it has formed a joint venture with NEC to pursue grid energy storage opportunities in China. There’s not much substantive detail in the announcement, but it looks like Wanxiang will contribute technology it acquired from A123 while NEC will supply its own battery and new energy expertise.
Such a pairing looks like a good one, bringing together the less experienced Wanxiang with a more sophisticated Japanese player to commercialize a western technology with strong potential. We’ll have to wait and see how this partnership develops, but I’m cautiously optimistic that we could see some promising and innovative new products and initiatives emerge from this new joint venture.
Bottom line: Europe is likely to reopen an anti-dumping probe and levy punitive tariffs against Chinese solar panel makers, while a new battery joint venture between Wanxiang and NEC looks full of potential.
This blog was originally published on Young's China Business Blog and was republished with permission.
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