Solar firms tap into new markets to ease glut

NANCHANG - In a factory in East China's Jiangxi province, workers are assembling solar parts to be shipped to new markets the company has been exploring after the European Union slapped a provisional tariff on Chinese solar products.

Seven months ago, LDK Solar Co Ltd, a leading Chinese producer of solar equipment, was on the verge of bankruptcy, as it reported a net loss of $97 million in the fourth quarter of 2012 amid shrinking demand from Europe, the world's largest market for photovoltaic (PV) products.

"We are far from getting back on our feet, but things have been improving in the past two quarters," said Tong Xingxue, president and CEO of LDK Solar.

In the first quarter this year, the company narrowed its losses to $59.5 million, down from the $131 million incurred during the same period last year.

The improvement came after LDK Solar began to diversify into other markets rather than simply clinging to Europe alone. The company signed a string of deals outside Europe, finding new outlets for its solar products and thus keeping its business afloat.

In April, the company agreed to provide 63 megawatts of solar modules starting from August for Thailand solar firm EA Solar Nakornsawan Co Ltd. This was followed by another deal with Realforce Power Co Ltd in East China's Shandong province to supply 120 million 6-inch silicon chips, amounting to 500 megawatts in generating capacity.

Analysts say China's solar industry is bracing for a major reshuffle after years of trade rows with Europe and the United States. Punitive tariffs imposed by the US and increased costs of Chinese imports to the EU will undoubtedly blunt Chinese firms' competitiveness in the two markets.

The EU's decision in June to impose an interim tariff of 11.8 percent for Chinese solar products has threatened to price Chinese imports out of the world's largest solar market.

Though talks between China and EU have signaled fresh hope to avert a heightened tariff in August, Chinese companies can no longer survive by solely relying on the European market.