Are the Chinese Using Predatory Pricing to Knock America Out of Solar Manufacturing?

[Octafish]

This helps explain why Solyndra tanked...



Are the Chinese Using Predatory Pricing to Knock America Out of Solar Manufacturing?

By Stephen Lacey on Sep 9, 2011 at 3:34 pm

Armed with tens of billions in loans from the Chinese government, Chinese solar companies have scaled at a rate unthinkable only a few years ago. At the end of this year, there will likely be 50,000 MW of manufacturing capacity in place around the world, with much of that new capacity being developed in China and other Asian countries. (In the year 2000, there was only 100 MW of production capacity world-wide.)

SNIP...

In four years, the solar manufacturing sector shifted from being led by a geographically-dispersed number of companies to one dominated by Chinese companies. In 2006, there were two companies from China in the list of top-ten cell producers. In 2010, there were six, according to Bloomberg New Energy Finance. There are currently only two non-Asian manufacturers in the top ten, and those companies — First Solar and Q-Cells — have shifted a lot of their production to Asia.

SNIP...

Bryan Ashley, the Chief Marketing Officer for Suniva, an American company that produces high-efficiency solar cells in Georgia, doesn’t mince words.

“The Chinese strategy is very clear. They are engaging in predatory financing and they’re trying to drive everybody else out of the market. When you’ve got free money you can out-dump everybody below cost,” Ashley said in an interview with Climate Progress.

That “free money” Ashley refers to is the cheap debt provided by the Chinese Development Bank (CDB). Here’s how the CDB works its magic:

The CDB was originally set up as a “policy bank,” to operate as an arm of the Chinese central government, doling out public funding to support central government development programs. Now it is a “joint stock company with limited liability” that often reports to China’s national cabinet on certain policy issues. This allows the Chinese government to get involved in CDB activities and direct loans toward projects officials want to support.

CONTINUED...

http://thinkprogress.org/romm/2011/09/09/315754/chinese-predatory-pricing-solar/

Be patient. One day soon the Chinese will be outsourcing their jobs to us.

I'm kidding, of course. Nobody's that stupid.

[izquierdista]

1. Probably learned it from the Waltons

Good ol' American capitalism for ya!

[Octafish]

14. The Waltons weren't traitors like today's ownership class. Ever hear of 'Magnequench'?

The company is was our only source for critical guided missile components.

Outsourcing US Missile Technology to China

The Saga of Magnequench

By JEFFREY ST. CLAIR
Coutnerpunch Weekend Edition April 7 - 9, 2006

Magnequench is an Indianapolis-based company. It specializes in the obscure field of sintered magnetics. Essentially, it makes tiny, high-tech magnets from rare-earth minerals ground down into a fine powder. The magnets are highly prized by electronics and aviation companies. But Magnequench's biggest client has been the Pentagon.

The neodymium-iron-boron magnets made by Magnequench are a crucial component in the guidance system of cruise missiles and the Joint Direct Attack Munition or JDAM bomb, which is made by Boeing and had a starring role in the spring bombing of Baghdad. Indeed, Magnequench enjoys a near monopoly on this market niche, supplying 85 percent of the rare-earth magnets that are used in the servo motors of these guided missiles and bombs.

But the Pentagon may soon be sending its orders for these parts to China, instead of Indiana. On September 15, 2004 Magnequench shuttered its last plant in Indiana, fired its 450 workers and began shipping its machine tools to a new plant in China. "We're handing over to the Chinese both our defense technology and our jobs in the midst of a deep recession," says Rep. Peter Visclosky, a Democrat from northern Indiana.

It gets stranger. Magnequench is not only moving its defense plants to China, it's actually owned by Chinese companies with close ties to the Chinese government.

SNIP...

In 1995, Magnequench was purchased from GM by Sextant Group, an investment company headed by Archibald Cox, Jr-the son of the Watergate prosecutor. After the takeover, Cox was named CEO. What few knew at the time was that Sextant was largely a front for two Chinese companies, San Huan New Material and the China National Non-Ferrous Metals Import and Export Corporation. Both of these companies have close ties to the Chinese government. Indeed, the ties were so intimate that the heads of both companies were in-laws of the late Chinese premier Deng Xiaopeng.

CONTINUED...

http://www.counterpunch.org/stclair04072006.html

One would think Archibald Cox's son would be a good guy.

[msongs]

2. does sh** stink? Is our government run by anti-American corporate toadies lol nt

[SammyWinstonJack]

5. Yes and Yes. nt

[Octafish]

15. They think we won't find out.

Thankfully, not everyone is too lazy or dumb to read.

Fed made $9 trillion in emergency overnight loans

EXCERPT...

Sen. Bernie Sanders, the Vermont independent who had authored the provision of the financial reform law that required Wednesday's disclosure, called the data that was released incredible and jaw-dropping.

"The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.

[banned from Kos]

3. Good question. Some US solar companies are thriving.

MEMC (WFR)
Nanosolar (private)
Applied Materials (AMAT)


Solar is a brutal business for 2011.

[FarCenter]

4. They keep sending students to US B-schools -- they learn fast

It seems that they have invested a lot in making pretty standard crystalline silicon solar cells as cheaply as possible, and making the assembly into solar pannels as cheap as possible.

US companies seem to have invested more in CIGS and other thin film technologies, and they have not been able to ramp production and meet cost objectives as well as they have predicted.

So the Chinese have been investing in the production process, while we have taken the riskier path of investing in a new product.

We're probably screwed.

[Juche]

6. There was a good article about some companies not wanting to trade with China

The reason was that they found that within 3-5 years China has either stolen or obtained all the info and machinery it needed to start its own companies. And since the Chinese have an advantage (currency manipulation, government subsidies, lower wages, weaker environmental/labor laws) the initial companies could not keep up.

ie, if a European company that manufactures speakers outsources some manufacturing to China, in a few years the Chinese will have the knowledge and machinery to be able to start their own speaker company that can undersell the European one due to the advantages it has in the global marketplace.

Economic Darwinism. The Chinese will likely monopolize a lot of higher end manufacturing soon (renewable energy, IT). Not just for those reasons but because they supposedly have a corner on the rare earth metals.

[ljm2002]

7. Gee, ya think?

And in the meantime, Republicans are making hay by attacking the Obama administration for its loans to Solyndra. "It's not capitalism, it's socialism!" and of course they then point to the bankruptcy as evidence that the loans were ill-advised.

[Hydra]

9. I love how they rant about "socialism"

When they offer banks taxpayer money to lend back to us.

[Donnachaidh]

8. does a bear shit in the woods? Is the pope Catholic?

Our *partners* in China are economic terrorists.

[Marrah_G]

10. Then you have companies like Evergreen....

....who took 43 Million dollars from Massachusetts and in a couple years, laid off 800 Mass workers and moved the company to China.

[Selatius]

11. I remember Mexico screaming at the US for unfairly subsidizing American farming corps.

Then those corporations flooded the Mexican market with their subsidized crops undercutting local farmers and basically destroyed indigenous farming there. China is basically doing the same thing, except with solar cell production.

[nadinbrzezinski]

12. you think

http://2.bp.blogspot.com/-TbmYJFkUcV0/TmUJG_vpA6I/AAAAAAAAAHY/0W1AxqMCleU/s1600/water+is+wet.jpg

[jannyk]

13. Yes

[marions ghost]

16. We deserve it

we deserve to have the Chinese take the lead in solar manufacturing.

America, stupidly tied to old oil-based technology.

Something ironic there.

[Better Believe It]

17. So strong government regulation and control over capitalist development works well for China and ...

certainly better than U.S. "free market" capitalism?

If it does, how can anyone here complain or whine about their system?

[Distant Observer]

18. It is so unfair for the Chinese to blindly follow good industrial policy recommendations

They should be force to take 20 year debating "peak oil" and whether climate change is man made before doing anything about it.

[Brickbat]

19. Why wouldn't they? They do it for everything else.