wrdforwrd

green and sustainable business

Next Silicon War: how governments affect business practices

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solar panelsThis is a guest post by Liz Nelson from WhiteFence.com. She is a freelance writer and blogger from Houston. Questions and comments can be sent to: liznelson17@gmail.com.

Thanks in large part to the support the Chinese government has offered to manufacturing, cheap solar panels flooded the global market causing a great deal of damage to renewable energy businesses. The damage was fueled by subsidies from the Chinese government that allowed manufacturers to sell solar panels for less than actual cost, thus allowing these manufacturers to dominate the market and put many foreign developers out of business.

In order to prevent unfair practices, the US imposed tariffs of 30 to 35 percent against the import of Chinese manufactured solar panels. This implementation has slowed the progress of selling below-cost merchandise to the US, but not entirely. In what seems like retaliation, China implemented its own tariffs against US companies that specialize in developing polysilicon – the active component in solar cells. This tariff is as high as 53 percent for some organizations.

The United States will usually take an active role when it comes to the monopoly or dumping of a specific trade item. Since no other region can compete against a company that sells materials below cost, this is an unfair advantage in the global market. Placing a tariff against those Chinese imports may have only been a statement to the government that unfair practices are dimly viewed upon, but the repercussions against US developers may be cause for alarm.

Several companies around the globe were hurt or put out business due to the subsidies offered to Chinese manufacturers. Earlier this year, some German corporations had to shut down because the competition could sell for such a low rate. However, the European Union has since hammered out a deal with China in regards to solar imports that may save other manufacturers from shutting their doors indefinitely.

Although cheap solar panels are ideal in order to encourage sales to customers for installers, tariffs and other practices could harm the market and development of solar technologies. In order to make the most profit possible, the lowest cost is usually the most sought after, even if the quality is substandard. If installers are unable to make their time worth the venture, we could begin to see some of them disappear.

So who does it really hurt?

Regardless of the reasoning behind it, placing a tariff in a vain attempt to “punish” China only hurts local economies and companies that depend on imports. While it could only be a matter of time before the US and China come to a resolution regarding solar panel imports, small businesses may be the first to feel the brunt of this intercontinental bickering of prices.

Coincidentally, exports of Chinese solar panels appeared to be dropping in this year’s third quarter. Although the products still account for nearly 70 percent of the global market, the production boom seems to have waned slightly. It’s hard to pinpoint exactly why the exports are beginning to decline as there are many market factors involved.

Although it may be unfair to some, does the US have the right to impose tariffs on the imports of Chinese manufactured solar panels? The answer of course is yes, it has the right, but should it do it? That is a more complicated and double-edged question: While the selling of panels below cost is unreasonable to businesses in the US, could it merely be a demonstration of the support that the Chinese government has for the country’s capacity to produce materials for the global market? Although it is doubtful that this situation could escalate to obscene, trade-war levels it will be interesting to see what unfolds.

Image: Solar panels by buildingresults via Flickr cc


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Written by William DiBenedetto

22 November, 2013 at 4:00 am

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  1. […] This is a guest post by Liz Nelson from WhiteFence.com. She is a freelance writer and blogger from Houston. Questions and comments can be sent to: liznelson17@gmail.com. Thanks in large part to the support the Chinese government has offered to manufacturing, cheap solar panels flooded the global market causing a great deal of damage to […] wrdforwrd Read Original Post […]


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