On May 31, 2018, the Chinese government reduced subsidies for photovoltaic power generation, an event widely known as the “531 Policy”. The move led to the sudden contraction of the country’s PV equipment market and severely impacted the local PV equipment industry. According to IHS, China’s new photovoltaic installations are expected to decline from 52 GW to 40 GW in 2018. In response, local PV equipment producers are looking overseas to find markets for their products.
As China implements strict policies to more closely regulate PV power production, flourishing overseas markets offer Chinese equipment producers new, exciting opportunities. Although the opportunities are immense, taking market share in established and mature foreign countries is not easy. Especially in markets that are difficult to access, like Japan or India, what sorts of companies and products can capture market share?
High-Requirement Markets Offer Great Opportunities
Nearly all foreign markets require high quality, which creates a competitive advantage for the best local manufacturers that are recognized across the industry for their high level of quality.
The Japanese market is a high profile market with both opportunities and challenges. After the leaks of radioactive material at the Fukushima Daiichi nuclear plant, Japan halted all nuclear power generation. To compensate for the lost generating capacity, government policy strongly encourages the development of other renewable energy sources. The Ministry of Economy, Trade and Industry (METI) enacted a particularly encouraging policy in July, 2012. The policy stipulates that solar power utilities certified by METI can sell electricity at a fixed price of 42 Yen per Kwh for twenty years.
Japan is a very attractive target market with broad prospects for Chinese PV equipment manufacturers facing significant pressure from both the anti-dumping and anti-subsidy policies of the US, EU, and India, as well as from subsidy reductions in the domestic Chinese market. However, 90% of the PV market in Japan is already served by local photovoltaic enterprises, such as Mitsubishi, Panasonic, Sharp, and Toshiba.
Similar to Japan, Indian market is one with both opportunities and challenges. India’s solar market is mature and stable, which creates the confidence to make significant investments in the country. The development of the solar industry in India is at a critical inflection point, and the government is acting to ensure that the standard of quality remains high as the pace of installation accelerates. The Ministry of New and Renewable Energy (MNRE) recently issued a quality control order that requires sellers and manufacturers of photovoltaic modules to have their products certified that they meet parameters set by the Bureau of Indian Standards (BIS). Despite the difficulty of entering this market, foreign investors are still attracted to the Indian market. Developers and EPCs often have their own quality assurance plans, including having their production process supervised by a top-rated third party inspection team.
Chinese manufacturers thus face a significant challenge to capture market share. Among those who enter the markets, who is best positioned to take the lead in capturing market share?
Since 2011, JA Solar has become one of the largest providers of PV products in India with a total shipment of 2.5GW and market share of over 10%.
In 2014, JA Solar’s shipment of solar products to Japan reached 1GW, giving JA the top market share in Japan for the first time. Since then, JA Solar has remained the market share leader. JA Solar’s cumulative shipments to date into Japan are over 3.3 GW. Its products are sold in all 47 of the administrative districts in Japan, and are widely used in residential, commercial and industrial rooftop PV systems, as well as large-scale ground-mounted power plants.
So, how does JA Solar stand out in high-standard markets?
JA Solar began its business operations in Japan by cooperating with influential local residential photovoltaic system installers, such as West Energy Solutions, on power plant design, construction, sales, and maintenance. Through the solid business relationships with system installers and partners, JA Solar rapidly expanded its share of market by optimizing the market coverage and client base. In addition, its solar products are well-recognized in Japan, and have won a number of awards, which is critical to the company’s success.
China’s photovoltaic industry is at the forefront in product quality, conversion efficiency and technological innovation. Over 80% of the world’s solar equipment is produced in China. Chinese PV manufacturers are in a solid competitive position due to the low cost of manufacturing driven by the massive scale of the industry.
As a world-leading manufacturer of high-performance solar power products, JA Solar stands out amongst its Chinese peers due to its superior product quality, excellent service and competitive pricing.
In 2012, JA Solar was granted the PERC patent in China, after which the company marketed its mono PERC cell PERCIUM and poly PERC cell RIECIUM in Japan, taking the lead in this high-efficiency product category. JA Solar’s module conversion efficiency is 1% higher than those of its peers. Importantly, the company provides both mono and poly products to meet specific customer needs. In 2017, JA Solar started mass production of its bifacial PERC double glass modules and PERC half-cell modules, which was critical in lowering LCOE and increasing system power output. In 2018, JA Solar received patent protection in Japan for the bifacial PERC technology. The same year, JA Solar already obtained the BIS certificate for its products, enabling access to the market for the next two years.
Either in Japan or India, products with good quality and high conversion efficiency are always desirable, regardless of the business environment or policy changes. As a leading manufacturer of high-performance products, JA Solar stands out amongst its peers, and is positioned to win in these markets.