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During the 2024 PV Industry Development Review in the First Half of the Year and Outlook for the Second Half of the Year Seminar, which was held on the afternoon of July 24, some PV entrepreneurs held a "secret" closed-door meeting in Wenzhou. The focus of the meeting was how to deal with the current difficulties faced by the PV industry.

Because it was a closed-door meeting, it is unknown who attended the meeting and what was discussed. However, from the paper meeting materials at the conference venue, we can still see the names of many bigwigs: Nan Cunhui, Gao Jifan, Li Zhenguo, Li Xiande, Cao Renxian, Chen Gang, Lan Tianshi...

Therefore, although this closed-door meeting was not on the public agenda, the participants were all representatives of leading companies. Of course, Gantanhao speculated that the main leaders of silicon material and silicon wafer companies such as Tongwei Co., Ltd., Daquan Energy, Xinte Energy, and TCL Zhonghuan did not come to Wenzhou and may not have attended the meeting.

01 Local governments should not get too involved

How important was this meeting? For example, Li Zhenguo, president of Longi Green Energy, even made a special trip to Wenzhou. Although Zhenguo did not show up in any of the public agendas of the meeting, many people saw him at the dinner on July 24.

JinkoSolar Chairman Li Xiande rarely attends social events. He was actually planning to attend the closed-door meeting, but he suddenly had important official business before leaving, so he delegated the company's vice president Qian Jing to attend the meeting and speak. After the meeting, in order to further express his opinions and suggestions, Li Xiande, who was on a business trip, even wrote a short article on his mobile phone on the plane.

At the China Photovoltaic Industry Semi-annual Conference held the next day, Wang Bohua, Honorary Chairman of the Association, said:

"The current situation in our photovoltaic industry is very serious. It is not enough to just say it is 'serious'... Prices have fallen too much: silicon material prices and component bidding prices are all falling, causing companies' losses to increase. This is a loss for the entire industry chain and the entire industry. This is rare and unprecedented in the history of photovoltaics. Moreover, the losses of companies in the second quarter have increased compared to the first quarter."

Wang Bohua added that due to the seriousness of information disclosure by the China Photovoltaic Industry Association, the data used in his report are all public information, but the actual situation is more serious, even much more serious!

Since the situation is so serious, adjustments are needed. But how to make adjustments? How to balance efficiency and fairness in the adjustment? Can the fittest survive and achieve the goal of adjustment? The opinions of large and small enterprises, and the opinions of enterprises and the government, are actually inconsistent.

It is understood that at the closed-door meeting of photovoltaic enterprises on July 24, some representatives of participating enterprises said that in the development of the photovoltaic industry, some local governments have been too involved, and have highly tied the development of the photovoltaic industry to government performance, and are unwilling to shut down obsolete production capacity. This has directly led to the sluggish clearance of old and obsolete production capacity, on the grounds that it affects performance, employment, and tax revenue.

At the public forum on the same day, Foster Chairman Lin Jianhua spoke bluntly about this issue: If we want to achieve this round of capacity clearance, the best and fairest way is to let the market solve it. Local governments should not save some backward production capacity, and should not force local banks to prolong the life of companies that have already encountered problems. If we really leave it to the market, capacity clearance will be very fast.

02The current cycle may become the norm

Different companies, and even the same company at different times, have different views on how long this round of PV reshuffle will take. Some people once thought it would be very fast, because it was indeed the case in history, and it would also be the case if everything was left to the market.

Some people think that it is too slow, including the carbon rush, because it is no longer an elimination game, but a tug-of-war. At the beginning, some local governments strongly recruited industrial investment and even personally worked on production capacity. Now these places are personally helping to save production capacity.

Li Xiande entrusted the company's vice president Qian Jing to speak at the closed-door meeting. Li Xiande's views were published on JinkoSolar's official Weibo tonight. For the sake of accuracy, Gantanhao excerpted them here as follows:

Due to some unexpected events, I missed the Wenzhou meeting, but I could still feel the solemnity of the air thousands of miles away. The flowers are the same every year, but the difficulties are different every year.

With structured thinking and structured expression, everyone has fully summarized the reasons for the current situation in the industry:Local governments and capital are too involved, there is no respect for patents, there is too much talk about technology stories that do nothing, new disruptors leave a mess, and anti-globalization is more ferocious than imagined....But I couldn't seem to form any ideas about how to prescribe and treat. How difficult could this industry be? Instead, I asked myself a few questions:

1. Be prepared that the current cycle may become the norm.（It seems that JinkoSolar is ready for a protracted war. This view is actually different from the view JinkoSolar expressed at SNEC more than a month ago. At that time, JinkoSolar believed that considering the cash flow of various photovoltaic companies, the price of photovoltaic products may return to rationality in one or two quarters. Now, a protracted war has become a consensus among veteran photovoltaic players. Companies such as Trina Solar and JA Solar have recently increased their cash reserves to prepare for a colder winter.）
   

2. Redefine overcapacity.No matter how cheap your components are, or how high your efficiency and power are, the capacity that is not needed in the future is excess. So what kind of capacity will be needed in the future? Locally manufactured, green electricity manufactured, supported by a local service team, and with a one-stop solution for photovoltaic storage, this kind of capacity is needed. (This is always true. Anything that can meet market demand is good capacity, otherwise it is useless. How can it be needed? Li Xiande said that it must be localized manufacturing, low carbon footprint, a complete service system, and a full-scenario solution.)
   

3. In a society where one hopes to have a technical patent barrier, and also hopes that the technology can become mainstream, be followed by peers, form a large-scale ecological chain, and thus be more economical. This is actually a contradiction. How to make good use of patents, a powerful weapon, to form patent deterrence and realize patent monetization, but at the same time avoid patent wars that hurt both sides? Patent licensing and paid licensing may be the best way, and for the practice of "taking it without saying hello", we support a firm crackdown. (The Carbon Driven Number would like to remind everyone that this should be the first time that Jinko has made a clear public statement on patent issues. In fact, since Trina Solar launched this round of patent wars, Jinko and JA Solar, two companies that also own some of the basic patents of TOPCon, have been keeping a low profile. It is understood that Jinko has currently licensed patents to many TOPCon companies. Of course, also during the semi-annual meeting, at the investor strategy meeting of Canadian Solar, the photovoltaic veteran Canadian Solar responded to the recent patent disputes with a clear attitude and crispness. As for how Canadian Solar answered, the Carbon Driven Number will write a special article in the near future.)

4. In a theater, only two types of people are needed, actors and audiences. The manufacturers are actors, and the users are audiences. The rest of the people, those who are irrelevant, should be cleared out as soon as possible to make the industry pure and give enterprises autonomy. (This is a figurative metaphor. Gantanhao believes that actors and audiences are supply and demand. In fact, this play also needs a director. The director must retreat to the backstage and cannot act on stage in person. The so-called "local government is too involved in the play" may mean this. The local government is setting up the stage and providing a platform for enterprises to show their talents, but it should not go on stage in person. Otherwise, the play will be unwatchable.)
   

5. Don't call on enterprises to accelerate the elimination and closure of obsolete production capacity while exaggerating the slightest action taken by enterprises. It is recommended that entrepreneurs uninstall WeChat and turn off Wifi. "Don't be shameless, don't be anxious, don't be afraid, and believe in yourself." You will win.

   (The Carbon News speculates that what Li Xiande meant by "taking some action" may mean that enterprises need to reduce the operating rate, even stop production, lay off employees, etc. in accordance with business needs. Indeed, it is necessary to consciously cut off information. As the saying goes, where there is expansion, there will be suspension of production, where there is salary increase, there will be salary reduction or even wage arrears, where there is recruitment, there will be layoffs. These are all business behaviors of enterprises and should not be over-interpreted or over-magnified. Even the smallest incident, if deliberately magnified, can easily hijack public sentiment and even evolve into a mass incident and cause a run on the enterprise. As the saying goes, a thousand words can melt gold, and a thousand criticisms can destroy bones.

   Gantanhao believes that photovoltaic companies and photovoltaic entrepreneurs must face reality and should not live in the glory of the past. They should have a strong heart, not a fragile heart, and should not let external criticism lead to distortion of their business actions. They should spend the winter as they should. Of course, as for the media, they should report objectively instead of exaggerating some news of suspension of production and layoffs. The industry is in a difficult situation and requires the joint efforts of the entire ecosystem.

6. Innovation is not just about technology, it is about cognition and awareness. Since you must go abroad, then go abroad with a different attitude and posture. Be more confident, you already have a lot of chips. (Photovoltaic companies must go overseas, but they must avoid making the same mistakes as Vietnam. In addition, from the perspective of supply chain collaboration, Chinese companies will definitely be more valuable if they gather together. How to go abroad in groups and how to resolve risks, there is a lot of homework to be done.)

03 Short pain is worse than long pain

Wang Bohua said that the photovoltaic industry has reached a point where it must be adjusted, because the risks of overdue payments and triangular debts between enterprises are rising, and the ability of some local governments to honor their investment policies is also at risk of decline, and photovoltaic companies themselves are also facing cash flow risks. If the trend of prices being lower than costs continues for a long time, there may be major risks such as product delivery failure and even product quality.

Wang Bohua said that for industry adjustments, short-term pain is worse than long-term pain. Adjustments must be made before all the problems in the photovoltaic industry become irreversible. Moreover, such adjustments should be "severe rather than light, and fast rather than slow." As the saying goes, severe cases require strong medicine.

Wang Bohua also admitted: "Even if we increase the intensity of industry adjustments now, this round of photovoltaic cycle may not be too short. However, we must try to speed up, otherwise the impact on the industry will only get bigger and bigger!"

So, how can we make adjustments “severely and quickly”?

Wang Bohua pointed out that to accelerate the elimination of obsolete production capacity and encourage mergers and reorganizations among enterprises, it is necessary to work together from top to bottom, including the central and local governments, enterprises, and financial institutions, to do this well. This may bring a lot of fluctuations to the industry and even some short-term pain, but it must be done.

Wang Bohua also encouraged photovoltaic companies, saying that China's photovoltaic industry actually has the resilience to make rapid adjustments.

First, photovoltaic power generation is a rigid demand worldwide. This demand will not change much in the future. The market is the foundation of an industry, and the prosperity of the market is also the foundation for the healthy development of an industry.

Second, our industry is very solid, and we have the world's unique and most complete industrial chain. Our photovoltaic R&D and innovation are unprecedented.

Third, a very valuable point in our photovoltaic industry is that our backbone enterprises are all private enterprises. The biggest characteristics of private enterprises are strong internal vitality, flexible development strategies, and fast decision-making. Therefore, from this closed-door symposium, we have reached a consensus on adjustment.

04 Raise the threshold and get out of the vicious circle of homogeneous competition

Chen Gang, chairman of Aixu Co., Ltd., believes that the photovoltaic industry has rapidly expanded from multi-crystalline to monocrystalline to N-type technology, and industry chaos has also arisen. Many new entrants often enter the industry at the mature stage, but their lack of precipitation and accumulation has intensified homogeneous competition.

How can photovoltaic companies break out of the vicious circle of homogeneous competition?

Chen Gang believes that technological innovation and deepening customer scenario needs are the key to breaking away from homogeneous competition. This point coincides with the view of JinkoSolar's Li Xiande.

The homogeneous competition that photovoltaics is currently experiencing is actually the same cycle that the home appliance industry has experienced. When disorderly expansion occurs, the industry will form a higher threshold, and those who ignore market rules and blindly expand will be eliminated by the big waves. Of course, during the meeting, Lu Chuan of Chint New Energy said that it took 15 years for the electrolytic aluminum industry to digest excess production capacity. Therefore, it is very important to prevent diseases and raise the industry threshold.

Chen Gang made the following four suggestions for the high-quality development of the photovoltaic industry:

First, we need to strengthen the protection of intellectual property rights:

Intellectual property protection is a key factor in safeguarding the rights and interests of innovators and stimulating the spirit of innovation. We call on relevant government departments to strengthen the top-level design of intellectual property protection, guide innovation, encourage innovation, and protect innovation through major changes, promote high-quality development of the industry, and gain the initiative in international intellectual property competition;

Second, encourage multi-dimensional innovation:

Private enterprises are an important force in scientific research and innovation, and they need to shoulder the responsibility of innovation in advantageous industries. A good policy support system should be created for private enterprises to accelerate technological innovation, and innovation should be encouraged in many aspects such as technology, equipment, and management;

The third is to improve the industry's entry standards:

At present, the industry standards are not systematized, the entry threshold is low, a large number of cross-border enterprises easily enter the market, and blind investment has caused homogeneous competition and industry involution; the industry entry threshold should be raised to avoid low-level repeated expansion, guide the construction of advanced production capacity, and promote high-quality development of the industry;

Fourth, increase investment in distribution networks:

Distributed photovoltaic power consumption still faces great pressure. It is recommended to further strengthen the investment and construction of distribution networks to solve the problem of grid connection and consumption difficulties in some areas.

In addition, in addition to reaching a consensus on "adjustment", the entrepreneurs present also had in-depth discussions on topics such as how photovoltaic companies can go global. They believed that collective action should be taken, but overseas layouts should not be concentrated, and can be moderately dispersed.

The photovoltaic chain is very short, and the shorter the chain, the worse the tension and elasticity. In response to the phenomenon that financial derivatives have an impact on the price of photovoltaic products, some companies have suggested that photovoltaic products should not be over-financialized, and excessive speculation can easily aggravate the internal circulation of the industry.

postscript

"'Lying in bed late at night listening to the wind and rain, I dream of the iron cavalry on the frozen river'. In the scorching hot summer season, Typhoon Gemi visited the conference with wind and rain, which is like a realistic portrayal of our photovoltaic industry..."

This is the first sentence in the speech of Nan Cunhui, Chairman of Chint Group. Indeed, an unexpected typhoon disrupted the return rhythm of many photovoltaic workers. In order to return to work on schedule, some colleagues changed their flights to high-speed trains, even if they had to stand all the way. This storm, like this sudden reshuffle of the photovoltaic industry, has plunged the industry into an unprecedented crisis.

A photovoltaic person's circle of friends

Now, Gantanhao is sitting on the high-speed train back to Shanghai, carefully reviewing and recalling this conference. The biggest feeling is the resilience, enthusiasm and diligence of photovoltaic people. This is the source of confidence in the industry.

Under heavy pressure and losses, every photovoltaic person that Gantanhao has come into contact with in the past few days is still full of energy and spirit. They rush between various venues and pay full attention to every speech by entrepreneurs and experts. When Wang Bohua was speaking, people still raised their mobile phones and took photos to record as they did in the past... As Chairman Wang Bohua said, photovoltaic companies, which are mainly private enterprises, are full of vitality.

Gantanhao believes that this spirit of photovoltaic people is actually the most valuable entrepreneurial spirit of our time: pursuing innovation, embracing change, being indomitable and giving their all.

This article has been revised and republished for some reasons. I believe everyone can understand the twists and turns. After all, it was discussed in a closed-door meeting. After all, there are some things that industry associations or companies are not suitable to say publicly, but are more appropriately expressed in internal work reports.

However, as a media outlet, Gantanhao can sometimes be a little "unbridled": the elimination of obsolete production capacity must be accelerated. If we cannot say it is a cure for disease, at least we must make up for the loss.

So, what is obsolete capacity and who should be cleared out? Gantanhao believes that administrative orders should never be used to specify, and administrative orders can only set a common standard applicable to all enterprises. Obsolete capacity is not determined by any department or person, but by the market.

It is somewhat magical that, during the writing of this article, some production capacities that are known to be loss-making are still being expanded, and some large projects that are known to be troublesome are still being launched. So, why do these people and the relevant departments that approve these projects turn a blind eye? In addition, what stories are behind these anomalies?

The typhoon is coming, the storm is coming. Since it has come, why should we be afraid? How can we see the rainbow without going through the wind and rain?