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During the Boao Forum for Asia, Gao Jifan of Trina Solar asked me to meet and chat. Last year, when we were doing ESG, he attended many events. I also went to their company last October. We are both fellow villagers and old friends. The feeling of going to their company is simply "awesome": this is the most awesome industry in our country. 70% of the world's technology, 80% of the standards, and 90% of the market are Chinese, absolutely leading.

Lao Gao gave me a book called "Trina Solar Chronicles". I read it in one breath and thought it was one of the best business biography books. The good thing is that it not only writes about Gao Jifan and Trina Solar, but puts the story of Trina Solar and Gao Jifan in the context of the development of the entire industry and the entire process of reform and opening up.

Gao Jifan is a man of action who believes that knowledge creates value. In 1988, he gave up the opportunity to study at the University of California, Berkeley and went south to start his own business. He started by developing and producing chemical preparations for treating the surface of home appliances, then returned to Changzhou to engage in aluminum curtain wall business, and then entered the photovoltaic industry, starting a new entrepreneurial journey with sunshine and photovoltaics. On December 26, 1997, Trina Solar was officially established.

"The Chronicles of Tianhe" tells many stories, the most thrilling of which is "Knowing when to advance and when to retreat, Tianhe escaped a disaster."

After 2000, the photovoltaic industry developed rapidly and became increasingly popular, making silicon materials, the staple food of the industry, even more scarce and in short supply. The price rose from more than US$20 per kilogram at the beginning to US$40 in 2005, and then soared to US$400 in 2007, and then continued to rise to more than US$500. Chinese photovoltaic companies, which were "out of money", set off a silicon material war, and large polysilicon projects were launched one after another. Under such circumstances, Trina Solar also decided to launch a polysilicon project to solve part of the food problem on its own.

On December 5, 2007, the project investment letter of intent was signed in Nanjing, with a total investment of up to US$1 billion, with a planned annual output of 10,000 tons of high-purity polysilicon, and all completed and put into production before 2012. This was the first 10,000-ton polysilicon project planned in China at the time, and the largest industrial project introduced by Lianyungang. A vice governor of Jiangsu Province, Lianyungang government leaders and heads of multiple departments attended the grand signing ceremony.

Because of this project, Trina Solar will sign a $300 million equipment purchase and service intention contract with GTSolar, a US solar product production equipment supplier. Before officially signing the contract, Gao Jifan went to the US GTSolar headquarters for inspection. During the exchange, a picture caught Gao Jifan's attention. It was the projects that GTSolar was executing and planning, as well as the polysilicon project planning of photovoltaic companies around the world. Gao Jifan counted it in his mind and found that the total tonnage was 3-5 times more than the current global demand.

Gao Jifan was terrified: there would be a surplus of polysilicon, would the Lianyungang project still be launched? Gao Jifan locked himself in the hotel to think about what to do, and did not close his eyes for three whole nights. It was neither going forward nor backward: if he went forward, he had already clearly seen the problem of overcapacity; if he retreated, he would not be able to explain the matter. In the end, Gao Jifan decided to abandon the project and return empty-handed. In April 2008, Trina Solar officially announced to the public that it would terminate the construction of the Lianyungang $1 billion polysilicon project and terminate the equipment supply contract signed with GTSolar. By withdrawing from the Lianyungang polysilicon project, Trina Solar lost a total of more than 10 million yuan in initial project expenses, but the well-founded decision allowed Trina Solar to avoid a major setback.

Just a few months later, the market took a sharp turn for the worse. The financial crisis swept across the country, and the entire Chinese photovoltaic market collapsed. No one in the industry could escape the impact. The price of 6-inch monocrystalline silicon fell by more than 10% in one month. The international price of solar cell modules dropped from $3.8 per watt at the beginning of the year to less than $2.8. The most brutal thing was the previously overheated polysilicon, which plummeted from $500 per kilogram at its peak, and fell by more than half in half a year, and then further fell to about $40, less than 1/10 of its peak. This caused heavy losses to many Chinese photovoltaic companies that had expanded polysilicon projects during this period. The worst-case scenario was that they lost tens of billions of assets and went bankrupt in a few years. Photovoltaic giants such as Wuxi Suntech, Jiangxi LDK, and Baoding Yingli all paid the price for their previous expansion in this crisis.

If Trina Solar really invests 1 billion US dollars in Lianyungang, the consequences will be disastrous. Life and death are just a matter of thought!

(March 28, 2024 CA1362 Haikou-Beijing)

Qiguan Guozi is the official WeChat public account of Qidian Observer Newspaper. Qidian Observer is an all-media platform guided by the State-owned Assets Supervision and Administration Commission of the State Council and hosted by the China Enterprise Reform and Development Research Association. It is recognized by the State-owned Assets Supervision and Administration Commission of the State Council as a "state-owned enterprise's own public opinion platform" and is committed to reporting on the reform and development of Chinese enterprises from a professional, market-oriented and international perspective.

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