Certainly! Here’s a commentary on the article with a sharp and observational tone, infused with a cheeky style that channels the essence of comedians like Jimmy Carr, Rowan Atkinson, Ricky Gervais, and Lee Evans.
—
Welcome to the dazzling world of solar energy manufacturing – where profits are so bright, you might need to wear shades just to spot the losses! We’re delving into the intriguing plight of Longi, China’s solar giant, who are currently trying to turn their fortunes around faster than a solar panel on a sunny day.
Now, it’s no secret that Longi has been riding the solar wave like a kid on a jelly trampoline. But the solar boom in China is about as steady as a tightrope walker with vertigo. They’ve added more gigawatts in the first half of this year than I’ve had hot dinners – over 100 gigawatts! It’s like the country woke up and decided to bathe itself in the goodness of the sun. However, while they’re busy doing that, poor old Longi is grappling with a reality check – competition so fierce, it makes a Black Friday sale look like a tea party.
Longi’s Chairman, Zhong Baoshen, is not just drowning in his losses; he’s doing the backstroke. You see, Zhong is like that friend who tries to advise you about investments when he’s canceled his own Netflix subscription due to financial difficulties. He boldly predicted the industry would face a crisis from excess capacity, and oh boy, was he spot on! It’s like trying to bring a spoon to a knife fight. Only the sharpest survive, and right now, Longi’s trying to not get cut.
Crossing the ocean, we reach the good ol’ US of A – where sunlight is plentiful but the prices are sticking up their noses in the air. Zhong, bless him, is looking over at American demand as if it’s a kid at a candy shop. But guess what? Geopolitics loves gatekeeping, and in this case, they’ve built a fortress around those sugary treats. “Pay billions in tuition” he says, alluding to the costs of learning American politics. Tuition? More like extortion with extra rust on the side!
Longi’s rise was like watching a boy band hit the big time – innovative, catchy, and with a thirst for glassy-eyed progress. Zhong and his mates took some big risks, and guess what? They paid off! Their choice to manufacture monocrystalline cells, those shiny beauties made from a single crystal of silicon, was a stroke of genius. However, it wasn’t just a cakewalk. It cost more to produce, and they had to find a way to make it efficient, like a barista perfecting the art of making lattes at dawn.
But here comes the plot twist! The Chinese government has been like that overenthusiastic parent who just wants their kid to be the best at everything. They provide subs – but hang on! With every helping hand comes a whirlwind of competition, ballooning capacity, and profits that vanish quicker than your socks in the dryer after laundry day. Prices for polysilicon dropped more than 40% in just six months, leaving Longi with losses that would make Scrooge McDuck shed a tear. $740 million lost is a number that stings like a wasp in a swimsuit.
Interestingly, even though they’re facing losses, the public perception over in the States is that companies like Longi are thriving off government handouts. Zhong, holding a cup of tea in one hand and his hard work in the other, states emphatically that it’s all about dedication. “Chinese companies succeeded thanks to hard work, skill, and a complete supply chain,” he argues. Quite the passionate defense! Hold on a sec – didn’t we just read about half of China’s industry suffering? Talk about complex math!
And let’s not forget the mixed feelings over there in Pataskala, Ohio. Local residents aren’t exactly welcoming their new Chinese “mortal enemies” with open arms, if we’re to believe the dramatic town hall meetings echoing with cries of fear and confusion. “Keep the CCP out of our backyard!” one fervent speaker proclaimed. Next thing you know, there might be a movement to start a fence-building business around their solar plant!
While Longi is working hard to convince Uncle Sam that they’re lawful citizens without CCP ties—like trying to convince your parents that you’re just friends with your ex—it’s clear the U.S. is playing a complicated game of supply chain chicken. But it pleads a question: can the Americans truly recover an industry they ceded to the Chinese decades ago? Talk about opening Pandora’s Box!
In the poker game of renewable energy, Zhong seems determined to play his cards right. “The U.S. has to be clear about what it wants,” he said, tugging at the strings of negotiation like a master puppeteer. Or perhaps it’s just the world’s largest game of chess, and everyone is hoping for checkmate, preferably without the dramatic drama of tariffs and trade wars! Because let’s face it, if the whole world runs on sunlight, the last thing we want is clouds of geopolitical chaos overshadowing the sun. That could really ruin a picnic!
In short, dear readers, whether you’re a fan of sunshine or shadows, Longi’s saga offers a fascinating glimpse into the chaotic dance of global economics and industry competition. It’s still up in the air whether they’ll find their footing again in the sprawling market—but one thing’s for sure, we’re all waiting for the next episode of this solar saga. Will it be a triumphant rise or a dramatic fall? Place your bets!
—
Remember, folks, whether you’re chasing solar panels or shady deals, always keep an eye on the sun—because it’s bound to shine.
XI’AN, China — For Longi, a juggernaut in the global solar equipment manufacturing landscape, the current moment should mark a significant triumph.
Longi, alongside a select group of Chinese enterprises, holds a commanding position in the worldwide solar energy sector. In an astonishing display, China has ramped up its solar capacity, adding over 100 gigawatts in just the first half of this year, underscoring the impressive growth of the industry.
Yet, amidst this remarkable surge, the unpredictable dynamics of China’s solar industry have resulted in a bitter reality for the companies at the forefront.
Longi’s Chairman, Zhong Baoshen, is currently grappling with substantial financial losses as he attempts to navigate the cutthroat competition that he foresaw last year when he warned of an impending oversaturation in the market.
In the United States, the lone global marketplace where solar prices remain elevated, Zhong faces deep-seated suspicions regarding China’s ambitions within the sector. His prior initiatives to capitalize on American demand have been stymied by significant geopolitical challenges.
“We pay billions in tuition” to learn how to navigate American politics, Zhong lamented, reflecting on the steep costs of engaging with the complex political landscape.
The life journey of this 56-year-old entrepreneur exemplifies China’s industrial successes and the accompanying risks. Partnering with two former college classmates from the Physics Department, Zhong launched a company that soared to an impressive valuation of $80 billion at its peak. Rather than merely imitating Western or Japanese technologies, Longi embraced innovative approaches that have significantly reshaped the solar energy landscape.
Despite its initial successes, Longi has faced severe setbacks, twice brought to its knees by government policies. The first occurrence transpired over a decade ago, with the second blow hitting this year.
The cycle has been consistent: Beijing champions renewable energy, prompting local authorities to dispense subsidies to emerging players in hopes of cultivating local champions. However, this unchecked growth leads to rampant capacity expansions, heightening competition and ultimately eroding profitability across the sector.
In the first half of 2024, polysilicon prices, crucial for solar panel production, plummeted by over 40%, while the prices of wafers and cells were slashed in half.
During the same period, Longi suffered a staggering loss of $740 million, with its stock value plummeting by as much as 80% from prior highs before experiencing a mild recovery. Despite the challenges ahead, Zhong remains resolute in his belief that Longi can weather the storm, a sentiment not shared by all within the industry.
In a pivotal moment during the summer of 2003, Zhong received a call from Li Zhenguo, a college friend, alerting him to the promising potential of the burgeoning solar industry.
The unfolding opportunity in the solar sector enticed the two men, previously on separate paths in the semiconductor silicon ingot business, to begin distributing ingots and materials to solar manufacturers, joined by a third classmate.
Two key technological advancements over the past decade catapulted Longi to the forefront of the Chinese solar industry. The company made a strategic choice to invest in monocrystalline cells, which utilize a single crystal of silicon, diverging from the polycrystalline cells preferred by most competitors. These advanced materials exhibited superior energy conversion efficiency, despite their higher production costs. Longi, however, mastered more efficient production methods.
Another breakthrough was the implementation of diamond-coated wire saws for wafer cutting, which enhanced durability due to the incorporation of synthetic diamond dust particles. These innovations resulted in a remarkable reduction in manufacturing costs by two-thirds from 2012 to 2016.
By 2020, Longi was shipping approximately 25 gigawatts of solar modules, surpassing the total amount of solar capacity installed in the United States that same year. This remarkable achievement came in tandem with Chinese President Xi Jinping’s ambitious climate pledges aimed at bolstering green energy consumption.
According to Longi’s annual reports, government subsidies accounted for a mere fraction, never surpassing 1% of its annual revenues, while the company allocated around 6% toward its own research and development initiatives.
Jonas Nahm, a Johns Hopkins University professor specializing in Chinese industrial policy, highlighted that for top companies like Longi, the primary form of governmental support is the incentive structure promoting renewable energy projects. This ensures a robust market for solar panels and products.
Zhong is acutely aware of the prevalent American perception that companies like his owe their success to government backing. He contends that it is rather their “hard work, skill, and a complete supply chain” that have underpinned their achievements.
Last year, China saw investment levels in clean energy escalate to tens of billions of dollars, which even led a dairy company to establish its own solar cell manufacturing facility.
Notably, two-thirds of new power generation capacity in China is now derived from solar energy, showcasing the scale of growth in just one year—equal to the total solar infrastructure the United States has built throughout its entire history. Nevertheless, the drastic price fluctuations have contributed to a 40% dip in Longi’s revenue during the first half of this year.
Currently, the United States stands out as “the only place where money is made,” according to Yana Hryshko, global leader of solar energy at consulting firm Wood Mackenzie.
Due to protective tariffs and the advantageous subsidies from the Inflation Reduction Act, the cost of solar panels in the U.S. is threefold higher compared to prices in China and Europe, as per Wood Mackenzie’s analysis.
Despite comprising less than 10% of Longi’s solar module sales, the company has found expanding its footprint in the Americas increasingly fraught with challenges.
The stringent U.S. anti-forced labor legislation has stymied imports of solar modules produced using high-quality silicon sourced from China’s Xinjiang region, forcing Longi to invest nearly a year in proving to U.S. authorities that its supply chains are devoid of any such practices, all while asserting its compliance with American laws.
Efforts to mitigate American tariffs through the establishment of manufacturing plants in Malaysia and Vietnam came to naught, as Longi spent over $1.4 billion before the White House curtailed tariff loopholes in May after extending them for two years.
In a significant development, Longi secured a 49% stake in a joint venture called Illuminate USA alongside Chicago-based renewable energy developer Invenergy, which controls 51%. In February, they inaugurated a module assembly plant in Pataskala, Ohio, resulting in the creation of roughly 1,500 jobs, as claimed by Invenergy.
Nonetheless, there are concerns among some Pataskala residents regarding Longi’s affiliations with the Chinese Communist Party. During a January town hall meeting, one concerned citizen voiced that the partnership could be akin to welcoming a “mortal enemy” into their community.
Representative Carol Miller (R-West Virginia) criticized the idea of hosting Chinese enterprises like Longi, arguing that it would only deepen the CCP’s reliance on the U.S. supply chain. Confronted with this sentiment, she has proposed legislation aimed at restraining Chinese firms from availing clean energy subsidies.
Timothy Brightbill, an attorney from Wiley Rein representing an American solar manufacturers’ industry group, argued against using taxpayer resources for companies contributing to the decline of the American solar market through what he termed unfair trade practices.
Longi maintains it operates as a private entity, insisting that Illuminate USA is fundamentally an American company. The partnership also benefited from $4 million in incentives from an Ohio economic development body, alongside a 15-year property tax exemption granted for facility improvements.
“The reality is that the United States ceded leadership in solar manufacturing to China decades ago,” remarked Jim Murphy, Invenergy’s president. He underscored that the Pataskala facility is leveraging Longi’s manufacturing expertise to help regain segments of the U.S. solar supply chain.
Zhong confirmed that Longi is assessing the feasibility of establishing a solar cell manufacturing plant on American soil.
“The United States has to be clear about what it wants,” Zhong stated pointedly. “If it aims to foster its renewable energy industry, it must acknowledge that all the technology and expertise reside in China. If the U.S. seeks to develop independently without China’s support, it will face significant hurdles,” Zhong concluded.
. Jim Jordan, among other political figures, has raised alarms about the potential implications of Longi’s operations in the U.S., emphasizing the need for vigilance against foreign influences that could jeopardize national security.
As Longi continues to navigate this complex landscape, the company’s future hinges on its ability to address both market demands and the pervasive geopolitical tensions that complicate its operations. With investments in local manufacturing in Ohio, Longi aims to solidify its presence in the U.S. market and quash fears related to its Chinese ties. The overarching goal is clear: to gain the trust of American consumers and policymakers while remaining a competitive force in the rapidly evolving renewable energy sector.
The stakes are high, and with every strategic decision, Longi isn’t just playing a game of business; they are engaged in a delicate ballet of diplomacy, innovation, and market survival. As these dynamics unfold, stakeholders—from local communities to international investors—will be watching closely to see if Longi can effectively balance its ambitions against the backdrop of global skepticism and its implications for the future of solar energy.
Longi represents both a beacon of China’s solar manufacturing prowess and a barometer for the complex interplay of global economics, politics, and technology. The ongoing saga is not just about panels and profits; it’s an intricate web of hope, mistrust, and the pursuit of sustainable energy that reflects broader themes of cooperation and competition in the 21st century.
