The industry believes that the photovoltaic supply chain may need to be relocated

The COVID-19 has affected all walks of life, and the photovoltaic industry has not been spared. Changes are taking place in the manufacturing end and application end of the industrial chain. The photovoltaic industry is suffering from multiple impacts of the epidemic due to delayed resumption of work, rising costs, tight supply of raw and auxiliary materials, and uncertain overseas conditions. However, with the orderly resumption of work in various regions and the active adjustment and response of enterprises, the situation in the early stage has improved.
Luo Xin, Chairman of GCL Integrated Technology Co., Ltd. (hereinafter referred to as GCL Integrated, 002506. SZ), said in a recent interview with the Economic Observer that the sudden COVID-19 should be divided into two dimensions: short-term and long-term. At the same time, the issue of balanced supply chain layout of photovoltaic enterprises will also be put on the agenda. It is understood that since the resumption of work was approved on February 6, all GCLSI manufacturing bases have resumed work in an orderly manner.
In the short term, the delayed resumption of work in the early stage led to the tension of the supply chain. After the resumption of work, some staff involved will also face the problem of missed work because the isolation period is not full. These short-term factors add up. Luo Xin believes that the overall situation of the industry may return to normal at the end of February.
The short-term impact caused by the above problems should also be considered separately: the impact on the domestic market is slightly small in the short term, because the first quarter was originally a traditional off-season in China, but not in foreign markets. Luo Xin told the Economic Observer: "The second quarter is the peak season for foreign markets, but the installation in the peak season depends on the supply in the first quarter. If the supply in the first quarter cannot keep up, it will definitely have a great impact on the second quarter."
Wang Bohua, secretary-general of China Photovoltaic Industry Association, previously said that from the manufacturing side, the epidemic would affect the operation of photovoltaic enterprises' overseas factories and the development of overseas markets. The delivery of overseas orders is seriously delayed, and enterprises will even face the risk of losing orders and litigation. Wang Bohua said: "Many enterprises have overseas factories, but the raw and auxiliary materials of these factories are purchased from China through import. Therefore, the shortage of domestic raw materials and tight logistics will also lead to great difficulties in overseas supply, and the potential risks will increase."
However, how much such impact will be, Luo Xin believes that it depends on whether enterprises in the industry can resume normal production and operation in the fastest time.
In the long run, as PV is a global market, all manufacturing and supply chain links were originally concentrated in China, but later, due to trade protection issues, some of them were transferred to Southeast Asia. Luo Xin believes that the global balanced layout of the supply chain should be put on the agenda in the future, adding to the impact of the new coronary pneumonia epidemic on the regional supply chain.
Luo Xin said: "In the long run, we should start to think about how to improve the overall supply chain of the industry. Because now it is only manufacturing outside, but many supply chain links are still concentrated in China. The industry will start to think about how to reposition. In addition to manufacturing and assembly, it may be inevitable to appropriately migrate upstream and downstream links to foreign countries."
From this, Luo Xin judged that, combined with the lessons learned from the impact on the supply chain this time, the PV industry chain may face repositioning and relocation. "Because this is a global market, it needs to be closer to customers and improve the risk aversion of enterprises and industries through a more balanced layout."
The so-called balanced layout is not limited to the region, but also involves the supply layout. "You can't put the terminal data overseas, and the rest is at home."
Luo Xin originally judged that the domestic PV market would be better this year than last year. First of all, the policy this year is relatively clear, and second, the degree of marketization this year is relatively high. "Last year, everyone was waiting for subsidies and other policies. It should be said that the final actual installation volume last year was lower than most forecasts."
According to the statistics of China Photovoltaic Industry Association, in 2019, China's newly added photovoltaic grid connected installed capacity reached 30.1GW, a year-on-year decrease of 32.0%; By the end of 2019, the cumulative PV grid connected installed capacity had reached 204.3GW, up 17.1% year on year; The annual photovoltaic power generation capacity was 224.26 billion kWh, up 26.3% year on year, accounting for 3.1% of China's total annual power generation capacity, up 0.5% year on year.
In addition to the sudden epidemic, Luo Xin adjusted his previous judgment and believed that the PV installation situation this year would be the same or even slightly worse than last year. "Because at least I think the growth in the first half of the year will be limited, but it depends on the specific situation of the resumption of work."
On the premise of normal resumption of production, the priority of the overseas market will be raised. Luo Xin told the Economic Observer: "After the resumption of normal production, it will certainly give priority to meeting the supply of the overseas market, because it takes more time to be involved in shipping, and ocean shipping always takes 45 to 60 days. In addition, the entire user cycle will take 50 to 60 days to be shipped to the construction site."
Under the influence of the sudden epidemic, China Photovoltaic Industry Association also lowered the expectation of new PV installations in China this year, from 40-50GW to 35-45GW.
Under the epidemic situation, a series of inherent problems, such as the large subsidy gap in the photovoltaic industry and the tight capital chain of enterprises, have been shelved for solution. In this regard, Luo Xin believes that the new market with a high degree of marketization is the focus of photovoltaic enterprises in the future. "The subsidy problem is mainly the stock business, and the initiative is not in the hands of enterprises. The government and the industry have also issued many documents to solve this problem. We are mainly considering new businesses. This year's installed capacity is highly market-oriented, and is less affected by subsidies and policies. At present, the top priority is to fight against the epidemic."
In Luo Xin's view, problems such as returning to work, missing work, supply chain and logistics can be solved one by one to reduce part of the impact of the epidemic through the rush period.
It is understood that after the outbreak of the epidemic, photovoltaic enterprises are also actively adjusting countermeasures. Many domestic teams of enterprises failed to attend the earliest photovoltaic exhibition in the United States this year. However, the local team actively communicated with the customer at the meeting, hoping to get an understanding and explain the customer's concerns. The overall operation team also coordinates supply chain issues through online communication to minimize risks. "The proof of force majeure does not mean that the order can not be executed and the shipment needs to be accelerated, but it is unlikely that the customer will change suppliers, because the supply chain is excessively concentrated in China, even Korean and American suppliers still need the Chinese market to provide raw and auxiliary materials."
The trend we can see is that the top photovoltaic enterprises are speeding up the pace of industrial layout, or developing the second main business to improve their risk avoidance ability.
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