China's photovoltaic industry series analysis: photovoltaic trade

The development of any industry is closely tied to the existence of a robust trading system that facilitates the flow of goods. Without such a system, an industry's growth is inherently unstable, and the photovoltaic (PV) industry is no exception. China’s PV trade has followed a unique developmental path, marked by distinct phases and challenges. Typically, industrial growth starts with trade, then moves toward manufacturing and eventually forms a complete industry. However, in the case of China’s PV sector, it began not with large-scale production but with small-scale installations. In the early days, many of today’s leading PV companies were involved in selling small systems—like solar power units installed on yaks in remote Tibetan areas or in tents in rural regions. This grassroots approach laid the foundation for the industry’s later expansion. The establishment of China’s PV industry started with component factories, followed by battery, slicing, and ingot plants. By 2006, the industry had taken shape, but it was characterized as “two ends out”—meaning raw materials like polysilicon were imported, while the market was overseas. All transactions revolved around international trade: importing silicon and exporting components. Initially, this trade was dominated by a few small trading companies, often referred to as “international hackers.” These entities played a crucial role in the early export of Chinese PV products and significantly influenced market dynamics. For example, between 2007 and 2008, the price of polysilicon skyrocketed from $40/kg to $4,000/kg, largely driven by speculative trading rather than real supply-demand imbalances. As Chinese PV companies grew, many expanded internationally, setting up foreign branches to sell their products. However, during this rapid growth phase, most companies lacked systematic sales strategies and relied heavily on price competition. This led to Chinese PV products being sold at much lower prices than those of local manufacturers in Europe and the U.S., ultimately contributing to the “double reverse” situation—where both import and export faced trade barriers. If Chinese PV companies had adopted more strategic trade policies from the start, with clear rules and constraints on sales, the issues of overcapacity and trade disputes could have been mitigated. As the scale of the PV industry expanded from billions to trillions of yuan, regulating PV trade became a critical challenge. Currently, pure trading companies in China’s PV industry are not highly visible. Most transactions within the supply chain occur directly between upstream and downstream manufacturers. However, due to the reliance on imported polysilicon, many trading companies focus on this segment. This trend is rooted in historical and practical reasons. China’s PV trade can be broadly categorized into three types: internal chain trade (less than 20%), raw material imports and component exports (over 70%), and fully independent trade (about 10%). With the growing application of PV technology in China, the market is shifting from factory direct sales to broader retail trade. The increasing domestic demand, especially after 2013, highlights the need for a well-structured trading system. As the PV industry expands, the role of trading companies becomes even more vital. They help manage logistics, provide after-sales support, and ensure smooth capital flow. In addition, modern tools like digital platforms, efficient business models, and technical services are essential for the industry’s sustainable growth. Despite these opportunities, challenges remain. Issues such as poor credit systems, product quality concerns, and high transaction costs must be addressed. Trading companies can act as intermediaries, helping manufacturers focus on production while ensuring timely delivery, quality control, and customer satisfaction. To stay competitive globally, China’s PV trade must evolve from traditional methods to modern, data-driven approaches. This includes better production matching, advanced business models, technical support, and financing solutions. At the same time, China must strategically navigate international trade barriers, using its market size and production capacity to shape its own rules and protect domestic enterprises. Ultimately, building a strong and resilient PV trading system is crucial for the long-term success of the industry. It requires collaboration between manufacturers, traders, and policymakers to create a stable, efficient, and competitive ecosystem. Only through such efforts can China solidify its position as a global leader in the renewable energy sector.

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