German manufacturers to blame for solar trade dispute

It is "unreasonable" for some German solar manufacturers, which have received millions of euros in government support, to accuse their Chinese counterparts of unfair competition, said a German expert in a recent interview with Xinhua.

The European Commission initiated an anti-dumping investigation against solar panels and their key components imported from China on Sept. 6. The plaintiff, an industry association called EU Pro Sun led by German firm SolarWorld, claimed that Chinese solar companies received illegal aid from their government and sold products below market value in Europe.

But, according to the Berlin-based solar industry research center, SolarWorld itself has received from the German government about 137 million euros of financial support, including investment allowances, from 2003 to 2011.

"Without government support, SolarWorld could never be as successful as it is today," said Wolfgang Hummel, director of the German Center for Solar Research.

SolarWorld is one of the biggest solar manufacturers in Germany, with business covering the whole value chain from silicon production to power plant building.

"The industry giant, however, has underestimated its Chinese competitors' growth pace," Hummel said, adding that it is the high production cost in Germany that makes German solar manufacturers lose their competitiveness.

Additionally, some factories of SolarWorld have been exempt from the apportionment which is used to support the higher fixed purchase price set by the government for electricity generated by renewable resources.

"It is undeniable that China has advantages over Germany in the costs of electricity, land, raw materials, and labor," he said. "Why should consumers pay 20 percent more to buy a German panel instead of a Chinese one whose quality is no poorer?"

Besides, Chinese manufacturers have been increasing their investment in innovation, and the quality of Chinese products have also been improved.

"But many German companies haven't recognized the fact. That's why they think Chinese could not succeed without aid from their government," Hummel said.

While Chinese companies are trying to collect funds from international financial market like NASDAQ, many German companies still rely on loans from Banks. That's another advantage China has, according to Hummel.

According to the European Commission, a product is considered as being dumped if its export price to the EU is lower than its market price in the exporting country.

"But in domestic markets of China, there are solar products which have a lower price than those exported to the EU," said Hummel. "You cannot accuse others of unfairly competing just because they have become stronger than you."

The director urged German solar manufacturers to adjust their strategies just like car manufacturer Volkswagen, which has moved some of their factories to Poland and other countries where labor cost is lower.

In fact, there are few solar cell and component manufacturers left in Germany, he said. Many solar companies and power plants have chosen to buy cheaper products from China for their production.

At the same time, Chinese manufacturers have been importing production facilities from Germany, which is renowned for its high-quality machines.

"Both sides of the trade would gain from using the comparative advantage," Hummel said.

The Chinese government and German Chancellor Angela Merkel have urged to settle the friction through dialogues.

"Imposing anti-dumping measures such as duties on China is against the interest of the EU," he said. It could lead to an increase in solar panel prices and decrease in demand and ultimately affect employment in Germany.

"That will be a lose-lose situation," Hummel said.