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In December final yr, Chinese language photo voltaic panel billionaire Li Zhenguo addressed the UN local weather change convention in Dubai, promising a “benevolent and equitable” vitality system to assist the world’s decarbonisation.
“The alternatives for everybody to contribute to the combat towards local weather change by way of renewable vitality options are boundless,” Li stated.
However three months later, the founding father of Longi Inexperienced Power Expertise has been compelled into retreat on account of a worldwide provide glut, firing 1000’s of manufacturing unit employees and new workplace employees because the business grapples with a collapse in costs. In China, the lay-offs have sparked criticism of the corporate’s company tradition.
Longi, one of many world’s largest photo voltaic panel producers, stated final week it anticipated to chop 5 per cent of its 80,000-strong workforce after Bloomberg reported the corporate was planning to slash 30 per cent of its employees. Longi stated the 30 per cent determine was “false”, although specialists stated the eventual job losses had been more likely to be greater than 5 per cent after photo voltaic module costs halved over the previous yr.
The strain on Li comes after a manufacturing increase in China resulted in oversupply. The job cuts threaten to check Li’s fame with the federal government in Beijing at a time of slowing financial progress and issues about industrial overcapacity. Abroad, he faces a world more and more polarised by China’s dominance of worldwide provide chains for renewable expertise, together with electrical autos, wind generators and photo voltaic panels.
Li graduated from Lanzhou College, in China’s northern Gansu province, in 1990. He initially labored at a state-owned laptop chip manufacturing unit earlier than founding Longi. Two of his college classmates function firm executives.
Longi was one in every of a number of Chinese language firms, personal and state-backed, that accounted for greater than 80 per cent of worldwide photo voltaic manufacturing, the results of a long time of deep state assist and fast home progress. Listed in Shanghai in 2012, it reported annual revenues of almost Rmb130bn ($18bn) in 2022, up from Rmb54bn in 2020.
As of October, Li and his spouse Xiyan had been price about $5.7bn, rating simply exterior the 100 richest individuals in China, in line with the Hurun Analysis Institute, a bunch monitoring wealth in China.
Specialists stated Li’s fortune mirrored the success of a collection of breakthroughs in photo voltaic supplies and manufacturing which have considerably improved the effectivity and longevity of photo voltaic panels. Longi’s advances embrace the substitute of polycrystalline materials with monocrystalline in photo voltaic panels, permitting larger energy manufacturing, in addition to diamond wire chopping expertise, which reduces the time and price of producing.
Li performs an vital position within the Chinese language Communist celebration’s plan to spice up the nation’s vitality safety, stated Alex Payette, chief government of Cercius Group, a consultancy that specialises in elite Chinese language politics.
“You will need to do not forget that Li Zhenguo straight performs his half in Xi Jinping’s self-sufficiency, home self-innovation programme — to safe China’s personal provide chains — and naturally, military-civilian integration technique,” Payette stated.
The photo voltaic business is cyclical, leading to intervals of increase and bust. Analysts have warned that large job cuts throughout the business are inevitable after a number of years of extreme concentrate on output somewhat than on sustainable earnings.
Xuyang Dong of Local weather Power Finance, an Australian think-tank, famous that at of the beginning of this yr, China had greater than 1,000GW of photo voltaic module manufacturing capability in growth for home and worldwide markets, a far greater quantity than present home demand. China wants round 280-320GW of latest photo voltaic capability a yr till 2030 to achieve its twin carbon targets.
“The amount of cash saved by shedding employees is inadequate in comparison with the 40-50 per cent decline in costs available in the market over the past 12 months,” she stated.
Dennis She, a Longi vice-president, advised the Monetary Instances final month that the corporate’s manufacturing unit utilisation price had fallen to as little as 70 per cent and that business consolidation was more likely to observe.
“You must be very powerful at this second,” he warned, including that the corporate would attempt to enhance its market share as smaller firms and newer entrants to the business battle to outlive.
The Chinese language photo voltaic business’s growth is coming below growing scrutiny, particularly within the US and Europe. In January, Brussels stated it was contemplating emergency assist measures after a flood of low-cost Chinese language gear sparked a collection of manufacturing unit closures.
That very same month, a bipartisan group of US senators referred to as on President Joe Biden to extend tariffs on Chinese language-made photo voltaic imports. In August, the US Division of Commerce discovered Chinese language producers, together with Longi subsidiary Vina Photo voltaic, “had been making an attempt to keep away from the fee of US duties by finishing minor processing in third international locations”.
Nevertheless, there are few indicators that the corporate’s international ambitions have been dented, stated specialists. Longi already has factories in Vietnam and Malaysia, a three way partnership with Invenergy in Ohio and gross sales places of work within the US, Australia, Japan, India and the UAE. It’s also in talks to enter Saudi Arabia by way of an area companion.
Yanmei Xie, a China analyst at Beijing-based consultancy Gavekal Analysis, stated Longi had proved itself to be “fairly adaptable” by way of a number of rounds of tariffs levelled at Chinese language photo voltaic firms by Europe and the US over the previous 15 years.
“This isn’t a brand new wave of protectionism. The worldwide backlash towards Chinese language photo voltaic exports began fairly some time in the past and principally has confirmed to be pretty ineffective,” she stated.
Li and his lieutenants try to persuade governments they danger slower decarbonisation of their economies in the event that they prohibit Chinese language firms from their renewable vitality provide chains. They argue China shouldn’t be seen as a risk to the vitality safety of different international locations.
“China just isn’t going to export sunshine,” stated She.
Extra reporting by Amanda Chu in New York and Wang Xueqiao in Shanghai
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