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Chinese solar panel companies to relocate production to EU and US to avoid taxes

7 August 2023

Many Chinese manufacturers are considering manufacturing directly in the European Union (EU) or the United States, or have already started to do so to avoid being affected by tariffs or other trade charges, according to an article published by economic news portal Yicai, quoted on Friday by EFE, according to Agerpres.

So far, Chinese firms have invested in Southeast Asia for this purpose, but the risks resurfaced when the US Commerce Department opened an investigation into whether these initiatives were being used solely to avoid taxes.

Although Washington has imposed a 24-month moratorium on tariffs on solar panel imports from Vietnam, Thailand, Malaysia and Cambodia, executives of Chinese companies in the sector cited by Yicai stressed that if the EU or the US impose measures against unfair competition or of state subsidies, the most logical thing would be to invest directly in production there.

Some companies, such as Arctech Solar, are trying the option of ceding patents and technologies to US manufacturing partners in order to temporarily avoid the large investments they would need to rapidly increase their presence in the country.

Others, such as Longi Green Energy Technology or JA Solar Tech, have already announced that they will build factories in the United States, while Jinko Solar will increase investment in the factory it owns in Florida to increase production.

In the case of Europe, Yicai recalls that only a few Chinese companies have invested in the old continent in the photovoltaic panel sector and highlights the case of the Longi company, whose president announced in June that he would build a factory in Germany.

Some of the quoted executives point out that “incomplete industrial ecosystems” affect investment possibilities, especially in the case of many European countries.

“Building factories in Germany or nearby is the only viable option if you want to have a presence in Europe because, on the whole continent, they are the only places with a relatively complete industrial chain. Undoubtedly, this situation limits business development in Europe”, said one of the interviewed managers.

Another, Jiang Weipeng, general manager at GCL System Integration Technology, talked about how long it can take to open a factory compared to China: “It only takes five to six months to open a factory in China, but in The USA and the EU take longer”.

According to data provided by the local employer, last year China produced 86% of polycrystalline silicon, 97% of silicate plates, 90% of battery cells and 85% of solar panels worldwide.

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