Suntech, the Chinese solar panel giant founded by Australian Shi Zhengrong, has finally defaulted on its loans after a volatile year in which it even said it may have been a victim of international banking fraud.
The business has failed to pay $520 million in bonds due on March 15, breaching the terms of some of its loans. In a statement, the company said the default means it has been placed in default on credit terms with several Chinese lenders.
Chief executive David King, who was taken over from Zhengrong, said the business is facing a “very difficult time”.
“We are currently exploring strategic alternatives with lenders and potential investors, which could help to set us on a path towards longer term success. We appreciate the support and understanding of our various stakeholders as we undertake efforts to implement these measures.”
Zhengrong was ousted from his position earlier this month, although still remains on the company’s board.
The default of the company may have some indirect ramifications in the Australian market, experts warn, with several consumers operating Suntech panels on their own homes.
But the default also signals a shift in the current global solar market, where Chinese companies hold the balance of power. Over the past few years, the trend has skewed towards cheaper, mass-produced panels. However, they’ve come at a much lower quality.
Glen Morris from the Australian Solar Council says while there is some fear the company’s default could eventually affect warranties, the market is beginning to see a turnaround in general as the Chinese power balance shifts.
“There really are a lot of large, tier-one manufacturers and with Suntech losing its position, there are a lot of companies standing behind to take its place.”
“I don’t see there’s going to be a major deficit in the industry.”
While solar companies have enjoyed lower prices, Morris says the quality hasn’t always been at its best. With some businesses under threat in China, that may change as companies are forced to raise their prices.
The news will be welcome for local solar businesses, which have typically operated under smaller margins than overseas players due, in part, to labour costs.
“A smaller increase in panel prices isn’t a bad thing,” he says.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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