Top Chinese solar companies have been expanding production in Vietnam in recent years, not only to tap into the Southeast Asian market, but to use it as a springboard to enter European and the US market. Despite the two-year tariff exemption from the US on solar products produced in Southeast Asian countries such as Vietnam and Cambodia, the risks of trade barriers still exist.
Chinese solar companies have worked diligently, and they have become a dominant force in the global solar market amid the industry’s ups and downs. In this process of give and take with international peers, they faced multiple anti-subsidy and anti-dumping investigations initiated by Europe and the US. This spurred the need for them to establish manufacturing bases overseas.
Initially, their bases set in Vietnam were used as OEM module factories for large domestic enterprises. However, when these companies needed to expand into upstream cell manufacturing, they found themselves facing investment and operational funding challenges.
The new round of trade friction between China and the US began in 2018, dramatically altering Chinese companies’ expectations for exports to the US. For example, Longi Solar had already established some production capacity in Malaysia but also needed to establish new overseas outlets beyond China.
As of now, Longi has manufacturing bases located in Malaysia and Vietnam. Malaysia serves for the production of silicon wafer and cell, while the latter has both cell and module capacity. In 2022, Longi completed the capacity transformation and enhancement of its Vietnam base.
Regarding overseas expansion, Longi is not the only one. JA Solar also established solar bases in Vietnam and Malaysia. By the end of 2022, JA Solar has completed 98% of its 3.5 GW high-power module project and 3.5 GW cell project in Vietnam.
Jinko Solar is currently promoting its 8 GW cell and 8 GW module project in Vietnam, which were mainly targeting markets in US and India.
Trina Solar has invested in solar cell and module manufacturing bases in Thailand and Vietnam. Its Vietnam factory occupies 17 hectares and was completed in 2021, with a production capacity of 3 GW cells and 4.5 GW 210mm modules. The company is to build another 6.5 GW wafer project there, further extending the upstream segment of the solar industry chain. The project was still under construction by the end of 2022.
Nowadays, when enterprises invest overseas, policy and international trade environment are the top priorities, since the driving factor behind Chinese companies building factories in Southeast Asia and other countries is the tariff barriers or various invisible non-tariff barriers set up by overseas markets based on energy security.
Overseas expansion is imperative, but Southeast Asia may be excluded of consideration as a door due to constant accusation and investigation from the west. There is always a risk, that is, what if the US closes this door? By June 2024, the US may make some other kind of choices to take control of that overseas capacity.
