Unusual US solar trade battle reveals evolution of Chinese firms’ expansion strategy

By Xiao Xin Source:Global Times Published: 2017/7/5 23:43:39

An unusual solar trade case in the US has recently been in the spotlight, and China has interests on both sides of the tussle. This might point to an internal battle between Chinese businesses eyeing the US market, and reflects an underlying shift in Chinese companies' overseas market strategies toward being more diversified and sophisticated.

Cheaper solar panel equipment, often from Chinese manufacturers, has substantially benefited American customers but has also dealt a blow to American manufacturers, who are fighting back, the New York Times (NYT) said in a recent article. So it's not surprising that local manufacturers sometimes petition the US government seeking heavy tariffs and minimum price guarantees on solar panel equipment made outside the country, particularly in China.

This seems to automatically mean a continuation of the fight between Chinese manufacturers and their US counterparts. However, a new case filed with the US International Trade Commission has prompted new thoughts about the involvement of Chinese businesses in the long-held dispute. The case - which "is shaping up to be one of the first major trade decisions of the Trump administration," according to the NYT report - was initiated by Suniva, a US-based equipment maker; but the firm's majority owner is a Chinese company.

It is probably a source of amazement for many people that China can be both plaintiff and defendant in the fight. But a deeper understanding of the evolution of Chinese businesses in overseas markets might help to clear up the confusion.

This is essentially an indication that a more sophisticated stage of business is being embraced by Chinese companies seeking a foothold beyond their home territory, something that European and US businesses have already experienced.

The case highlights changes in Chinese companies' approach to expanding overseas. The Chinese government cannot fine-tune the changes like a remote control. Instead Chinese businesses have to comply with market rules and adjust themselves to local market conditions.

It is likely that there will be more such occurrences and it must be borne in mind that domestic Chinese companies' conflicts with each other - which may have resulted in some of the tussles - should be avoided. While a competitive mindset is indispensible to keep Chinese businesses on their feet in overseas markets, vicious competition should be reduced as much as possible.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: EYE ON THE ECONOMY

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