Huang Ming, chairman of Himin Solar, holds a press conference, questioning subsidies offered in the sector, on October 16 in Beijing. Photo: CFP 



Few businesses in China would dare challenge the authorities in charge of their sector. But Huang Ming, chairman of Shandong-based Himin Solar, is defying this tradition.

"The sector is in chaos," Huang said at a press conference in Beijing on October 30.

It was his third press conference in the month, and again he railed against the dark side of the solar-powered water heater sector, while hurling accusations of fraud and improper conduct at rival firm Jiangsu Sunrain Solar Energy Co and Jiangsu Institute of Product Quality Inspection and Technical Research.

But some are questioning whether Huang is more interested in justice and market order or in promoting his own company.

Humin resources

The Humin Project was launched earlier this year by State authorities including the Ministry of Finance and the National Development and Reform Commission, in an effort to encourage the use of energy-saving products.

Under the program, producers of solar-powered water heaters that meet the energy-saving standards can get subsidies of 100 to 500 yuan ($16-80) per unit. The program became effective from June 1 this year.

The Humin Project is important for the sector, industrial insiders said, as a previous policy to boost purchases of home appliances in rural areas expired in some provinces last year.

"We can get some 100 to 500 yuan in subsidies from the government for each solar water heater we sell, which can help in our promotions," a manager surnamed Dong with Taizhou Huangjinyu Solar Energy Co, whose products have passed the Humin Project test, told the Global Times Monday.

"The project is important, not only in cash terms, but also because it helps with branding, proving our quality in a sector that has low barriers to entry," said Dong.

Long-term battle

Companies' products need to pass a test to qualify for the subsidies and Huang accused Jiangsu Sunrain and the Jiangsu Institute of Product Quality Inspection and Technical Research of faking the test reports.

On June 1, the government announced that solar-powered water heater companies had to demonstrate their qualifications for the Humin Project subsidies by the end of June 4.

Himin managed to get two of its products qualified, according to a list released by the National Development and Reform Commission in June. But Jiangsu Sunrain got 160 of its products onto the list thanks to a huge number of positive test results from the Jiangsu watchdog agency.

Himin alleged that the Jiangsu test results were processed with suspicious speed.

The case took a new turn last week when Jiangsu Institute of Product Quality Inspection and Technical Research admitted that its staff had put the wrong testing dates on some of the quality reports, and said this was because they were urged to issue the results quickly by Jiangsu Sunrain.

Jiangsu Sunrain denied Himin's accusations and blamed the Jiangsu agency for mistakes over the test report dates.

"We suffered public suspicion and criticism on this matter, and reserve the right to sue Jiangsu Institute of Product Quality Inspection and Technical Research," the company said in a statement on October 30.

The General Administration of Quality, Supervision and Quarantine heard Himin's complaint the same day, and has asked the Jiangsu agency to launch an investigation.

Conflicts between Himin and Sunrain are nothing new. In 2007, Himin sued two of its former employees who had left to join Sunrain, alleging that they had violated confidential agreements.

Himin once had a lion's share of the domestic solar-powered water heater market, but was overtaken by Sunrain in 2008.

"Himin used to be popular but in the last two years their products have disappeared from our local market," Long Hua, a staff member at a solar water heater dealership in Anhui Province, told the Global Times.

"The market currently favors products with a price tag of 2,500 yuan while Himin aims to be a high-end brand and most of its products are are more expensive than the average price," said Long.

Himin has wanted to launch an initial public offering (IPO) since 2007, but has not been able to so far. Some of the real estate projects it invested in have also performed badly. Meanwhile, its rival Jiangsu Sunrain got listed in May this year.

What's the motivation?

"Government authorities should punish the cheaters," Himin said in a statement sent to the Global Times on October 30, calling for Sunrain to be stripped of its right to government subsidies.

But Xu Xinjian, chairman of Jiangsu Sunrain, has claimed that Himin is discrediting the sector. "He is either discrediting the sector to have a start in another sector or he is discrediting Sunrain to get a chance to beat us," Xu said, according to a report by 21st Century Business Herald last week.

Himin, however, claims it wants to help clean up the sector, which is facing various problems including products of inferior quality.

According to 21st Century Business Herald, some industrial analysts have speculated that Himin's campaign is an effort to shore up its own position by impugning the credibility of rival firms, some of whom are also seeking IPOs.

However, other industrial insiders said that Huang had raised some important points.

"We cannot comment on the accusations as we don't know the truth," Meng Xiangan, secretary general of the China Solar Energy Academy, told the Global Times on Novermber 4. "But the sector has many problems, like a lack of uniform criteria for market access, which urgently need to be addressed."

Roughly 5,000 businesses are now involved in the solar-powered water heater market nationwide, and there is still significant room of growth.

But the sector is now at a price-oriented stage of development, with some businesses tending to use substandard materials in order to cut prices and stand out in the market.

"It is worrisome to see that this tendency is getting more obvious. There is also an absence of effective supervision, as businesses can pay a third-party inspection agency to undertake quality tests," said Meng.

However, as problems come to light they can be dealt with, and the sector is expected to develop in a more orderly and standard way, Zhang Yonglan, an analyst with data provider Qianzhan Intelligence Co, told the Global Times.