Rising Sun

By Li Xiaoshu Source:Global Times Published: 2012-6-24 23:10:02

Workers examine solar panels in a factory in North China's Hebei Province. Photo: CFP 

Workers examine solar panels in a factory in North China's Hebei Province. Photo: CFP


Unused land in the suburbs of Japanese cities might seem like unlikely hunting ground for Chinese entrepreneurs, but it is increasingly promising territory for the burgeoning domestic new-energy sector.

Having set up a Japanese office in 2007, Su Weili, president of Beijing-based Sky Solar Holdings Co, urged his team to buy up any land they could find after the devastating earthquake and tsunami ravaged Japan on March 11, 2011. 

"The disaster has changed the dynamics of the energy market," Su told the Global Times. "Investors' expectations are mounting for solar as a more benign form of alternative energy."

Su said market prices for open land with more direct sunlight and close to high-voltage grids in Japan have surged 10 times in the past 15 months.

On May 22, Su signed a contract with local authorities in Japan to rent 25,000 square meters of land in Uto, Kumamoto Prefecture of Southwest Japan's Kyushu Island, for 5 million yen ($63,500) per year.

Sky Solar Japan Co will finish building a 2-megawatt solar power plant in January next year, and the company expects it will provide profit margins of up to 20 percent.

China is the world's largest producer of solar panels, but punitive tariffs and anti-dumping probes by the US government against Chinese manufacturers have cast a shadow over the domestic photovoltaic (PV) industry.

In contrast, Japan's expanding new-energy market is a source of optimism for Chinese solar power firms looking for opportunities in new markets.

Getting hotter

The number of residential PV systems in Japan, the world's third-largest economy, passed 1 million at the end of April, data from the Japan Photovoltaic Energy Association showed on May 15.

Japan's sales of solar cells in the first quarter rose 38.1 percent from a year earlier to 391.5 megawatts, driven by robust demand from house owners, said the association.

The Japanese government announced on May 6 that the Tomari nuclear plant in Hokkaido had gone offline for mandatory routine maintenance. All of the country's 53 other nuclear reactors were already dormant. Even though the Japanese government recently announced a restart of the use of nuclear power, it still remains highly controversial among the public in Japan.

The Japanese cabinet on May 29 released a white paper calling for greater use of solar power in Japan's quake reconstruction, said the agency.

Besides, Japan's Industry Minister Yukio Edano approved Monday a new subsidy scheme starting from July 1 to pay solar companies 42 yen per kilowatt hour for solar-generated electricity for the next 20 years, double the subsidy offered in Germany and more than three times that paid in China. 

 "The policies will lead to the development of a 10-gigawatt market over the next three years," said Li Shengmao, a new-energy analyst with Shenzhen-based CIConsulting. "Solar business firms are unprecedentedly encouraged to enter the market, given investment returns estimated at 30 percent in Japan, compared with Italy's 15 percent and Germany's 7 percent."

A sales manager for Shanghai Aerospace Automobile Electromechanical Co echoed Li's forecasts.

"The profit margin for solar power in Japan is now the highest worldwide, and is on average 20 percent higher than in Europe," said the manager, who declined to be named.

The potential profits have attracted many Chinese firms to embark on ambitious plans.

Canadian Solar Inc (CSI), a solar cell and module manufacturer that conducts all of its manufacturing operations in China, put 40 percent of its global investment into Japan in 2011, according to Zhang Hanbing, CSI's senior global marketing director

Zhang said the company would build a 2-megawatt solar power plant in Mie Prefecture in the Kansai region of Japan's Honshu Island.  

Chinese PV maker Shanghai Chaori Solar Energy Science & Technology Co intends to build solar energy projects in Japan worth 7.5 billion yen by the end of 2012, the company said on April 11.

Obstacles remain

However, it remains challenging for Chinese companies to get a big share of Japan's solar power market, largely due to low acceptance of "Made-in-China" products from Japanese consumers who prioritize quality, performance and service, insiders and analysts said.

"When Sky Solar Japan held a press conference about its solar power plant in Uto with the city government, a reporter from the Tokyo-based Yomiuri Shimbun newspaper asked the mayor, 'doesn't Japan have its own solar power companies?'" Su Weili recalled. "The mayor had to explain that Sky Solar planned to invest in Japan, not to sell cheap products."

Su believes that no matter how generous the Japanese government appears to be, its aim is not to benefit foreign companies, but its domestic industry giants.

"Chinese manufacturers are struggling to find a foothold in Japan, whether through acquisitions or setting up local companies, mainly because Japan is a relatively self-sufficient and oligopolistic market with rich capital, advanced technology and diversified products in a mature business and legal environment," Su said. 

"China's solar companies have costs some 30 percent lower than Japan's domestic manufacturers, leading to their relatively competitive retail prices," said Liu Wenping, a solar power analyst with Shanghai-based technology investment consulting firm Pacific Epoch.

Chinese solar companies also need special certificates in order to enter Japan's PV market. Manufacturers and trading companies are required to get either a JPEC certificate from the Japan Photovoltaic Expansion Center under the Japan Photovoltaic Energy Association or a JET certificate from the Japan Electrical Safety & Environment Technology Laboratories (JET), according to Shanghai-based solar quality inspection company Kisun Solar Consultancy Services.

It usually takes more than one year to get the certificates approved, and an estimated 50 Chinese companies are in the waiting line, the Southern Weekend newspaper reported on June 8. So far, only 7 Chinese PV manufacturers have received the JET certificates.

Even after getting the certificates, the firms face market uncertainties such as a lack of understanding of the local buying culture, according to Li Yan, assistant to the CEO of JA Solar Holdings Co. "Japanese clients are extremely picky about details," she said.

"Even marks on the boxes or incorrect tagging could bring up canceled purchases and requests for investigation," said Cui Juanjuan, Japan market director with the International Business Development Center of solar cell and module manufacturer China Sunergy (Nanjing) Co.

However, Chinese enterprises remain optimistic about their chances in Japan. 

Suntech Power Holdings Co, China's largest PV manufacturer by revenue and capacity, expects its revenue in Japan to double in 2012.

"As long as we keep improving our product quality, respecting our clients and enhancing the overall branding, the future is promising," said Zhang Jianmin, senior manager of the Suntech CEO's office.


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