In the context of the global energy transition, China's photovoltaic industry has delivered a brilliant report card in 2024. According to data from the Ministry of Industry and Information Technology, in 2024, China's photovoltaic cell exports will increase by more than 40%, module exports will increase by 12%, and the output of polysilicon, silicon wafers, cells, and modules will increase by more than 10% year-on-year, and the industry's output value will remain trillions. However, behind the export growth and output increase, China's photovoltaic industry is facing the dilemma of involution in the "far ahead", and how to break through has become an important topic in front of the industry.
First. The leading edge of China's photovoltaic industry
(1) Market share and scale advantage
China's photovoltaic products have a global market share of more than 85%, and the production capacity of high-purity crystalline silicon, silicon wafers, cells, modules and other links ranks among the top in the world. In 2024, China's total PV module exports will reach 235.93 GW, an increase of 13% over 2023. PV module exports to 23 countries increased by more than US$10 million, module exports to 33 countries increased by more than 100%, and the number of markets with exports exceeding 1GW increased from 29 in 2023 to 38. This scale and cost advantage makes China's photovoltaic products highly competitive in the international market, able to provide high-quality photovoltaic products at lower prices to meet the wide demand of the global market.
Figure: China's photovoltaic cell exports will increase by more than 40% in 2024
(2) Technological innovation and cost advantages
China's photovoltaic enterprises are in a leading position in technological innovation. For example, JinkoSolar has applied for more than 4,500 patents, and LONGi's patent reserves are among the highest in the industry. New technologies such as N-type TOPCon and BC continue to emerge and realize industrial application, which promotes the technological upgrading of the photovoltaic industry. The electricity consumption for polysilicon production has been significantly reduced, with a combined power consumption of 57 kWh/kg and a reduction power consumption of 43 kWh/kg. The market share of large-size wafers has also continued to grow, with the proportion of wafers over 182mm increasing to 98%, and the market share of N-type cells increasing to more than 25%. These technical advantages not only enhance the core competitiveness of Chinese photovoltaic enterprises, but also provide important technical support for the development of the global photovoltaic industry.
Second. The performance and harm of the involution dilemma
(1) Low-price competition and profit dilemma
Driven by the rapid growth of market demand, photovoltaic production capacity has soared, resulting in the balance between supply and demand in the market being broken, and product prices entering a rapid downward channel. In 2024, polysilicon and module prices will decline by 39.5% and 29.7% year-on-year, respectively. In order to compete for market share, enterprises have launched fierce low-price competition, and even sell below the cost price, which has seriously damaged the profitability and sustainable development of the industry. In 2024, the photovoltaic industry will have a large scale of losses, and the leading enterprises in the main industrial chain will suffer serious losses, which will affect the R&D, talent retention and application product supply of enterprises.
(2) Patent litigation and resource consumption
In recent years, patent disputes in the photovoltaic industry have occurred frequently, involving many well-known enterprises at home and abroad. Although the patent war has promoted technological innovation and patent accumulation to a certain extent, and enhanced the international competitiveness of enterprises, it has also brought many adverse effects. On the one hand, malicious patent disputes may consume a lot of time and financial resources, distract the energy of enterprises, and are not conducive to the normal operation and industrial development of enterprises. On the other hand, frequent patent litigation may lead to tensions within the industry, hinder cooperation and collaborative development between enterprises, and may even lead to international trade frictions.
Third. The strategy of breaking through the dilemma of involution
(1) Strengthen coordination and cooperation
Enterprises should strengthen cooperation and collaboration, form industrial alliances or technological innovation communities, jointly overcome technical problems, reduce research and development costs, and improve the overall innovation ability and competitiveness of the industry. For example, JinkoSolar has formed alliances with companies such as Trina Solar and JA Solar through patent assignments to jointly suppress competitors. This collaborative innovation model can not only avoid duplicate R&D and waste of resources, but also promote the complementary advantages of enterprises to achieve mutual benefit and win-win results.
(2) Enhance core competitiveness
Enterprises should focus on enhancing their core competitiveness, strengthening brand building and quality management, and improving the added value and market recognition of products. In the fierce market competition, only enterprises with unique competitive advantages can be invincible. For example, Tongwei Group has laid out multiple cutting-edge technology routes at the R&D level at the same time, maintained undifferentiated R&D investment, and allowed sunk costs to exist to ensure timely adjustment and transformation in technological change.
(3) Strengthen policy guidance and supervision
The government should strengthen guidance and supervision, formulate reasonable industrial policies and industry norms, and prevent vicious competition and excessive expansion. For example, the Ministry of Industry and Information Technology's "Standard Conditions for the Photovoltaic Manufacturing Industry" includes intellectual property protection in the assessment to promote technological upgrading. In addition, the government can also encourage enterprises to increase R&D investment, improve technological innovation capabilities, and promote industrial upgrading through financial subsidies, tax incentives and other policy means.
(4) Expand emerging markets
Enterprises should actively expand into emerging markets and reduce their dependence on traditional markets. In 2024, China's PV module exports to emerging markets will show a good growth trend, such as Latin America, the Middle East and other regions. The emerging PV market is small in scale but has initial growth potential due to the rapid growth of electricity demand and the high potential of renewable energy. Enterprises can increase their share and influence in emerging markets by establishing production bases in emerging markets and strengthening the construction of sales channels.
Four. Conclusion
In 2024, China's photovoltaic industry has made remarkable achievements in export growth and output improvement, but behind the "far ahead", the dilemma of involution is also becoming increasingly prominent. Enterprises should strengthen collaboration and cooperation to enhance their core competitiveness; The government should strengthen policy guidance and supervision; At the same time, enterprises should also actively expand into emerging markets to achieve sustainable development of the industry. Only in this way can China's photovoltaic industry continue to maintain its leading position in the tide of global energy transition and make greater contributions to achieving the goals of carbon peak and carbon neutrality.
