- The bankruptcy of Zhejiang Akcome’s subsidiary highlighted a growing crisis in China’s solar industry, driven by oversupply and price wars.
- As bankruptcies mounted, industry leaders urged faster consolidation to stabilise the market and prevent further company collapses.
OUR TAKE
China’s solar industry is in dire straits. Companies like Zhejiang Akcome New Energy Technology are really feeling the heat from oversupply and price cuts. This is causing a lot of smaller companies to go bankrupt, and there’s a big push for these companies to merge to stabilise things. It seems that the industry grew too fast and now there’s just too much product out there, making it super hard for the smaller players to keep up. It’s not just a few companies struggling, it’s a big problem that could shake up the whole solar sector in China.
—Heidi Luo, BTW reporter
What happened
Zhejiang Akcome New Energy Technology Company has filed for bankruptcy following a mandated reorganisation process after consistently reporting losses since 2019, according to Bloomberg.
The company, which is facing insolvency, was unable to meet its debt obligations, according to a recent filing by its parent company on Monday. The industry is now facing a crisis due to overcapacity, which is driving prices below production costs and intensifying competition.
The company had already suspended production at four of its subsidiaries, including the one that has now gone bankrupt. The move followed the delisting of Akcome on the Shenzhen Stock Exchange, after its shares remained below $0.14(1 yuan) for 20 consecutive days.
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Why it’s important
Zhejiang Akcome New Energy Technology is a Chinese company specialising in the production of solar technology, including solar modules and cells. The company has been actively involved in the solar energy industry with the aim of providing innovative and efficient solar energy solutions.
However, it has faced financial challenges in recent years, resulting in significant losses and operational difficulties that have affected its stability and market presence. Adding to the industry’s woes, another small manufacturer, Gansu Golden Solar Company, began a pre-reorganisation process this month.
Unlike larger companies such as Longi Green Energy Technology, which have managed to weather the financial storm by halting production and laying off staff, smaller firms lack the resources to cover such financial gaps.
Amid these industry struggles, a Chinese solar industry group has called for faster consolidation, urging that no financial aid be given to failing companies and that larger companies be encouraged to acquire smaller facilities. This is seen as a step towards stabilising the market and preventing further failures.
