China-Europe Photovoltaic Battle Behind the Scenes

The German tycoon Asbæk, who has two castles, repeatedly lobbied the European Commission for imposing punitive tariffs on Chinese PV products. Now it may be miscalculated in Germany. People are used to calling him the "Sun King." Frank Asbeck's luxury, unbridled manner of speaking, and the fact that he is the head of the solar industry, Solar World, earned him this name.

The curious tycoon who owns two castles and uses 350 hectares of private forest as a hunting ground is the biggest behind-the-scenes promoter who lobbied the European Commission to impose a punitive tariff of 47% on Chinese solar panels.

The European Commission launched an anti-dumping and countervailing investigation on China's photovoltaic products last year. It involved Chinese companies exporting up to 21 billion euros to the European Union, claiming the largest amount of “double negative” cases in the history of the European Union. In accordance with relevant EU regulations, the European Commission is expected to make a preliminary ruling on June 6.

However, the current situation is changing rapidly. At least 14 EU member states (one said to be 17 countries) have voted in the European Commission's recent vote on whether to impose temporary anti-dumping duties on Chinese PV products. In particular, the opposition after Germany’s “change of face” has greatly reduced the expectations of the Sino-EU trade war.

Chinese Premier Li Keqiang expressed at the luncheon of the Sino-German business community in Berlin on the 27th and delivered a speech. On the morning of the 27th, the German side officially responded to the European Commission and opposed the “double counter” investigation on China. The German side should have officially answered the European Commission three days ago, but it has been delayed until the morning of the 27th. The reason is that the German side wants to hear the voice of the Chinese government. "This position is a consensus between China and Germany. I highly appreciate it." During the previous Sino-German premier meeting, Li Keqiang and Merkel expressed their willingness to avoid trade friction.

Earlier there were German media nicknames that Europe must risk the start of a trade war to make the days of the solar world a little better. This proposal is in full compliance with Asbek's style. In the present situation, I am afraid that the "Sun King" will be disappointed.

"The Sun King" and His Lobby

In the process of the European Commission’s round-up investigation of Chinese solar panels, the Solar World Company almost single-handedly guided the “anti-China camp”.

Last year, Solar World Corporation first filed a complaint in Washington through its subsidiary company in the United States, accusing China's competitors of dumping and illegal subsidies, including billions of euros in cheap government loans. In the end, the U.S. government decided to impose a punitive tariff of up to 250% on solar components produced by Chinese companies.

Solar World Corp. followed a similar litigation version in the EU. The difference is that the European Union is currently the world's largest solar energy market, and its installed capacity is about 10 times larger than the US market.

“If not for endless government subsidies, most Chinese solar companies have been bankrupt for a long time,” said Milan Nitzschke, former chairman of Solar World, the current chairman of the European photovoltaic manufacturer (Prosun Alliance), but only in 2012. In the year, more than 20 major solar cell manufacturers in Europe were insolvent.

The Prosun Alliance is the "Sun King" campaign against the Chinese solar panel makers. Niezk said that the lawsuit concerns the European solar energy industry's right to life. "If there is no measure at all, we will lose the entire industry."

A reporter from the "First Financial Daily" consulted Solar World Corporation's financial report and found that in 2011, the company suffered a loss of approximately 233 million euros; during the period from January to September 2012, the operating loss was close to 190 million euros, and the loss rate of current assets was as high as 60%; After the third quarter of the year, its total loss has exceeded 1 billion euros.

Asbek was forced to admit that his company was financially distressed and began negotiating with creditors. However, the German media pointed out that Asbæk apparently believes that corporate restructuring should use the money of others, and Asbek has always been good at using the national policy to get rich.

The "Der Spiegel" reported that in Germany, Asbek had run for many years to obtain the highest possible solar subsidy, and has achieved success. According to calculations by the Institute of Economics of Rhine Westphalia, the total subsidy for solar photovoltaic power facilities paid by electricity consumers by paying electricity bills exceeds 100 billion euros.

Such a huge amount of subsidies led to the installation of a large number of solar modules in Germany. What benefited from it was the industry’s largest giant solar world, especially its owner Asbek.

Asbek since the creation of SolarWorld has included approximately 28 million euros in dividends; in addition, he has obtained 40 million euros in revenue through the sale of shares; not only that, he also received the chairman and chief executive officer. Salary, in good business years, this salary is up to 1 million euros.

Asbek used the money to enjoy a life like the baroque nobles. In 2008, he bought a hunting castle in Carmuth, Germany, including 350 hectares of private forest. To participate in business activities, he likes to drive in the black Maserati.

When Asia's module makers retreated at a low price to German manufacturers, Solar World Corporation had to restructure because of its huge debt of around 1 billion euros. In the face of creditors, Asbek took the major responsibility. All of them were pushed to Chinese companies and claimed that if the expected anti-dumping duties were levied on Chinese PV products, the German and even European PV market would resume fair competition in the second half of 2013, and its companies would also be out of the woods.

However, Asbæk’s recent headline in the German media has nothing to do with the identity of the EU’s “double reverse” investigation, but because he bought a second castle in his life when the company was in financial difficulties. .

The castle is located in the Remagen area of ​​the Rhine and costs 5 million euros. The dilemma of the German photovoltaic industry seems to be completely detrimental to the Baroque aristocratic lifestyle of the "Sun King."

In view of the "Sun King" depicting anti-dumping duties as the savior of the German solar energy industry, "Der Spiegel" commented that, in other words, it is now up to the state to assist the person who owns two castles.

European Union's "Selling" to China

In fact, for the European Commission, it is a very thorny issue to China. Experts are worried that punitive tariffs will trigger a trade war with China. This is something that countries like Germany, which rely on exports, do not want to see.

At the same time, there is indeed room for negotiation in EU law: in one of the articles referred to as “social interest”, the European Commission is allowed to cause damage to European producers in the event of illegal dumping or subsidy but imposes punitive tariffs. Will not violate the EU's broader interests, take measures that do not impose tariffs.

The definition of this article is ambiguous, and possible explanations for “broader interests” include higher prices for consumers, harm to European employment opportunities, and environmental impacts.

Ironically, Asbæk launched the Prosun Alliance, but most European solar companies joined another coalition, the Cheap Solar Alliance, and launched expert research reports.

A report made by Prognos, the commissioned economic consulting firm, pointed out that if China imposes a tariff of 60% on solar panels, Europe will probably lose 242,000 jobs within three years.

On the 24th, the Solar Energy Alliance held a special “funeral” in Brussels to “lost” more than 200,000 European jobs due to the European Commission’s potential to impose punitive tariffs on Chinese PV products.

China’s ambassador to Germany, Shi Mingde, previously stated that 85% of China’s machinery and equipment for photovoltaic products come from Germany, and finished products are sold back to Germany. Consumers can obtain low-priced products and the renewable energy industry can develop rapidly. Germany also benefits from this.

Shi Mingde said: "China's labor costs are lower than in Europe. Even within Europe, the competitiveness of different companies is also high or low. Individual companies lose competitiveness and should not put responsibility on others."

The German media predicts that if there is a trade war with China, the first victims will be German machinery and equipment manufacturers that use China as their main sales market.

German Chancellor Angela Merkel, who has felt pressure from the industry, has repeatedly stressed that he does not want to have a trade war with China. The German economic minister Rosler also said that Germany has “a great deal of concern” about retaliation from China’s trade.

On the 24th, at least 14 EU member states, including Germany, the United Kingdom, the Netherlands, and Sweden, voted against the European Commission’s move toward China. Currently, only four countries can be voted for, of which the firm stands. The countries on the side of the European Commission are France, Italy and Spain.

Although the above voting results cannot change the decision of the European Commission's preliminary ruling, it will change the balance of power in the "PV case" game that appeared to be at a disadvantaged position in China. The European Commission pushing for the case will also be a heavy blow. This will weaken the “status” of the European Commission’s subsequent negotiations with China on the “photovoltaic case”.

However, the most ardent commissioner in the "double counter" investigation of China, Trade Commissioner De Gucht said on Tuesday that he will not be forced to withdraw punitive tariffs from China's pressure.