China’s Excess Solar Capacity Forces More Firms to Restructure
(Bloomberg) -- More Chinese solar companies are ending up in court as the industry contends with massive overcapacity and deepening losses.
The latest casualty of the shakeout is Tunghsu Azure Renewable Energy Co., a smaller solar farm operator that also makes panels. A creditor has asked a local court to put the firm into restructuring on the grounds that it “clearly lacks the ability to repay” its debts, according to a stock exchange filing by the solar company on Wednesday. The court has yet to rule on the request.
The sector is being forced into a brutal consolidation after equipment makers built far more capacity than the market required. Despite China’s world-leading position in solar, weaker firms are going bankrupt or getting taken over as the industry shrinks in line with demand.
Tunghsu Azure was already facing the threat of being delisted from the Shenzhen exchange after a warning from the regulator in July. It’s just the latest manufacturer to fall foul of creditors and courts, a list that includes Zhejiang Bangjie Holding Group Co., Zhejiang Akcome New Energy Technology Co. and Gansu Golden Solar Co.
While larger firms are able to adjust production or lay off staff to weather the downturn, smaller players, particularly new entrants to the market from other industries, have shown themselves to be more vulnerable to the rapid changes sweeping the industry.
Cloud Live Technology Group, a catering firm that announced its plan to invest in solar two years ago, said in a statement this week that its panel-making unit is being sued by a supplier after it failed to pay its bills.
©2024 Bloomberg L.P.
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