Chinese Solar Firm Forced Into Bankruptcy as Glut Deepens

(Bloomberg) -- More Chinese solar manufacturers are falling into restructuring or bankruptcy, with a deepening oversupply and fierce price wars causing massive financial losses and threatening many smaller players’ survival.

A subsidiary of Zhejiang Akcome New Energy Technology Co. was the latest to declare bankruptcy when it was ordered by a court to undertake a reorganizing process after a creditor said the manufacturer “was not able to pay debts” and “clearly lacks solvency,” according to a filing by the parent company on Monday. 

China’s world-leading solar industry is grappling with a wave of company failures and consolidation as excessive capacity pushes prices below production costs. The ruling Chinese Communist Party on Tuesday pledged to smooth the process of allowing low-quality and outdated production capacities to exit, and prevent vicious competition.

China “should strengthen the market mechanism that allows the superior to win and the inferior to be eliminated,” the CCP said in an online statement on Tuesday.

While bigger players like Longi Green Energy Technology Co. have so far survived billions of yuan in losses by imposing production halts and layoffs, smaller companies have fewer ways to plug financial gaps. The failure of Zhejiang Akcome Photoelectric Technology Co. comes after another smaller manufacturer, Gansu Golden Solar Co., entered a pre-reorganization process earlier this month. 

Akcome has been reporting net losses every year since 2019 and last month had to suspend solar module and cell production in four of its subsidiaries, including the arm that has now been forced into bankruptcy, according to its stock filings. The Shenzhen Stock Exchange terminated Akcome’s listing last month after its shares traded under 1 yuan ($0.14) for 20 consecutive days. 

An industry group last week called on the government to roll out measures to facilitate faster consolidation, including not sending financial help to companies that are set to fail. The group also encouraged larger players to buy smaller plants. 

(Updates with government statement in third and fourth paragraphs.)

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