Chasing the Sun German and Chinese Solar Firms Battle for Survival

By Wiebke Hollersen

Part 2: The Chinese Advantage


"The Germans were pioneers," says Zhu, using the past tense. But there are still some other pioneers in the business, he says, such as his boss, whom he invariably refers to as "Dr. Shi."

In Wuxi, the story of the solar industry also sounds like a fairy tale. It's about Dr. Shi, whose full name is Zhengrong Shi. He is the son of poor farmers who gave him away at birth. Shi was a model student who studied in China, more or less accidentally got involved in solar research in Australia, received his doctorate there and bought a stake in his first solar company. Eleven years ago, Shi returned to China, founded Suntech and became a millionaire.

"Dr. Shi's decisions have always been correct; he will lead us through the crisis," says Zhu, who contends that his boss is a kind of Steve Jobs of the solar industry. Shi relied on producing large quantities -- the usual Chinese strategy --and had everything from the cells to the modules manufactured in his own plants. His company has three other facilities besides the one in Wuxi, with an additional 8,000 workers.

"Dr. Shi" is the best argument that his vice president can muster in response to the allegation that the Chinese have once again stolen technology from the Germans, and that they actually understand nothing about solar energy.

Confusing Situation

Shi not only has a Ph.D. in photovoltaics, he has also made his former professor from Australia the head of his company's research department. And he advises the United Nations on issues concerning renewable energy sources. Zhu's boss is always traveling, and when he happens to be in the production plant, he can be seen walking behind a woman, a functionary of the Communist Party who has come from Beijing, from the politburo.

The Chinese government has finally decided to introduce a small aid program for solar-energy companies, Zhu says, though he adds that it is "not as good a program as the one in Germany."

Zhu receives regular reports from his German colleagues, who work for Suntech in Munich and Switzerland and keep him abreast of any changes in Germany's funding for solar power. At the moment, the situation is unfortunately confusing, says Zhu, who has heard that politicians are wrangling over cutbacks in subsidies.

He has also heard that some Germans are calling for funding to only be granted for electricity that is generated with European modules, and that they are pushing for punitive tariffs on Chinese-made solar panels. They want to be protected in the duel.

Victory in Massachusetts

Back in Bitterfeld, Beutel doesn't talk about punitive tariffs, nor does he even complain much about the Chinese. He actually purchases commodities from the Chinese, such as aluminum or glass, when he can get them cheaper that way. What's more, in December, Beutel flew to the United States to make a business deal resulting from a rival's demise.

He likes to talk about this trip, which seemed like an intermediate victory. It took him to Fort Devens, Massachusetts. A solar-technology production plant there had gone bankrupt, 800 workers had to be let go, and now the company's equipment was being auctioned off. The crowd mostly consisted of locals who had come to buy the forklifts.

Beutel was there because of the furnaces -- tall, gray machines in which silicon is melted at 1,400 degrees Celsius (2,550 degrees Fahrenheit) and rolled out in strips. The strips are cut into sheets called wafers, which are then made into solar cells. Most manufacturers cut them from silicon blocks.

Beutel wanted more of these furnaces for his factory; they save electricity and materials, and he had room for them in his production halls. He hoped that the furnaces would help him beat the Chinese at the price game. He purchased 180 of them along with other machines -- half the factory in total -- for €4 million, and had everything sent back to Bitterfeld. It was his first and last major investment.

Life in a German Plant

Since January, the furnaces have been installed in Plant 3. This is where Annett Henssler works. She is a wafer-production technician, and she says it's the best job she's ever had. Henssler is a prime example of how the solar industry has generated jobs in eastern Germany.

She is a small, compact woman in a white protective suit. Half of her face is covered by a pair of safety glasses. She is 41 years old, has two children who are almost grown up, and her boyfriend travels from construction site to construction site throughout Germany, always going wherever there's work.

Henssler grew up in Bitterfeld, and she completed an apprenticeship at the local chemical plant after 10th grade. The plant was closed after the Wall fell, so Henssler sold flowers, stocked supermarket shelves, attended training courses and lived from temporary work. "My CV is three pages long," she says. She couldn't find a permanent position until she started working at the solar-technology production plant five years ago.

These days, Henssler monitors 16 furnaces. When one of them beeps, she adds more silicon or pushes one of the strips back into the molten mass whenever one of them is torn. She works four shifts a week, eight hours each, as well as every other weekend.

Long Hours in China

Zhao Tiantian works 11 hours a day in Suntech's P2 plant in Wuxi. After four days, she has two days off -- unless her bosses decide she needs to work overtime. Since she has to clean her workplace after every shift, she is usually at the factory for over 12 hours.

During her lunch break, Zhao sits with two fellow female workers at a table in the canteen with a view outside. She sets down a metal tray in front of her with rice, strips of beef, fried shrimp and vegetables, and she places her cell phone next to the tray.

She has left her smock in the factory and slipped into a short, gray cardigan. Her hair is falling into her face, and she's sitting at the table like a tired high school student. Zhao is 25 years old. She has a 4-year-old son, and her husband also works at Suntech.

After completing secondary school, Zhao moved to Wuxi from Xuzhou, a city in the northern province of Jiangsu. She had originally intended to pursue university studies, she says, but then she took part-time work in a Sony factory, had a child and started working in the solar-technology production plant.

She seized this opportunity in a new industry, just like Henssler, the worker in Bitterfeld. Zhao has never been unemployed for long, and the job in the solar-technology plant wasn't her only option. But she says the conditions at Suntech seemed better to her than they did elsewhere.

As the union representative explains, whether men or women, all workers who start out at Suntech should be high school graduates and healthy. The starting wage is 2,500 yuan a month -- a bit more than €300 -- without overtime or bonuses and before tax. There are five days of paid vacation per year as well as health insurance.

Zhao and her friends say that work in the factory is exhausting, that the days are long and that the pressure is constant. But that's how it is in every factory, she adds. She says that she and her husband are saving up to buy an apartment. Then she walks back into the plant.

A Fighting Spirit

In the factory, one can stand in the corridor and observe her and the other workers as they turn wafers into solar cells. They clean the wafers and imprint them. They are standing close to each other, and they do more work by hand than their German counterparts, but they also operate large machines. A supervisor points to one bearing the name Centrotherm. It's one of many German machines here.

The walls of the corridor are lined with certificates for teams that have been particularly punctual or fast-working. Newspapers on the wall bear photos of dancing and sports competitions. Indeed, the lives of the workers at Suntech seem like one huge competition.

Upstairs, next to the offices, employees from the accounting department are practicing for a singing competition on the weekend. "We are the sun's emissaries," they sing, "holding forth holy fire that spills throughout the world." It's the company song. Down in the factory, there are large screens displaying the song, a hymn, a fighting song: "Chase the sun, realizing dreams, united in spirit and effort, challenge hardship."

Before Zhu rushes out of his office, he rattles off the names of countries: India, Brazil, Chile, Romania and Ukraine. "South Africa also looks very promising," he says. If he had time, Zhu could continue on like this for some time. He is referring to the places where Suntech will be able to sell its solar panels. Zhu believes this includes virtually every country on the planet. Since the modules have become so cheap, he'll even be able to sell them where there are few or no subsidies for solar power. That's the nice thing about the crisis, he says. Even the environment benefits from this, he adds, pointing at the smog outside his window.

Germany will soon no longer be the most important market for his solar panels, Zhu says. Over the past eight years, Germany's market share of the global photovoltaic industry has dropped from nearly 70 percent to less than 20 percent. But if the Germans decide to continue supporting sales in their country for a while, he'd be happy. Inexpensive modules plus government subsidies add up to excellent deals for his German customers.

Holding on while Help is Debated

The Germans have shelled out over €100 billion alone in funding for the solar panels that have been installed to date. This is paid for by all electricity customers, who will soon be shelling out 4 cents per kilowatt hour on their utility bills to support solar power. Indeed, the government wanted to reduce the subsidies for solar power, which have been falling since 2009, by another 20 to 30 percent. Since solar panels have become much cheaper, they reason, buyers no longer need to be lured with subsidies. But the governments of the German states that are home to solar-power companies hope that government funding will at least be able to save a few of these firms. Germany's upper house of parliament, the Bundesrat, which represents the states, recently voted against the cutbacks.

This summer, politicians plan to continue debating the matter, which is now being handled by the mediation committee, a body that acts as an intermediary between the Bundesrat and the Bundestag, the lower house of parliament. They could extend the funding, but that would help everyone who sells solar panels, especially companies like China's Suntech, whose jobs would continue to be subsidized by German electricity customers. Companies like Sovello would also benefit -- assuming, of course, that they are still in business.

On a recent Tuesday, Beutel assembled his workers in Sovello's Plant 2. He will remain their boss, he told them, adding that he is working on a new, even tougher restructuring plan. Their wages have been secured by the insolvency money, he assured them, but only until the end of July.

"Everyone wants to beat the competition -- that's normal," says Zhu in Wuxi. The Chinese-American entrepreneur has learned how capitalism works. When the state intervenes, he says, capitalism is always smart enough to ensure that something other than what the state wanted is ultimately achieved.

No, he says, he's not afraid of the Germans anymore. What worries him are the competitors in his own country.

Translated from the German by Paul Cohen

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