While the U.S. tariffs placed against Chinese solar panels is certainly a blow for ....Chinese manufacturers, these companies have highly diversified and adaptable business models.
The solar tariffs may give U.S. companies an extra competitive boost against its Chinese rivals.
Large Chinese solar companies have proven to be extremely resilient in the face of obstacles.
Upon the announcement of the most recent tariffs, Chinese leading solar manufacturers such as Yingli (NYSE:YGE), Trina Solar (NYSE:TSL), and JA Solar (NASDAQ:JASO) all experienced sharp drops in stock price.While the U.S. markets are important to Chinese solar manufacturers, these companies have proven to be extremely resilient.
... there are many reasons to believe that the tariffs levied against them will only be of minimal consequence to these companies....Although the Chinese solar market is approximately equivalent to the U.S. solar market, the Chinese market has infinitely more potential, just based on the country's population size alone. On top of that, the political climate for solar in China seems to be much healthier than that of the United States.
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The massive government subsidies that will undoubtedly be handed out should provide an enormous advantage to large solar companies, especially in the case of industry standouts such as Trina Solar or Yingli Solar.
In addition to China's solar friendly political environment, its electricity consumption growth may be an even bigger boon for domestic Chinese solar market. China's average per capita electricity consumption is approximately 3,297 kWh, which is about 4 times lower than that of the United States. This means that China's electricity consumption will likely skyrocket into the future, given its enormous future GDP growth projections.
While the U.S. market is surely an integral customer for Chinese Solar firms, they are becoming increasingly less reliant on the it due to their international diversification. Most large Chinese solar firms, including the ones listed earlier in the article, have a vast business portfolio spanning across the globe, from the developed markets of Japan, to the burgeoning markets of India, and even to the developing markets of Africa.
Trina Solar's diversified portfolio is a typical of large Chinese solar firms.
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Chinese companies have shown to be incredibly opportunistic in focusing on emerging markets. Many of the emerging economies of the Middle East, Africa, Southeast Asia, and South America have a naturally more conducive environments for solar than that of the developed countries.
...Chinese companies are even starting to catch up to their U.S. counterparts in terms of technological innovation. In fact, JA Solar boasts some of the highest efficiency panels in the world, with efficiencies comparable even to efficiency leader SunPower (NASDAQ:SPWR).While these tariffs will certainly cause some damage to Chinese solar companies, this has already been factored into Chinese solar company valuations. In fact, investors may have overcalculated the potential damage of these tariffs, giving leading Chinese solar firms valuations such as Trina Solar, Yingli Solar, and JA Solar even more upside in the long-run.
seekingalpha.com/article/...e-able-to-overcome-the-u-s-tariffs
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