China Producing “Silicon Sneakers”

by Bill Dodson

It doesn’t take long when you live and work in China to realize that altruism seldom fits into Chinese business calculations. As far as the renewable energies manufacturing sector is concerned, the Chinese government and entrepreneurs see the potential for riches to be made from the manufacture of equipment that captures, transforms and distributes energy from sources other than coal and oil. One source with whom I talked at the recent SNEC Photovoltaic Conference and Exhibition in Shanghai said her company had commissioned a market study in 2008 on the largest manufacturers in China of photovoltaic cells, as used in solar panels. The study turned up 130 companies that matched their criteria. A year later 50 of those companies had simply disappeared. “It was clear many of the [Chinese] investors saw an opportunity, had some money from other businesses, and thought they’d try their luck.”

It’s important then, in this media-appointed “race” between China and the US in the renewable energy sector to look more precisely at the numbers being quoted, the sources and the time frames from which the numbers are being taken. Bruce Usher, an executive in residence at Columbia Business School, recently wrote in a New York Times Op-Ed piece that, “Bruce Usher, an executive in residence at Columbia Business School, in a 2004 analysis, the World Bank determined that China accounted for a mere 5 percent of clean-development projects globally. But by 2008, the most recent year for which annual data is available, the bank reported that China’s market share had climbed to an astounding 84 percent.” But the same can be said of so many other industries in which America once held predominance and manufacture shifted off-shore: sneakers, TV sets, video recorders, and the like.

Issues of quality are even more difficult to articulate. One maker of equipment that automates the transfer of silicon sliced into wafers told us one of the reasons for Chinese interest in his equipment is that the majority of Chinese production is done on manual lines that yield 16.3% efficiencies in the solar cells. Some American buyers require 16.7% efficiencies from makers, creating a hidden barrier to unfettered Chinese domination of the American market. Though non-renewable energy may not be a national policy on the order of China’s, I do believe American companies continue to refine energy technologies and invest in R&D that will turn up ever more efficient means of producing clean, renewable energy.

So, let China continue to churn out the solar equivalent of “cheap sneakers” for the world. By the time international buyers have to replace less efficient Chinese copy-cat technologies, more efficient products and perhaps even completely new approaches to powering the world will be available.

Further reading: NYT