in China, the solar panel industry in difficulty

As Chinese solar panels continue to flood markets around the world, the sector is now facing overproduction and tie-ups are increasing in China.

On the surface, everything seems normal here in the outer suburbs of Xi’an, in front of this huge factory of the Longi group, the world leader in solar panels. The site is working, we can see the workers starting their shifts… China is by far the world leader in the sector. Its solar panels are flooding markets in Asia, America and Europe. But the Chinese have invested so much that they are now faced with a worrying phenomenon of overcapacity. Chinese solar giants are forced to lay off a large part of their workforce.

As the Longi group did not wish to welcome us inside its Xi’an factory, we questioned the employees. This first young woman confirms to us that the factory is in the process of letting go of part of its staff. “At the moment there are layoffs. Half of our team has been laid off. I don’t know yet if I will be affected, but maybe it will be the case.”she says.

In recent weeks, figures have circulated in the press indicating that Longi could lay off up to 30% of its 80 000 employees. The group denied this, citing a drop of only 5% in its workforce, but this trader who works in front of the factory does not believe it, at least in Xi’an. “We are rather around 30% layoffshe believes. I’ve been selling food in front of the factory for years, so of course I know all this. Administrative employees and production line workers began to be laid off last October.”

Activity down

This employee who is finishing her shift confirms to us that the activity in the factory already has nothing to do with that of last year. “Before, we could only take very little vacation. During Covid, we even worked 30 consecutive days. Today, it’s only four days of work per week and three days of rest, and a lot of people are on vacation or have been sent to other factories. I heard that production will soon stop here.

Among the people already made redundant, this mother : “The company first dismissed interns and temporary workers, then certain managers. I was summoned by the human resources department and I was notified of my dismissal. They explained to me that the market was not “wasn’t good. I feel like it’s because the product isn’t selling well.”

“Our department previously had around thirty people, today only half remain.”

a mother, made redundant

at franceinfo

Like the other solar panel giants, Longi is the victim of a market that has become too competitive. Attracted by large state subsidies and tax facilities, companies overinvested. 42 billion euros, for example, in 2023. Today, supply has far exceeded demand.

“A normal phenomenon in the industry”

Prices are falling and solar panels are piling up in warehouses. We must get rid of part of the workforce as quickly as possible, explains Shen Wenzhong, who heads the Solar Energy Research Institute at Shanghai Jiao Tong University : “Longi has experienced very significant development over the past two years, which has pushed them to stock up on staff. Now in a situation of overcapacity, the company must reduce its unnecessary staff in order to reduce its financial burden. This staff will be made redundant , which I think is a normal occurrence in the industry.”

But for Julie Laulusa, who heads the Mazars firm in Shanghai, the Chinese have not said their last word. These difficulties foreshadow even greater investments. And it is already a reality. While laying off workers on certain sites like that of Xi’an, the Chinese solar giants are also developing new factories in parallel, in China, but also abroad. Two huge projects have, for example, been signed in Saudi Arabia and Vietnam. Despite its difficulties, China wants to do everything to maintain its position as world leader in solar energy.