The China government has been eager to develop and expand domestic solar demand because the solar supply chain faces anti-dumping and anti-subsidy investigations in international markets. This has caused China's state-owned enterprises to be enthusiastic about the development of domestic solar demand. However, there are some difficulties that the industry will face while trying to expand market share and obtain subsidies.
Most small- and medium-size solar firms in China are unlikely to revive production in 2013, and this has been helping to ease dumping problems. The government's goal to increase domestic demand has been attracting state-owned enterprises to invest in end market solar PV systems. China-based solar firms pointed out that it is quite difficult for companies other than tier-one solar firms to obtain orders from the state-owned enterprises.
Despite the large volume of orders, suppliers have been facing problems as the payment periods and methods of state-owned enterprises are often long and complicated.
In the past, small-size solar firms in China relied on orders from large-size firms. But in recent years, oversupply problems have caused large-size firms to face financial troubles and low demand. This has also affected the cash flow of small-size firms. Now large-size firms rely on orders from state-owned enterprises but lack a continuous inflow of funds, forcing the firms to rely on financial capital from banks that have been ordered by the government to issue loans.
Solar firms noted that China's solar subsidy programs are quite different compared to those in Europe and the US in that some payment methods used by the local governments are complicated making it difficult to obtain payments.
