Suntech’s Journey from a $13 Billion Company to Bankruptcy

15th May 2013

Shi Zhengrong is the billionaire who ran the world’s largest manufacturer of solar photovoltaic cells, Suntech Power.

JoNova wrote the following paragraph about Shi:

“In 2008, CNN named Shi “China’s Sunshine Boy.” In 2009, Fortune anointed him “China’s new king of solar.” That year, New York Times columnist Thomas Friedman also cited Shi and Suntech as models of China’s green leap forward — which he called “the Sputnik of our day” and a spur for U.S. clean energy policy.”

On Wednesday, the Suntech announced that its 2012 revenue had fallen 48% compared to the year before, and a Chinese court bowed to pressure from eight Chinese banks and declared the company bankrupt.

That is quite a fall! In 2011 Suntech was the world’s largest producer of silicon based PV modules, and valued at $13 billion on the New York Stock Exchange. Now it is worth less than one percent of that.

As a child he was offered up for adoption by his poverty stricken parents. He worked hard in school, studied a PhD in solar cell research at the University of New South Wales in Australia, and then went on to run the world’s largest solar cell company. The main problem was that too many solar panel producers appeared at the same time, and the market was just not ready.

An article at The West explained how “Suntech’s business model, deliberately pushing down prices to capture larger market share despite narrower profit margins, contained the seeds of its own destruction.”

In 2010 Suntech recorded a $237 million profit, but that sharply fell to a $1 billion loss in 2011, as its business strategy began to see it sell solar cells at a loss.

The European debt crisis provided the real deathblow, just as Suntech became the world’s largest manufacturer. Demand dried up, the markets shrank, profit margins vanished, and customers began to default on their unpaid bills.

The Chinese government might have had the ability to save its solar hero, but despite targets of adding 6GW of solar capacity each year for the next decade, support for the solar industry has started to disappear.

By. Tim Visser