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Business trends

Solar panel makers brush off US tariffs and head to emerging markets

Industry leaders say the Trump administration's move will backfire on America

Demand for solar panels is rapidly growing in emerging nations like China.

TOKYO -- Solar panel makers are looking beyond the U.S. to emerging markets, where demand for renewable energy is soaring, following American President Donald Trump's decision to impose safeguard tariffs early this year.

China's JinkoSolar Holding, the world's largest panel maker with a roughly 10% share of the global market, views the U.S. as just one of the places where it sells, Vice President Qian Jing told Nikkei.

The U.S. accounts for about a fifth of global solar panel demand, and Jinko is thought to ship a little over 20% of its product to the country. But as solar power generation spreads throughout Southeast Asia, the Middle East and Africa, Jinko plans to increase production by about 30% this year to 13.5 million kilowatts with an eye to emerging-market demand.

Citing a threat to U.S. producers from rising imports, the Trump administration in January imposed a 30% tariff on solar panels levied under Section 201 of the Trade Act that will decline 5 percentage points each year for four years. The protectionist measure could prove a tailwind for First Solar, a U.S. panel maker ranked seventh in the world, to the disadvantage of Chinese-made products.

Although New York-listed Jinko is disappointed by Trump's stance, any impact on its earnings is likely to be small given the outlook for the market beyond America.

Japan, Europe and the U.S. comprised about 70% of the world's roughly 225 million kilowatts of solar generation capacity in 2015, but will fall to around 20% of the total in 2040, the International Energy Agency estimates. By then, 1.5 billion killowatts of new capacity will be added worldwide, much of it in China, India, the Middle East and Southeast Asia.

Jinko has 31 offices around the globe and will expand its presence in the Middle East and South America, said Qian. He described the company's plans to build a U.S. factory as a foothold for exports to South America, not a response to the safeguard tariffs.

Nor has the rise of Southeast Asian and Middle Eastern markets been lost on CEO Shawn Qu of Canadian Solar, the world's third-largest panel maker, which is thought to ship over 20% of its products to the U.S. The growth of these markets should outweigh the effect of the U.S. tariff move, reckons the Canadian company, which has its main plants in China and Malaysia.

China's Trina Solar, the world's second-ranked panel maker, is looking to its home market, according to Vice President Feng Zhiqiang. Since last fall, the company has been working with partners like network equipment maker Huawei Technologies to test systems that can efficiently supply power to communities using solar panels coupled with communications devices and storage batteries. Trina believes demand for such systems, rather than for individual panels, will grow in emerging markets.

With solar panels becoming increasingly commoditized, bigger producers have a greater pricing advantage. Canadian Solar's Qu said the Trump administration's safeguard tariffs will hurt the U.S. by keeping out all but high-priced panels. The Solar Energy Industries Association, an American trade group, estimates that the tariffs will cost the U.S. 23,000 jobs.

Japanese players Sharp and Kyocera do most of their business in the domestic market, making them relatively unaffected by the tariffs.

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