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Suntech's fall rings alarm bell for China's solar industry

By Tang Danlu (Xinhua)

10:15, March 25, 2013

Photo taken on March 17, 2013 shows the entrance of a Suntech Power factory in Wuxi, east China's Jiangsu Province. China's leading solar panel maker Suntech Power, a New York-listed private company based in Wuxi, declared bankruptcy on Wednesday. (Xinhua File Photo)

BEIJING, March 25 (Xinhuanet) -- The bankruptcy of Chinese leading solar panel maker Wuxi Suntech stunned the domestic photovoltaic (PV) industry last week, raising wide speculations on the future of the company and the whole sector.

On Wednesday, the Wuxi City Intermediate People's Court approved the company's bankruptcy and ruled that it was undergoing "bankruptcy reorganization."

The announcement came two days after Suntech said it had defaulted on a 541 million U.S. dollars bond payment.

"The key reason lies in global overcapacity," noted a member of the bankruptcy liquidation team, adding that the company was defeated in the fierce price war.

As a major subsidiary of the Nasdaq-listed Suntech Power, Wuxi Suntech was once one of China's four largest solar module makers.

The company has been hard hit by shrinking global market for solar cells and panels as well as by punitive tariffs with the United States and Europe over alleging that Chinese dumping and government subsidies to producers.

According to a senior company manager, the company's credit balance for the local and foreign currencies of the creditor banks totaled 7.1 billion yuan (1.14 billion U.S. dollars) by the end of February.

The banks expected the company to seek a third party for strategic reorganization in order to revive the company, the manager added.

Besides, sources revealed that the Suntech founder Shi Zhengrong, who was ousted from the position of chairman of board earlier this month, had the support of the Wuxi government and could return to the company as part of the reorganization, according to the 21st Century Business Herald.

Some experts thought that was a wise move for the bankruptcy of Suntech.

"It's a reasonable option for all the parties involved, including Suntech, the local government and its creditors," said an industry insider. "People don't know how much more money would have to be injected into the company to keep it afloat."

"The local government might play the savior role, but it will definitely raise public doubts whether it's worthwhile to do so," said Ren Dongming, director of the Center for Renewable Energy Development of the National Development and Reform Commission's Energy Research Institute.

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