Suntech Power: Competition and Financing in China's Solar Industry
(5 pages of text)
Case (Pub Mat)
In 2011, Suntech Power, the world’s largest solar panel manufacturer, found itself in a highly problematic position. Recent developments in the Chinese solar power industry had negatively impacted the company’s operations. As the industry had matured, the demand for Suntech Power’s products had become highly volatile. Changing policy regulations, the ambiguous financial structure of the firm and a shift in consumers’ perceptions of the product were only some of the issues that further compounded the problem. As a result of these changing dynamics within the global solar power industry, the company’s share price had plummeted by roughly 90 per cent. To remedy the problem, in May 2011, the founder and chief executive officer of Suntech Power hired a new chief financial officer and they faced the arduous task of turning the company around. How should they tackle changing political and economic conditions? What decisions needed to be made to maintain the position of the company in the global solar energy market?
- To examine the Chinese solar power industry and its place in the global solar energy market.
- To explore Suntech’s operations within the context of changing laws and regulations in the global solar power industry.
- To determine how the fluctuations in the prices of raw materials can negatively influence an industry.
- To highlight the importance of due diligence and transparent management practices for a company in the context of what happened to Suntech.
This case can be used in a corporate finance course to discuss product market competition, capacity constraints, convertible debt and financial structure. Additionally, it can be used in a corporate strategy class focused on competition and industry structure.
China, Large, 2011
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