Chinese Solar Panel Maker Suntech Goes Bankrupt (4)
ooby_dooby: http://www.npr.org/blogs/thetwo-way/2013/03/20/174828432/chinese-solar-panel-maker-suntech-goes-bankrupt
What goes around comes around. This story contains the seeds of why Solyndra went bankrupt if you can connect the dots.
What goes around comes around. This story contains the seeds of why Solyndra went bankrupt if you can connect the dots.
Seems that they were doing fine, then decided to grab bigger market share and overinvested. Competitors did the same and now there is oversupply. They had a situation where they thought that there is a spare market capacity and if they don't invest, the competitors will invest and get the market share. And they were right, that would happen, so they had no other option than to invest. All are worse off after investment, but had to do it anyway. This is an example of oligopolic competition. May be Suntech had higher costs than competitors and lost the battle.
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joyaepace: Seems that they were doing fine, then decided to grab bigger market share and overinvested. Competitors did the same and now there is oversupply. They had a situation where they thought that there is a spare market capacity and if they don't invest, the competitors will invest and get the market share. And they were right, that would happen, so they had no other option than to invest. All are worse off after investment, but had to do it anyway. This is an example of oligopolic competition. May be Suntech had higher costs than competitors and lost the battle.
Probably. I've read about new types of solar panels, cheaper and easy to install. But I don't know its durability.
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As with any manufactured item, the more that are produced the cheaper they become due to efficiency of scale. Unless a manufacturer has a monopoly their margins will decrease as the cost goes down. The only way to maintain the level of earnings is through a constantly rising sales volume. At some point the market gets saturated and the whole cycle ends. This is what we're seeing with solar panels. Involvement of governments only exacerbate the picture and hasten the implosion.
In the end you get consolidation with the bigger fish eating the little fish until there is only 1 or 2 left in business.
In the end you get consolidation with the bigger fish eating the little fish until there is only 1 or 2 left in business.
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What goes around comes around. This story contains the seeds of why Solyndra went bankrupt if you can connect the dots.