Looking back at the development process of China's photovoltaic industry, the industry has experienced "three falls and four rises", and every time it comes out of the trough, it is accompanied by technological progress, efficiency improvement and market expansion. At present, the photovoltaic industry has entered another round of deep adjustment. Prices of silicon materials, silicon wafers, batteries and components continue to bear pressure, and some links suffer long-term losses. The pressure brought by low-price competition has been transmitted from enterprise operation to product quality, technological innovation, contract performance and supply chain stability.
Cost advantage has always been one of the core competitiveness of China's photovoltaic industry. The low cost formed by technological progress and management improvement has promoted the acceleration of photovoltaic power generation towards parity, and also achieved a complete and advanced photovoltaic industry chain in China. However, if the price deviates from the real cost of the enterprise for a long time, the reasonable investment and sustainable operation of the enterprise will be difficult to be guaranteed, and the industry will also be difficult to form a competitive order based on quality, innovation and long-term value. Luo Wen, Secretary of the Party Leadership Group and Director of the
State Administration of Market Supervision and Administration, recently published a signed article in People's Daily entitled "Deeply Rectifying the" Involution "Competition to Create a Good Market Environment", proposing the comprehensive use of capacity regulation, standard guidance, price law enforcement, quality supervision and other means to guide market competition from "price competition" to "quality competition and innovation". China Photovoltaic Industry Association organizes and formulates the General Principles of Cost Accounting Model for Photovoltaic Industry, which is a specific work to play the basic role of standards and improve industry cost management.
First, sales below cost erode the foundation
of high-quality development of the industry. Photovoltaic products have the characteristics of long manufacturing chain, large investment scale, fast technology iteration and long quality responsibility cycle. The price of component delivery is only one end of the transaction, which is also connected with R & D investment, equipment renewal, product reliability, after-sales service and long-term quality assurance. Sustained irrational low prices will reduce these necessary inputs, weaken the ability of enterprises to continue to operate and perform contracts, and transmit along the industrial chain, affecting the quality of industry development. Selling
below cost also distorts market signals. When the quotation no longer truly reflects the consumption of resources and the input of operation, it is difficult to distinguish the cost advantage brought by technological progress from the price strategy of simply exchanging losses for the market, and the mechanism of market survival of the fittest will also be disturbed. For the international market, the extension of low-end homogeneous price competition may also increase the risk of trade frictions and affect the overall image and global development space of China's photovoltaic industry.
Therefore, the key to rectify the "involution" competition is to re-establish the market price on the basis of real cost, product quality and innovation ability, so that enterprises with technology, quality and credit can get reasonable returns. To achieve this, first of all, we need a set of industry methods that can objectively reflect the cost of enterprises.
2. Reflect the real individual cost
of enterprises in a unified industry cost language. The General Principles cover the four main manufacturing links of silicon materials, silicon wafers, batteries and components, and systematically stipulate the cost range, cost level, main parameters, data requirements and calculation models, thus forming a cost accounting framework that runs through the industrial chain. It is based on the enterprise accounting standards and the actual data of the enterprise, so that the cost of each link has a clear boundary, a consistent calculation logic, and a data base that can be traced and verified.
The standard divides the cost into three levels: cash cost, production cost and full cost. The cash cost mainly reflects the production expenditure directly paid by the enterprise in the current period; on this basis, the production cost is included in the depreciation calculated according to law, reflecting the complete investment in the product manufacturing process; the full cost is further included in the management, sales, financial and other period expenses, reflecting the overall cost borne by the enterprise to maintain normal production and operation. Each of the three levels has its own purpose. Under the same framework, we can distinguish short-term cash pressure, manufacturing input and the burden of continuous operation of enterprises, so as to avoid replacing the complete cost situation of enterprises with a local caliber. At the same time,
the General Principles set up three accounting levels, namely, enterprise, single base and industry. The enterprise dimension is based on the actual and verifiable cost data of the enterprise itself, which is the main dimension to reflect the reasonable individual cost of the enterprise and carry out cost self-inspection; the single base dimension collects data around the specific production base, which can be used for value taking, internal benchmarking and cross-verification; the industry dimension is based on the sample data to form a comprehensive reference for industry monitoring and policy research. The three levels corroborate each other, so that individual costs can not only be reflected in the overall picture of enterprise operation, but also be verified through base data and industry operation.
Photovoltaic enterprises have not only specialized operation, but also integrated layout and multi-business operation. The General Principles specify the methods of carrying forward upstream and downstream costs and allocating common expenses according to different organizational forms, and require accounting according to the principles of actual occurrence, reasonable collection and truthful reflection. This is not an abstract industry average, but an individualized presentation of enterprises'own technical level, operational efficiency and actual input based on the unified industry cost language. This is the scientific basis for the standard to better reflect the cost of a single enterprise.
3. To provide methods for checking sales below cost according to law, we have established a system basis for stopping dumping at low prices by referring to
China's Price Law and Regulations on Stopping Dumping at Low Prices. Article 5 of the Provisions clearly States: "The term" lower than cost "as mentioned in these Provisions refers to the reasonable individual cost of the commodities operated by the operator." Article 4 also specifies: "Production costs include manufacturing costs and period expenses consisting of administrative expenses, financial expenses, and sales expenses." The
legal system clarifies the principles of judgment, and the industry standards further solve the problems of how to collect, calculate and verify the cost of photovoltaic manufacturing. The General Principles transform the cost concept in the legal provisions into the accounting scope and calculation method suitable for the four links of silicon materials, silicon wafers, batteries and components, providing a basis for enterprises to carry out cost self-examination and price compliance risk identification, and also providing an operational method reference for relevant parties to obtain, compare and verify cost data in accordance with the law. The value of
this convergence lies in improving the scientificity and operability of cost verification. Faced with different technical routes, different organizational forms and different production bases, we can return to the real and verifiable individual data of enterprises along a unified accounting framework to analyze the relationship between prices and reasonable individual costs. The calculation results formed according to the standards can be used for cost caliber verification and risk identification; the investigation, fact determination and law application of specific acts shall be made by the competent authorities in accordance with legal procedures. After the release of the
standard, the association will do a good job in publicity and application services, promote enterprises to make good use of cost models, strengthen cost management and price compliance, improve the collection mechanism of industry price and cost information, and improve the authenticity, representativeness and timeliness of industry monitoring; Actively strive to establish a price supervisor system for the photovoltaic industry under the guidance of the market supervision department, carry out price information collection, policy publicity, compliance tips and risk reports, and provide industry support for the supervision department to perform its duties in accordance with the law. The association will also continuously evaluate the implementation effect of the standards according to technological progress and industrial development, and improve relevant methods in a timely manner.
In-depth rectification of "involution" competition is a clear deployment made by the Party Central Committee and the State Council with a view to the construction of a unified national market and high-quality development, which reflects the firm determination of the state to promote the return of market competition to rationality and maintain fair competition order. The fundamental purpose of China Photovoltaic Industry Association in formulating and promoting the implementation of the General Principles is to consolidate the basis of market governance with a unified industry cost language, create a fair, orderly and sustainable market competition environment for the whole industry, and guide enterprises to devote more energy to technology, quality, brand, service and life cycle. Promote the transformation of China's photovoltaic industry advantages into long-term and stable global competitive advantages.
(Author: Liu Yiyang, Executive Secretary-General of China Photovoltaic Industry Association)
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