The Solar industry in china is seeing a downturn after a robust growth in the last decade. The industry has suffered huge financial losses due to decrease in sales worldwide. Another reason for this downturn is the ongoing price war between other economies manufacturing and selling solar panels across the world. The weak sales have threatened Chinese economy, which is the market leader in the manufacturing and sales of solar panels.

U.S and Europe are weakening the sales of the solar panels made in China by imposing heavy tariffs on the China made solar panels thus adding to the sales depression. If the same condition persists for long in other major markets of China, the manufacturing industry is likely to face financial problems resulting into Mergers and Acquisitions of the major companies by foreign counterparts. It may also lead to possible bankruptcies, factory closure and layoffs thus hampering Chinese economy.

The Solar companies are losing out sales mostly in debt ridden countries such as Europe, which is one of the major markets for Solar panels. Sources reveal that even the Chinese government is responsible for the plight as it issued licenses to many small companies in china to produce solar panels thus encouraging competition and price war.

Suntech Power holding is one of the major manufacturers of the solar panels, registered makeable loss of USD 250 million in the last quarter. The Chinese market leaders which emerged in 2005 became the competitors to companies in Germany, Spain and European Countries. The Chinese Solar industry profits gained sky heights in 2007- 2009 due to boom in the industry as United States and other major economies accounted for the maximum installations. The success of China in the solar energy appeared to be a threat to the communist countries and they thought it will curb Chinese demand of Oil and Gas in future as china will become depended on renewable source of energy.

Solar power was sought to be in hand with the fields such as aerospace and biotechnology and was declared the emerging industry, strategically transforming China from a low cost country to a technologically advanced country. Government provided inputs such as grants, low cost loans for those involved in manufacturing Solar panels. Bigger corporations were taking up solar panel manufacturing in 2011 when the major markets were affected by the financial crises. The competitors in the market reduced prices for their products leading into price war between themselves. The crises reduced subsidies and supplies reduced as sales shrinked. It is recorded that the price of solar cells has reduced by 73%. However, some of the manufacturers would be saved by serving the domestic markets of solar panels.