Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Hanwha Q CELLS Korea submits to US trade pressure
Hanwha Q CELLS Korea CEO Cho Hyun-soo
By Park Jae-hyuk
Solar cell manufacturer forced to build plant in US
By Park Jae-hyuk
Hanwha Group's efforts to find substitutes for the U.S. solar energy market are apparently not effective enough to offset the Donald Trump administration's imposition of safeguard tariffs on imported solar panels.
Hanwha Q CELLS Korea, the solar cell manufacturing unit of Hanwha Group, said Wednesday it signed a memorandum of understanding with the Whitfield County government in Georgia to build a solar module manufacturing plant there.
The recent decision is in stark contrast to the remarks made earlier this year by the company's CEO.
“Business downsizing in the U.S. is inevitable,” Hanwha Q CELLS Korea CEO Cho Hyun-soo told reporters in January at the New Year's meeting among officials from energy companies, citing Washington's regulations on imported solar power products.
Back then, the chief executive was skeptical about the Korean government's appeal to the World Trade Organization (WTO) and building his company's factory in the U.S.
“The government is considering bringing the case to the WTO, but I'm not sure about its effectiveness,” he said. “Building our factory in the U.S. will take at least two years, so the factory may not have any benefit to us.”
Hanwha Q CELLS Korea aims to start building the new factory this year and begin production next year.
According to the company, the annual capacity of the factory will be 1.6 gigawatts ― the largest among solar module factories in the U.S.
“The county will give us benefits worth $30 million by offering land for free and reducing taxes,” a company official said. “With the local factory, we will overcome difficulties from the safeguard measure, as well as maintaining our presence in the U.S. market.”
Since the United States Trade Representative announced the decision to levy a 30 percent tariff on imported solar cells and modules in February, the solar cell maker has faced a deteriorating business outlook.
For the next four years, the U.S. government will impose tariffs on solar cells and modules imported from almost all over the world, except some products from several developing countries.
The rate will be 30 percent in the first year, and will go down by 5 percent every year thereafter.
Although Cho said his company's business networks in other countries can offset the U.S. exports, Hanwha Q CELLS Korea seems to be submitting to the U.S. threats due to its declining profitability.
The company posted 61.1 billion won ($56.4 million) in operating profit last year, down 40 percent year-on-year.
Despite Hanwha Group's sincere support, its credit rating is two notches lower than OCI, according to NICE Investors Service and Korea Ratings.
Hanwha Q CELLS and Hanwha Q CELLS Korea are two different companies and do not share their profits.
After acquiring a factory of Nasdaq-listed Hanwha Q CELLS in 2016, Hanwha Q CELLS Korea began focusing on solar panel business.