[SMM Analysis] PV Product Tax Rebates Imminent! Can International Capacity Truly Narrow the Gap with China's Supply Chain?

Previously, the State Taxation Administration of China issued an announcement on adjusting the export tax rebate policy for PV products, a move that has attracted widespread attention in global markets. Against this backdrop, can non-Chinese enterprises seize this opportunity to rapidly narrow the cost gap with the Chinese supply chain and reshape the competitive landscape during the window period when the theoretical export costs of Chinese products are expected to rise?

Currently, there is a significant price and cost difference between PV products (mainly PV modules) manufactured in China and those from other regions. With the official cancellation of the export tax rebate policy for Chinese PV products, whether this gap can be quickly narrowed has become a core issue of concern for the global PV industry. According to incomplete statistics from SMM, at present, there remains a notable price difference of at least 0.05 $/W between Chinese-exported modules and those exported from non-Chinese regions such as Southeast Asia and India. Based on three dimensions—global supply and demand status, industrial technology strategy, and product manufacturing quality—an in-depth analysis follows:

I. Mass Production Scale: Global Supply and Demand Status

In theory, expanding capacity in non-Chinese regions to achieve economies of scale is an effective way to reduce supply chain costs. However, under the current market environment, this approach lacks commercial feasibility. The global PV market is currently in a period of supply and demand adjustment, with existing capacity already sufficient to meet market demand. Without a sudden surge in end-use demand, simply increasing production at non-Chinese bases to lower unit costs not only defies basic business logic but also directly increases the risk of inventory accumulation.

Moreover, as the only country in the world with a complete PV industry chain, China's core competitive advantage lies in the cost benefits brought by industrial clustering. From upstream polysilicon and wafers to midstream solar cells and auxiliary materials, the high geographical concentration of upstream and downstream links significantly reduces intermediate logistics costs and inventory cycles, creating comprehensive cost advantages that are hard to replicate. In contrast, non-Chinese bases often face the problem of a dispersed supply chain, where the high costs associated with cross-border raw material allocation weaken their overall competitiveness. Additionally, labor and transportation costs cannot be overlooked. China boasts a large and technically mature workforce, along with highly developed logistics infrastructure, ensuring extremely high production yields and transportation efficiency; overseas manufacturing bases, however, still need time to accumulate in terms of labor skill proficiency and supply chain logistics support. This comprehensive barrier, formed by the synergy of the entire industry chain and the differences in factor costs, makes it difficult for them to compensate for cost disadvantages through simple capacity expansion in the short term. Therefore, without strong support from new orders, attempting to dilute fixed costs by increasing production to narrow the price difference, the marginal benefits would hardly cover the potential operational risks.

II. Technology Export Level: Core Technology Retention Strategy Maintains Competitive Advantage

Against a backdrop where economies of scale are difficult to exert significant effects, although technology synchronization is theoretically another pathway to cost reduction, its implementation faces objective limitations due to constraints related to the protection of core corporate competitiveness and global layout strategies. If core cost-reduction technologies or high-efficiency PV module production processes are simultaneously transferred to international manufacturing bases, it will weaken the pricing power of the Chinese domestic supply chain in the global market. The competitive advantage of the PV industry primarily stems from rapid technological iteration and precise process control. To safeguard the commercial returns on R&D investments and maintain product differentiation advantages, top-tier enterprises generally adopt a "technology gradient transfer" strategy. This means prioritizing the deployment of the latest cost-reduction processes and high-efficiency technologies (such as cutting-edge N-type iteration technologies) in Chinese domestic bases that have well-developed R&D support and responsive supply chains.

This strategy aims to ensure that new technologies are gradually promoted overseas only after their maturity and yield rates reach optimal levels, while also managing the risks associated with the diffusion of core intellectual property. Consequently, non-Chinese supply chains primarily adopt mature, standardized technologies that have been market-verified over a longer period, rather than the very latest generation of processes at the forefront of cost reduction and efficiency improvement. This commercially logical technological gradient objectively limits the possibility for overseas bases to achieve significant cost reductions in the short term through technological leaps.

III. Product Performance and Manufacturing Consistency Level: Objective Inter-Generational Differences Exist Between Regions

Although top-tier enterprises implement unified quality management systems across all global manufacturing bases, there are objective differences in specific power ratings and photoelectric conversion efficiencies among products from Chinese bases, international bases, and overseas PV module producers. First, performance differentiation arises from the iteration of production line equipment. Chinese production sites are the primary launch sites and hubs for the latest manufacturing technologies, with extremely high production line update frequencies, and their equipment precision and automation levels are at the industry's peak. In contrast, international manufacturing bases, constrained by investment return cycles and equipment import/export procedures, experience relatively slower production line upgrade speeds.

Taking the 210R form factor as an example, the power rating of conventional modules produced in current domestic Chinese bases has stabilized in the 650-660W range, with some ultra-high-power products reaching up to 670W. However, the average power of similar products from overseas manufacturing bases is mainly concentrated around 620W, or even lower.

This significant gap in power ratings directly reflects the inter-generational difference in manufacturing processes, resulting in the average output performance of international bases being generally lower than that of Chinese bases even when producing the same type of module. Secondly, the maturity of the supply chain also significantly affects product consistency. China boasts the most complete supply chain cluster globally, with stable auxiliary material supplies and uniform standards, effectively minimizing module encapsulation losses. In contrast, in Southeast Asia and other regions, some auxiliary materials rely on imports or require coordination with local suppliers, and minor fluctuations in the supply chain may result in a less concentrated distribution of module electrical performance, leading to a relatively lower proportion of high-power output. Additionally, enterprises tend to prioritize deploying the highest conversion efficiency, latest technology routes, and R&D resources for product capacity in China. International bases currently mainly handle the manufacturing of more mature, higher-yield mainstream products, resulting in non-Chinese-made products often lagging behind their Chinese counterparts in top-tier performance parameters.

IV. Conclusion

In summary, the current price difference between Chinese and non-Chinese supply chains is essentially the result of the global industrial division structure, competitive strategies, and generational gaps in product technology. From a cost perspective, the global supply and demand fundamentals do not support blind expansion at international manufacturing bases aimed solely at cost reduction. Technologically, the retention strategy for core cost-reduction and efficiency-improvement technologies will ensure that the Chinese supply chain maintains its cost advantages. In terms of product logic, the advantages in production line equipment and supply chain support at Chinese bases keep Chinese-made modules ahead in power and efficiency. Therefore, the cancellation of export tax rebates has not altered this fundamental industrial logic. The cost and technological gap between Chinese and non-Chinese supply chains is expected to remain unchanged in the short term, making it difficult to narrow rapidly.