In 2001, Shi moved back to China, using $6 million in seed money from the Wuxi local government to start Suntech. At the time, Wuxi, with the blessing of the central government, was turning itself into a technology center, part of a broader nationwide effort to climb the manufacturing ladder. In addition to cash, it provided Suntech with land and tax benefits as well as cheap electricity.
Like other solar module manufacturers, Suntech took advantage of generous government subsidies in Germany and later in other countries to boost sales. In December 2005, Suntech went public, becoming the first private Chinese company listed on the New York Stock Exchange. Within four years, Shi was a billionaire. In 2011, Suntech, with sales of
$3 billion, was the world’s biggest maker of solar panels. And it set up an assembly facility in Arizona.
One business adviser recalls the charismatic Shi showing up for a meeting in a Bentley. Shi said he didn’t want to be ostentatious, so he left the Rolls-Royce at home, according to the account.
But Shi wasn’t the only one jumping into the solar business; it became a classic bubble. In China alone, there are hundreds of manufacturers. Most are low-cost and low-quality, but there are a handful of giants with prodigious capabilities, such as Yingli and Trina. China has about two-thirds of the world’s solar panel manufacturing capacity. China alone, theoretically, could supply all of the world’s solar demand and there would be no room for U.S., German, Japanese or Taiwanese companies. Suntech tried to distinguish itself with its Pluto technology, a manufacturing process that allowed the cells to convert sunlight into energy more efficiently. But other companies also are setting new records for efficiency.
“Ten years ago, it was Suntech that was really a first mover in building China’s solar industry, and Dr. Shi at the time was a visionary of sorts,” Molchanov says. “He helped create this low-cost manufacturing industry in China.” And, for a time, Suntech was successful, emerging from the 2009 slowdown.
Then, just as Suntech became the world’s largest solar panel manufacturer, the European debt crisis hit. Profit margins collapsed, and customers’ unpaid bills piled up. In June 2012, a puzzled Citigroup analyst noted in a report that as major countries such as Germany and Italy sharply reduced subsidies, Chinese manufacturers led by Suntech boosted capacity 30 percent, “only exacerbating the excess supply conditions.” The report said that “module prices are likely to remain below Suntech’s production costs for the foreseeable future.”