Electrical Equipment / Components & Telecoms

Key points

1. On June 24, 2021, BIS included 4 Chinese photovoltaic companies and the Xinjiang Production and Construction Corps on the grounds of "forced labor" in the entity list, combined with the U.S. Customs temporary seizure order and the U.S. Department of Labor’s listing of "polysilicon" The list of products produced by child labor or forced labor has launched a combination of suppression of China's photovoltaic industry.

2. If an enterprise in the photovoltaic field encounters a violation of US export control or economic sanctions, its senior executives may also face legal risks of being included in the sanctions list by the United States or being investigated for civil or even criminal liability, and may also trigger outbound activities. Personal restriction risks.

3. The U.S. policy system is complex and has a short change cycle and is greatly affected by the fluctuations of the international political and economic situation. It is recommended that Chinese companies entrust professional teams in advance to conduct continuous and complete collection, tracking, and early warning of industry information, think tank research information, and U.S. policy trends. .

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U.S. policies on China's photovoltaic sector and the risks faced by Chinese companies

"Decarbonization" and the focus on the development of "renewable energy" have become the background of global industrial development trends. US President Biden has pushed for a 2.3 trillion infrastructure and energy plan, and China has also raised carbon neutrality and energy transformation to a national level. . As a major producer of photovoltaic modules, China has absolute scale advantages in the manufacturing of the entire industrial chain of silicon materials, wafers, cells and modules in the photovoltaic industry.

(1) Analysis of U.S. Policy: From the Trump Period to the Biden Period

During the Trump administration, the Federal Energy Regulatory Commission of the United States focused on the development of the traditional energy industry. President Biden announced the return of the United States to the Paris Agreement on his first day in office.

In December 2020, the American Solar Energy Industry Association (SEIA) called on companies operating in Xinjiang to relocate and re-adjust their supply chains.

From January 2021, mainstream Western media such as the "New York Times" and "Washington Post" have begun to guide the trend of public opinion on the "forced labor" of Chinese photovoltaic companies.

On June 24, 2021, BIS included 4 Chinese photovoltaic companies and the Xinjiang Production and Construction Corps on the grounds of "forced labor" in the entity list, combined with the U.S. Customs temporary seizure order and the U.S. Department of Labor’s listing of "polysilicon" as "child labor or The list of products produced by forced labor has thus launched a combination of suppression of China's photovoltaic industry.

(2) Sorting out potential risks in the photovoltaic industry

1. Risks of U.S. sanctions and controls caused by the industrial chain

The industrial chain of the photovoltaic industry is intertwined, and some upstream and downstream enterprises form a linkage relationship through mutual shareholding or contractual agreements, and work together to form a complete and stable industrial chain. Under the circumstances that the United States plans to conduct a broad attack on the entire photovoltaic industry chain, if it chooses any link in the industry chain as a breakthrough point, companies in each link in the industry chain may be included in the US entity list and other relevant restricted lists, resulting in Listed companies may face the risk of a sudden "shock" interruption in the supply chain when purchasing controlled items. Other upstream and downstream companies may adopt conservative strategies such as suspending transactions or suspending transactions based on the strict requirements of their own internal control systems or compliance systems.

2. Multi-sectoral and multi-country linkage sanctions

On July 1, 2020, the four U.S. agencies jointly issued the "Xinjiang Supply Chain Business Consulting Report" to signal to the outside world that Xinjiang's supply chain was cut off. In addition, the linkage effect also involves the United States and other entities including the European Union, the United Kingdom and Canada.

3. Credit risk

Once a photovoltaic company is included in the entity list or SDN list and other restricted lists, its credit information in the international market may be affected, and its investor confidence and open market credit rating may be affected, or even It may also indirectly affect the business development of related companies and the implementation of strategic planning.

4. Public opinion risk

Most of the information collection work of related companies by overseas think tanks or consulting agencies comes from public channels such as the Internet, including corporate annual reports disclosed by listed companies, corporate publicity reports, etc., and it does not rule out that related overseas think tanks or other institutions directly report to China Photovoltaic It is possible for companies in the field to send inquiry emails or interview requests to obtain information. In this special new era, how to comply with the regulations and appropriately respond to various queries and state their positions on the basis of comprehensive consideration of relevant laws and regulations and public opinion factors of Chinese and foreign news media is the biggest difficulty facing enterprises.

5. Legal liability of senior executives and personal restrictions on exiting the country

If a photovoltaic company encounters a violation of US export controls or economic sanctions, its senior executives may also face legal risks of being included in the sanctions list by the United States or being investigated for civil or even criminal liability, and may also trigger personal restrictions on outbound activities. Class risk.

The response of companies involved in areas of high concern in the United States

For all companies in China's photovoltaic industry chain, matters such as how to sort out their own industrial chain and adjust the upstream and downstream layout, how to limit the scope of internal and external information disclosure, and how to connect upstream and downstream companies need to be handled carefully. , And then control the compliance risks faced by the enterprise from the overall situation and formulate countermeasures to realize the controllable risks of the enterprise and maximize the benefits.

1. Corporate crisis management awareness-cautiously and appropriately speaking out and outputting information

In response to inquiries and interviews from overseas media and think tank professional institutions, if a company chooses not to comment or even directly ignores it, it is not ruled out that some media will use speculation or fragmentary evidence in follow-up reports to infinitely magnify or one-sidedly evaluate the company's relevant situation. If false information is provided, the relevant documents may become unfavorable evidence submitted to the U.S. government departments and courts in the future. From the perspective of corporate external information release, it is necessary to check the disclosure caliber and wording from multiple dimensions including company regular disclosure information, company external publicity information, domestic and foreign media interviews, and adaptation to the international information environment. "Under, correctly and appropriately respond and reply.

2. Enterprise information security management-collection and tracking of domestic and foreign policies, early warning

The U.S. policy system is complex with short change cycles and is greatly affected by fluctuations in the international political and economic situation. It is recommended that Chinese companies entrust professional teams in advance to continuously and improve the collection, tracking, and early warning of industry information, think tank research information, and U.S. policy trends. And based on this, adjust the business development strategy in a timely and flexible manner, rather than just passively respond.

3. The establishment of the company's internal information confidentiality system-secure network management and confidentiality system

While preventing the intrusion of external technology, companies should combine various business scenarios with informatization methods to strictly prevent the outflow of internal information, and establish information security based on the actual situation by combining various business scenarios with informatization methods. Protection system.

4. Construction of export control compliance system-supply chain security protection

In order to respond to the targeted suppression and sanctions from the US, companies in the photovoltaic field should establish a corresponding compliance system as soon as possible based on their own business models, strategic arrangements and other actual conditions, investigate and control the entire process of risk from imported items to product exports, and conduct self-inspection in a timely manner. , Unblock and clean up the upstream and downstream industrial chain, and refine the compliance management of each business link. From a market perspective, having a complete compliance system is a very bright plus point. It can help companies lay a solid foundation for compliance operations and establish a good corporate image, whether in the capital market or on the international stage. , To improve the external credit rating.