China's solar panel exporters are fearing tougher times as the European Union moves closer to imposing punitive duties on Chinese exports.
"The punitive duties are surely unavoidable and the key is the rate of the duties," said Zhang Bin, a senior sales executive of King-PV Technology Co Ltd, a subsidiary of Qunsheng Group in Zhejiang province.
"If the duties are between 18 percent and 20 percent, the impact won't be severe. But higher duties will deprive us of competitive edge over our European Union peers."
Following the United States' decision to impose anti-dumping tariffs of up to 249.96 percent and countervailing duties of up to 15.97 percent in November, the EU opened an investigation into alleged government subsidies for Chinese solar panel manufacturers.
The EU is due to issue a preliminary anti-dumping ruling in coming weeks and an anti-subsidy ruling in August.
The case is the EU's largest trade investigation involving $20 billion worth of Chinese exports of solar products in 2012 and could affect more than 400,000 Chinese workers.
The Chinese government has repeatedly urged a resolution through negotiations and called for prudent rulings of the investigations.
"The EU market is at its worst time," Zhang said. "The duties will help stabilize the EU market and dispel the unrest of EU customers. Some EU buyers still favor the Chinese products but they are not sure about the duty rates and there are too many uncertainties."
The EU bloc is the major market for the Zhejiang-based private company because of its huge size but overseas orders in the first quarter of the year decreased 50 percent from a year earlier, according to Zhang.
In addition, customers are worried after the European Commission ordered EU customs to register imports of Chinese-made solar panels starting from March 5, a move which could allow the EU to retrospectively impose anti-dumping tariffs should the commission rule against the Chinese manufacturers.
"We took part in the investigations and will get averaged duties, which we believe will range from 18 percent to 35 percent. This will surely narrow profit margins and the EU market will see a transition from extravagant profits to meager profits," Zhang said.
The Financial Times reported on Sunday, citing an unnamed source familiar with the matter, that EU Trade Commissioner Karel De Gucht is pushing to impose provisional duties of about 40 percent on solar panels from China after concluding that Chinese manufacturers benefited from government subsidies and sold the products below cost in the EU market.
"We will not give up the EU market because of huge investment in the past years and we can only adjust our product efficiency and prices," Zhang said. "The revenue from other businesses is supporting the company and will allow us to get through the hard times."
Ye Maoping, manager of the solar business department of China Electronics Shenzhen Co, added: "Owing to lower labor costs, Indian solar products are 10 percent to 15 percent cheaper than ours, further darkening the export prospects of Chinese solar products."