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In the face of the boom of the industry's going overseas, photovoltaic leader LONGi Green Energy (601012. SH) once again made its attitude clear: cautious overseas expansion. This is in contrast to many of its PV peers of comparable size.

According to the minutes of the investor exchange meeting disclosed recently, when asked about the layout of overseas production capacity, LONGi Green Energy said that when choosing to expand overseas, the company should not only consider many factors such as the local policy and legal environment, geographical location, economic basic conditions and market size, but also fully evaluate the potential opportunities and risks from a medium and long-term perspective, so the company maintains a cautious attitude towards overseas expansion at this stage.

The decline in domestic prices, the intensification of involution, and the setting of tariff barriers in overseas high-premium markets are accelerating the process of Chinese PV companies going overseas. Ten years ago, in response to the "double reversal" in Europe and the United States, the photovoltaic leader went to Southeast Asia to build factories, thus forming an overseas production capacity town. With the changes in the international situation, Chinese photovoltaic companies have become more and more diversified in the destinations of investment and factory construction, and have gradually begun to explore investment opportunities in Europe, America, the Middle East, Turkey, Africa, India and other regions.

The Middle East has been the most popular overseas destination in the past two years, and among the four manufacturers in the "first echelon" of global photovoltaic modules, LONGi Green Energy is an exception, and JinkoSolar (688223. SH), JA Solar (002459. SZ), Trina Solar (688599. SH) is promoting the establishment of factories in the Middle East.

For the construction of factories in the Middle East, LONGi Green Energy's enthusiasm has not been high.

In response to the market's concern about the expansion of production in the Middle East, the company previously responded that the challenges faced by the global photovoltaic industry have increased in recent years, and the decentralization of photovoltaic manufacturing capacity is the future development trend. The company has the opportunity to continue to pay attention to the layout of overseas production capacity, but overseas expansion needs to consider many factors, such as policy support, economic environment, business regulatory environment, infrastructure and logistics, production costs, etc., so the appropriate capacity construction area still needs to be further observed and evaluated.

LONGi has silicon ingot, wafer, cell and module production capacity in Malaysia and cell and module production capacity in Vietnam. However, due to the "tariff stick" of the United States waving the photovoltaic production capacity of the four Southeast Asian countries, most Chinese photovoltaic factories in Southeast Asia have reduced production to varying degrees since the middle of last year.

LONGi Green Energy has made it clear during the institutional survey that there is no plan to relocate Southeast Asia's PV capacity to other countries or regions, and the market demand in India and Canada and other regions will support the continued operation of Southeast Asian production capacity. In addition, considering the shortage of high-efficiency battery production capacity in the United States, it is expected that the battery production capacity in Southeast Asia will continue to enter the U.S. market.

In the U.S. market, LONGi's 5GW module joint venture plant will come on stream in the first quarter of 2024. A number of Chinese PV companies, including the four major module leaders, will start to build factories in the United States in 2023.

Regarding the development strategy of the U.S. market, Zhong Baoshen, chairman of LONGi Green Energy, said at the third quarter of last year's results briefing that the U.S. market is mainly driven by the IRR of the project. In terms of photovoltaic manufacturing, the United States has also given a lot of subsidies, while at the same time setting up some barriers in other areas. Therefore, the safest way is for companies to have production capacity in the United States, which will reduce the risk of restricting trade barriers, which is also the strategy that LONGi is currently adopting.

According to InfoLink, a third-party organization, by the end of 2024, the local cell production capacity in the United States is only about 7GW and the local module production capacity is planned to be about 56GW, and the overall cell production capacity is far from meeting the local module production capacity. In the short term, it is expected that US module makers will struggle to find sufficient sources of cell supply outside the four Southeast Asian countries, and cells from Indonesia, Laos, and India will still have opportunities to be exported to the US. If you want to accurately grasp the U.S. market, expanding production in the U.S. may be the safest supply model.

The minutes also disclosed LONGi's forecast for the market demand in China and Europe in 2025. The company believes that, on a neutral basis, it is expected that the new domestic PV capacity in 2025 will not fluctuate significantly on the basis of 2024. Considering that it will take time to solve the bottleneck of grid consumption, it is expected that the new installed capacity of PV in Europe will be relatively stable year-on-year in 2025.