Export Strategies For Solar Panels To India Market

At Shanghai Expo this year, solar lights, solar water heating, solar heating and solar electronic display are laid out. This term is the first time for solar industry at your fingertips of Expo, which show solar energy begin to appear in people’s lives both development and use of new energy, whether from technical or application perspective.

In recent years, India government attempts to encourage solar energy development, such as increasing subsidies for solar energy development projects, designating public facilities to purchase solar power and other measures.

Solar Flare is a solar panels producer which has a 27% market share in Australian market. It plans to export solar panels to India market after Shanghai Expo last month with an Indian trade official. In this paper, Indian market, the political and economic environments were researched. SWOT and PEST analysis were studied to export to India market. Competitors and competitions that Solar Flare faced were also analyzed. Corresponding recommendations were proposed at last.

Introduction

At Hanover Expo in 2000, the “solar economy” was brought forward. The Expo showed the most advanced solar energy in the world, such as photovoltaic power generation device, solar building and the largest solar yachts. Many visitors were impressed by a variety of solar cells in Aichi Expo in 2005. At Shanghai Expo this year, solar lights, solar water heating, solar heating and solar electronic display are laid out. This term is the first time for solar industry at your fingertips of Expo, which show solar energy begin to appear in people’s lives both development and use of new energy, whether from technical or application perspective.

In recent years, India government attempts to encourage solar energy development, such as increasing subsidies for solar energy development projects, designating public facilities to purchase solar power and other measures. It is reported that the goal of “National Solar Mission in 2008 is to make solar power capacity to reach 20,000 megawatt s by 2022(Jawaharlal Nehru National Solar Mission towards Building SOLAR INDIA, 2008, p.3), which could provide adequate power for 20 million families. Solar panels (solar power component) is the solar PV industry chain in the end product. It is the core part of the solar system and it is the main components of photovoltaic lighting and building integrated photovoltaic system. It has a broad market prospect. SOLAR FLARE is a producer of solar panels that has a 27%market share in the Australian solar panel market. India’s many policies and market conditions provide it extremely rare opportunities to enter Indian market.

The business problem

India is a very attractive market in the large investment environment. However, there are still many and many problems, especially for foreign investors. The problems are mainly low efficiency, official corruption, time-consuming approval, less skilled workers, low quality, intractable labor relations and so on. Marketing and the concept of market competition are fall behind due to long-term, lack of competition, backward policies, the low efficiency and lack of R & D BMW tried to enter India market and finally gave up in two years, McDonald’s insisted for four years and continuing loss. There are countless examples of failure.

Market policies in India

India is the second largest population country and one of the “four BRIC countries”. The economic has rapid development in recent years and demand of energy is also increasing. India develops new energy policy in 2005 to achieve energy independence by 2030(Jawaharlal Nehru National Solar Mission, 2008, p.1). Indian government announced on the solar cell production incentives, and they planned to meet 10% of its electricity needs by 2012(Jawaharlal Nehru National Solar Mission, 2008, p.12).

Besides, India’s FDI policy in many areas is to support foreign investment. The most obvious manifestation is the relevant provisions of the Ordinance of the Securities Regulatory Commission in India (SEBI). SEBI enacted foreign venture capital fund management, to allow foreign venture capital institutions and individual investors registering in the SEBI and enjoy related rights in 2000.( SEBI, p.135)

More than one billion of the world’s second largest population represents a huge market, which is the main reason to affect investors all over the world. The size of the middle-class population stands at 300 million and represents a growing consumer market¼ˆRachna Saxena, 2010,p.l¼‰. The importance of the middle class comes from the fact that it is growing at a faster pace than the overall population, so it will represent an increasingly larger market for companies and new challenges for policymakers (Bussolo, De Hoyos, Medvedev, van der Mensbrugghe,2007.). Market potential and huge middle class population are the focus that government has repeatedly stressed to attract foreign investment. These policies are very important to enter India market for SOLAR FLARE.

SWOT Analysis

Strengths

Development opportunities offered by the Expo

At the 2010 Shanghai Expo, solar lights, solar water heating, solar heating, solar electronic display are laid out. This term is the first time for the solar industry at your fingertips of Expo, which show solar energy begin to appear in people’s lives both development and use of new energy, whether from technical or application perspective. In India, hundreds of thousands of the poor need solar system to meet their household energy needs. Per capita energy consumption is lower in India, and 400 million people are less of electricity. All these provide SOLAR FLARE a good chance to enter India market.

Government continuing to cut tariffs and encouraging foreign investment

According to India’s economic and trade policies in 2005, the general tariff rate of products reduced 20% to 15%, and lowered rates of many products. It would speed foreign products into India. Besides, the government has adjusted joint venture between foreigners and Indian vendors, and gives foreign business greater cooperation to change the object of options. These new measures will help SOLAR FLARE enter India market.

Climate and environment

India’s energy industry experts believe that solar energy has huge potential in India, India has good sunshine and power generation will be relatively high. As a tropical country, India enjoys abundant light resources, which has become the unique conditions for the development of solar energy. Indian Kelinsile consulting firm showed potential of solar energy is expected to 100 000 MW installed capacity.

Opportunities for government support

In recent years, India government attempts to encourage solar energy development, such as increasing subsidies for solar energy development projects, designating public facilities to purchase solar power and other measures. Indian government regulations include a photovoltaic and solar thermal project to be 30% of new financial support or 5% of the low-interest loans.

It has meant that the execution of development initiatives is through an alliance between state, market and civil society thereby reinterpreting the boundaries between public and private sphere and between the state and the citizens (Sarah Josep, 2007 )

Weaknesses

Poor government efficiency

Party politics is not stable. Politics is not clear which results serious bureaucratic and administrative inefficiencies. Infrastructures, roads, ports, railways, communications are in slow growth. Business operations were stifled and restricted. Business hidden costs are high.

Enterprises are forced to share responsibility of Government

The hidden costs are so high, complex business tax are provisions, Red Envelope Culture and telephone, water, time-consuming applications are difficult for company registration and others.

The great gap with other countries leads to foreign investors away

Cultural differences, different business practices

In comparison, the Indians generally do not promise punctuality, they are focus on establishing business contacts and interpersonal relationships rather than efficiency. These are quite different with Western business. On the other hand, there is no national credit system of individuals or companies, foreign investors get formal investigation through the correspondent banks or credit company and could not get Comprehensive information¼Œe.g. the general bounce and close down companies are difficult to get.

Opportunities

Increasing price of solar cell

Research from Energy Trend said solar cell prices rise in the future due to demand growth and foreign subsidies reduced. The quote are continuing to rise in April and May, ant it is expected to rise 5% per month. While it is rose up to 3% in June. In the table 1, the trend of price increases can be seen (Energy Trend, 2010.3, p.1). It is a good opportunity to seize part of the middle class and win market share in India in the situation of increasing price

Indian’s attention to brand

There is a large gap between the rich and the poor in India. The rich are willing to pay expensive price to buy good products, which general products to different objects have different quality and different price. The foreign product information is limited, so consumers are receptive to advertising and branding, and pay more attention to brand. Solar Flare is Australia’s brand products, and has 27% market share in Australia. So it will surely attract Indians, especially the rich.

Threats

Many products are still a seller’s market

India’s many products are mostly sellers, causing the buyer in a weak situation. Consumer rights are not taken seriously like other advanced countries. The local producers would monopolize India market and increase barriers to entry.

Many competitors

In recent years, India government attempts to encourage solar energy development, such as increasing subsidies for solar energy development projects, designating public facilities to purchase solar power and other measures. So there are a lot of competitors to enter the Indian market for Solar Flare.

Several large power companies in India such as Tata Power and Reliance Power have also spotted on it. They said they plan to develop small-scale solar power plants. And foreign high-tech enterprises, such as Aston Field renewable resource company from New York also eager to invest in solar energy industry.

The advantages and disadvantages to export to India market can be seen clearly from Table 2 after SWOT Analysis

PEST Analysis

Political and legal forces

In recent years, India government attempts to encourage solar energy development, such as increasing subsidies for solar energy development projects, designating public facilities to purchase solar power and other measures. It is reported that the goal of “National Solar Mission in 2008 is to make solar power capacity to reach 20,000 megawatt s by 2022(Jawaharlal Nehru National Solar Mission towards Building SOLAR INDIA, 2008, p.3), which could provide adequate power for 20 million families. India’s FDI policy in many areas is to support foreign investment.

The most obvious manifestation is the relevant provisions of the Ordinance of the Securities Regulatory Commission in India (SEBI). SEBI enacted foreign venture capital fund management, to allow foreign venture capital institutions and individual investors registering in the SEBI and enjoy related rights in 2000.

Economic forces

The demand of China, India, Japan and other regions is expected to grow substantially, due to subsidy policy. Germany, Italy, Spain and other European countries demand will slow because of reducing the amount of impact of subsidies. Energy Trend estimates global market in 2011 installed capacity will 13.5GW, annual growth was 12.5%. It can be seen in table 3(Energy Trend, 2010.8, p.2/2)..And India’s market economy and controlling and molding the state towards its interests are varying degrees (Barbara Harriss White, 2003)

According to statistics Energy Trend, India solar market volume was only the installation of 5MW in 2009. After the policy of subsidies and support from 2011 to 0213(Jawaharlal Nehru National Solar Mission towards Building SOLAR INDIA, 2008, p.5), the Indian market will reach 1GW, which is expected to 20GW by 2022(Jawaharlal Nehru National Solar Mission Towards Building SOLAR INDIA, 2008, p.3). All make India the world’s most high-profile companies in emerging markets.

Social forces

The problems are mainly low efficiency, official corruption, time-consuming approval, Less skilled workers, low quality, intractable labor relations and so on. BMW tried to enter India market and finally gave up in two years, McDonald’s insisted for four years and continuing loss. There are countless examples of failure.

India’s rapid development, a huge open-door policy and young consumers are most attractive to foreign investors in recent years.

Technological forces

There is advanced solar energy technology in Australian. Australian scientists have developed the world’s most efficient solar cells. Scientists at the University of New South Wales announced that they successfully developed a composite material that can change 43% of solar energy into electrical energy. And this result also broke the previous record of 42.7%.

Despite the huge potential of solar energy in India, large-scale promotion of solar power still faces many obstacles. India Solar is lack of industrial base, new energy power generation is not just to see how much new capacity or investment, but consider how to achieve a virtuous cycle, thus producing efficiency, and eventually transported to the terminal. India is in the stage of industrialization, Power Facilities are poor. If new energy installed capacity can not run well, it will be waste of resources. Fast growth in India is characterized by high urbanizationrates and growing demand for skills (Maurizio Bussolo, Rafael E. De Hoyos, Denis Medvedev, and Dominique van der Mensbrugghe, 2008, p.1).

Environmental forces

India is seriously polluted, and the government clearly recognized that climate change and pollution will have serious impact on social and economic development. Solar system provides clean and renewable solar energy to reduce operating costs and greenhouse gases in the atmosphere, thus reduce pollution.

Recommendations and Conclusions

Recommendations

The export strategy is fully capable for large income and it is feasible. Therefore, the following several suggestions are put forward for export strategy.

Participation in various exhibitions

In this way, Solar Flare can promote their products, they can understand the Indian market, and the ultimate aim is able to know a lot of customers. For example, New Energy Exhibition in New Delhi is held in October 22 to 25, 2010. They can attend the event to improve their visibility (Current Fairs, p.1).

Price and patience

The most value of Indian businessmen is price. So, enough patience and serious attention are needed to deal with their inquiry. They like to bargain and reduce price. But Once the transaction is made, they would be come long-term customers. In addition, hundreds of millions of people are below the poverty line, so many products should be stressed the world’s lowest price in the Indian market.

Strengthen relationship with Indian Chamber of Commerce

Solar Flare could sell their products through the Chamber of Commerce and ask them to introduce clients. Because Indian Chamber of Commerce has great influence and they can help solve economic disputes and political disputes.

Build branding

Large foreign companies have more resources and power. They cooperate with local manufacturers. So they better cope with Indian government’s bureaucratic operation. Solar Flare can follow this practice to build brand and shape the product image, using advertisement. The long-standing practice can gain harvest if continuing.

Conclusions

There are various problems in the Indian market policy, government measures, social culture, efficiency from the above SWOT analysis and PEST analysis. That result in some difficulties to exports solar market in India. But it is still feasible to export solar panels to India for SOLAR FLARE. The first reason is incentives in economic policy, foreign investment policy, legal policy and financial policy. The second is advantages of solar energy production from natural environment and climate in India. The third is advantage of SOLAR FLARE to capture market share in India.

Four suggestions are put forwards for the Indian market problems in this article. It is hoped these can be able to occupy market in India and gain larger income.