CEO commits suicide, Chinese photovoltaic industry at its limit

Solar companies in China continue to pile on debt, which has now reached almost US$16 billion.
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Li Fei, the owner of Chengxing Solar Company in Jinhua, Zhejiang Province, committed suicide by jumping off a building, alarming the debt-ridden photovoltaic industry, reported First Financial Daily in Shanghai.

Li ended his life after Chengxing was unable to repay a 20 million yuan (US$3.15 million) loan taken by another photovoltaic company called Zhongxi, for which Chengxing was the guarantor.

The incident was a sign of the imminent collapse facing the Chinese photovoltaic industry, because of its lack of liquidity and mounting debts, noted First Financial Daily.

It had become common for cash-strapped companies to postpone their payments, with letters of credit often maturing 150-200 days after the delivery of goods, thereby hurting their suppliers' abilities to pay their suppliers, said First Financial Daily.

Most companies in the industry were burdened with high debts, according to the newspaper. For example, Suntech Energy reported a debt of US$2.26 billion in the first quarter of this year, the same as the last quarter of last year, while Trina Solar's debt grew 9.7% to US$1.13 billion.

The newspaper quoted US investment bank Maxim Group as warning that China's top ten photovoltaic companies had accumulated a combined debt of US$17.5 billion and the entire industry was teetering on the brink of collapse