Suntech’s Wuxi workers strike suggests a looming decline for the once-dominant industry leader

According to online sources, on April 26th, an estimated 2,000 workers at Suntech Wuxi factory went on strike. Jiangsu Wuxi Suntech Solar Power Co., Ltd. allegedly decided to give employees at its Wuxi factory a long, unpaid “vacation” starting on May 1st due to a shortage in orders. Suntech’s decision caused a stir among its employees right after the announcement. Many believed that the company’s move was a lay-off in disguise, leading to a strike demanding proper compensation.

After the strike began, employees rallied in the factory holding slogans such as, “Say no to the [so-called] vacation. We need to survive.” The local police force was dispatched into the factory to de-escalate and prevent workers from moving the demonstration to public places. At one point, they clashed with striking workers. At 1 a.m. on April 27th, the protest gradually dissipated. On the 28th, some workers who wished to leave Suntech received a N+1 compensation (Note: N+1 compensation means a termination compensation of one month’s pay plus settlement of any outstanding wages, as stipulated in Article 40 of the Chinese Labor Contract Law).

The scene of the clash between workers and the local police, sourced from the internet

Suntech Power Holdings Co., Ltd. is an established Chinese solar panel manufacturer with an annual production capacity of 2,000 megawatts. According to the company’s website, Suntech has been in the field of crystalline silicon solar cells and modules production for over 20 years. The company’s product was sold in more than 100 countries and regions in the world. At its peak, Suntech had approximately 11,000 employees worldwide.

Suntech’s fortunes began to turn after peaking in 2008 due to market saturation for solar products and poor investments. In March 2013, the company defaulted on US$541 million in bonds, making it the first company in mainland China to default on its U.S. bond. Subsequently, Wuxi Suntech Electric Power Holdings Co., Ltd., Suntech’s main subsidiary, declared bankruptcy. The company was then delisted from the New York Stock Exchange and instead became an over-the-counter (OTC) security.

On March 18th, Suntech’s creditors jointly filed a bankruptcy and reorganization petition on the company to a local court. According to reports, as of the end of February, Suntech owed a total of around 7.1 billion RMB (around USD$980 million) to its creditors.

These are only part of Suntech’s woes. In recent years, the company’s management has undergone frequent changes. It has experienced three shifts of top executives in one year. In recent months the impact reached lower level employees, and waves of resignations followed. This included middle and senior management, technical and marketing personnel, and the heads of finance, product research and development team, as well as overseas sales and other departments. The company has also been riddled with lawsuits. All these issues cast a shadow on market confidence in the firm. 

Suppliers panicked following bad press. Jiangsu Leadmicro Nano Tech, a high-tech manufacturer, submitted a petition to court for Suntech to settle outstanding payments and liquidated damages. Wuxi Liangsheng Specialty Glass, a company best known for being a supplier to Suntech Power, also filed a suit over Suntech’s outstanding payments.

Jiangsu Leadmicro Nano Tech’s lawsuit against Suntech, sourced from the internet.

Asset freezes, lawsuits, problems with production capacity and order shortage, frequent staff changes, and management departures; the issues kept tumbling down. 

Suntech’s misfortunes are of course tied to its internal operational issues, but are potentially escalated by the increasingly hostile market environment. As U.S. – China relations continue to freeze, global investors have taken cautions and withdrawn from the Chinese market, leading to trouble in the Chinese economy. This is especially true as the solar panel industry has been flagged with major Uyghur forced labor risks by the U.S. government. With strong enforcement measures of the U.S.’s Uyghur Forced Labor Prevention Act (UFLPA), global buyers are on the fence. 

Suntech’s downturn trickling down to impact front-line manufacturing workers is not a unique case.  Amidst a slowdown in China’s manufacturing sector, many manufacturers have resorted to similar measures such as unpaid leaves and wage cuts to reduce company operating costs. 

Chinese netizens have mixed reactions to the Suntech strike. Some said that the strike will not result in any substantive impacts. Some claimed that it is the company’s freedom to implement personnel measures when it’s losing money. Some lamented that during the Republic of China era, workers could organize independent unions to resolve labor disputes. While that option is unavailable today, they can only find their own ways to protect their rights and interests.

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