②

The Chicken-And-Egg Dilemma

A leisurely stroll doesn't mean smooth success, nor do twists imply perpetual chaos. Like other industries, the PV sector has fallen into a cycle of internal competition before a new equilibrium is reached.

Liu Hanyuan recalled that by the end of last year, the overall PV industry still maintained an open and cooperative attitude of "you give me the modules, I give you the cells." However, after entering 2025, the thinking of some companies changed.

According to his original intention of entering the PV industry, Liu Hanyuan believes that PV companies, including Tongwei, should establish a cooperative model of division of labor and collaboration by opening up equity and working with upstream and downstream partners. Just like Apple, they should hand over production rights to professional foundries, focus on building a platform, creating an ecosystem, and ultimately becoming one of the world's most respected and profitable innovative companies.

TW Solar 5G intelligent manufacturing production workshop

From a literal perspective, "Tongwei" means "cooperation brings great power" in Chinese—this is also the essence that economics has been emphasizing since the Industrial Revolution. In fact, for a long time, under the leadership of Liu Hanyuan, who loves economics and respects market common sense, Tongwei has been operating in accordance with the doctrines of economics itself.

For example, from 2019 to 2020, Tongwei strategically invested in LONGi's monocrystalline silicon rod and slicing projects, while LONGi strategically invested in Tongwei's high-purity crystalline silicon projects. With equity as a bond, they achieved industrial chain division of labor, forming an industrial cooperation model where "you use my silicon material, I use your silicon wafer, and ultimately share profits together." In 2022 and 2023 alone, Tongwei shared over RMB 8 billion in net profits with its shareholding partners, including LONGi Green Energy and Trina Solar.

Unfortunately, the ideal is always more plump than the reality.

Around 2022, as major firms pursued full vertical integration, Tongwei realize that even if it was the global dual leader in silicon materials and cells, if it stuck to the upstream, it would eventually face the risk of the terminal market being monopolized by integrated giants and the loss of pricing power. At the same time, warnings about the silicon material price entering a downward cycle also appeared in the industry. To avoid a cliff-like drop in profits caused by the decline in silicon material prices, Tongwei believes that only by digesting production capacity through module terminals can it smooth out cyclical fluctuations.

Garden factory of Yongxiang Co., Ltd.

In the summer of 2022, Tongwei unveiled the prelude to its full-scale entry into the module market with a module talent recruitment announcement. It then launched an offensive in the market, successively winning module orders from CHN Energy and China Resources Power. Since then, Tongwei has also started its full-scale integrated layout.

Having once championed specialization, Tongwei has now decisively embraced an integrated approach to competition. The debate surrounding the merits of this strategic shift continues to this day. Liu Hanyuan also admitted in the interview that Tongwei’s entry into PV module manufacturing wasn't intended to poach competitors' market share. Rather, as integration became the industry norm, Tongwei felt compelled to participate in establishing a business moat.

Pursuing vertical integration may appear as a phased phenomenon when viewed over an extended timeline in the sector's development. However, the reality where ideals yield to survival imperatives is an unavoidable challenge for any enterprise. In this regard, Liu Hanyuan and Tongwei's spirit of "seeking truth from facts" is particularly valuable.

What exactly does this reality entail? Liu Hanyuan explained that in recent years, it has been believed that integration is the trend of the sector, so Tongwei has carried out extension to form a global supply chain with leading efficiency in scale cost, transaction cost and organizational cost in supporting coordination, and served and supported energy transition.

However, pursuing integration does not mean abandoning specialization. It is not difficult to see from its actions that Tongwei has been emphasizing specialized division of labor, advocating for effective division of labor and cooperation within the industry, and particularly cherishing and valuing specialized partners, so that customers and peer companies can give display to their strengths, have more choices, expand their expertise scope, effectively cooperate with others with expertise, and rationally and appropriately control the company development to create a business ecology featuring "choosing wisely between what to do and what to avoid, and returning good to kindness".

As early as the beginning of the 21st century, Liu Hanyuan studied for a DBA in Business Administration at the School of Economics of Peking University, and after systematically studying economic theories, he gained a deeper understanding and a more objective perspective of the real world.

Therefore, under the leadership of Liu Hanyuan, facing numerous temptations, Tongwei never blindly entered popular industries in the first 20 years, and in the field of agricultural feed, it persevered and became the world's number one. In the later stages of development, it did not blindly expand either. Many people only see Tongwei entering the module business, but they do not know that all of this is based on the fact that Tongwei's silicon materials and cell panels are already the world's dual leaders.

Tongwei's intelligent manufacturing production line for high-efficiency modules

It can be said that in the history of the development of Chinese and even global enterprises, there are not many, or even very few, companies that have achieved strategic focus and concentrated focus like Tongwei for 43 consecutive years.

During the interview, Liu Hanyuan repeatedly emphasized the development concepts of "do what is appropriate and discard what is inappropriate," strictly controlling boundaries, and focusing on core products. In the development of the industry, Tongwei has also been advocating for the construction of a benign industry ecosystem, differentiated competition, and collaborative development, and has been adhering to its own specialization, refinement, and strengthening under the background of division of labor, consolidating its own competitiveness, and promoting the healthy development of the industry.

In his view, competition should serve as an alarm clock against complacency, but excessive or disorderly competition becomes counterproductive. Restraining excessive competition is the experience of Europe, America, Japan, and South Korea. For China, the past three or four decades have been a culture of competition, with everyone working hard and diligently to do well and strengthen many industries. Yet its negative effects are also obvious. Once China enters an industry, that industry may become "scorched earth," and it is the common responsibility of practitioners to reasonably control excessive and disorderly competition.

"This may represent just a phase," Liu Hanyuan lamented. "We remain hopeful and move forward, hoping that everyone can sit down and talk together to jointly achieve effective capacity self-restraint and self-balance, and rationally maintain the basic balance between capacity release and market demand. If such a consensus can be formed, everyone can usher in a new dawn."

TW Solar's intelligent manufacturing production line

More remarkably, outcomes demonstrate that Liu Hanyuan has once again steered Tongwei to safe harbor.

In the eyes of outsiders, the so-called "counter-cyclical gamble" has never been a decision made on a whim. Liu Hanyuan revealed in the interview that outsiders believe that when the industry has opportunities, Tongwei always seems to suddenly stand up and seize the profit opportunities, which is actually the result of rationally controlling the pace and scale, avoiding and reducing risks, and it is what Tongwei has been doing for decades.

In fact, Tongwei's solid foundation in each segment has always maintained the company in a state of readiness, merely awaiting the opportune moment. In September 2013, while the "anti-dumping" measures in Europe and the United States still cast a shadow over the PV market, Tongwei Co., Ltd. acquired the nearly bankrupt LDK Solar Hi-Tech (Hefei) Co. Ltd. for RMB 870 million, thereby obtaining the world's largest single-crystal silicon cell factory at the time.

Looking back, in Liu Hanyuan's own words, perhaps "sometimes, the chicken-and-egg question is complementary. Whether you become strong first or large first, this may be a dialectical relationship."

This dialectical relationship is, in essence, a relationship of the spear and the shield. The ability to manage this relationship is precisely the concrete manifestation of entrepreneurial spirit in balancing ideals and survival within a dynamic market.