Panasonic has walked away from a planned partnership with China-based GS-Solar and threatened possible legal action after its Chinese partner failed to fulfill its commitments to the arrangement. The Japanese electronics giant will continue producing its modules in Japan and Malaysia while seeking other cooperation opportunities.

in May 2019, Panasonic announced plans to transfer its Malaysian solar manufacturing unit to Chinese heterojunction module provider GS-Solar (China) Company Ltd, and to separate out its solar R&D unit into a joint venture with its partner. However, the Japanese firm said in a recent statement, “Panasonic will exercise its right not to proceed with the agreement, due to GS-Solar’s failure to fulfill the requirement necessitated to launch by the deadline agreed to in the contract. Panasonic will take resolute measures, which do not rule out taking legal action against GS-Solar for a breach of contract.”

The company has stated that it had given GS-Solar extra time to meet its end of the deal, due to the Covid-19 crisis, but a second deadline had also been missed by the Chinese business. “Panasonic will look into every possible measure, including new business collaboration with other partners, to restore profitability in the solar business by the fiscal year ending March 2023, with more focus on the energy solution business, combining photovoltaic modules, [Home Energy Management System product] HEMS*1 and storage batteries,” added the company.

The group will continue Panasonic Energy Malaysia Sdn Bhd’s solar manufacturing operation in Malaysia, as well as the group’s Japanese factories in Nishikinohama, Fukushima and Shimane.

REGlobal’s Views: Panasonic has recently reported its financial results for quarter ended June 2020 wherein its Life Solutions division – which includes its solar business – registered a 30 per cent quarterly fall in sales to ¥325 billion ($3.08 billion). Its decision to walk away from the potential partnership to move its operations to China makes sense given the decline in demand as well as the ongoing global efforts to localise solar supply chain.