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The expansion of Chaowei in the past two years has been really fast. The founder of China Battery Network, Yu Qingjiao, told 21st Century Network.

But in Yang Yuanling's view, the speed of output expansion is still not fast enough. Our goal is to become the world's largest battery manufacturer, and our leaders have been encouraging us to expand.

However, what companies such as Chaowei did not expect was that after the environmental storm, those lawless small companies did not withdraw from the industry, and underground factories remained rampant.

The resurgence of small workshops and the doubling of production by large companies have led to a more severe production surplus.

It is understood that because there is no need to pay taxes or spend money on environmental protection equipment, their production costs are 20% to 30% lower than those of regular manufacturers. Therefore, the gross profit of these small workshops is much higher than that of regular manufacturers.

On the one hand, legitimate companies need to invest a large amount of funds in research and development and equipment, and on the other hand, they also need to consider the financial and inventory pressures caused by large-scale expansion. Price wars seem to be the most effective means.

Although Chaowei achieved a double hundred increase in revenue and net profit in the first half of the year, some negative effects also began to emerge.

According to the financial report of the first half of 2012 of Chaowei Power, the company's Gross margin has begun to decline by 3%, while the asset ratio has reached the highest level in recent years.

Industry analysts believe that in the harsh industry environment, the expansion of Super Power will inevitably harm itself. From this perspective, the theory of a collapse is not unfounded.

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