UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
20-F









(Mark
One)


 ̈
            REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
      ACT OF 1934


OR


x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934


FOR
      THE FISCAL YEAR ENDED DECEMBER 31,
2009


OR


 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934


FOR
      THE TRANSITION PERIOD FROM 
      TO


OR


 ̈
            SHELL
      COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934


DATE
      OF EVENT REQUIRING THIS SHELL COMPANY REPORT


FOR
      THE TRANSACTION PERIOD FORM 
      TO


COMMISSION
FILE NUMBER 001-33290






JA
Solar Holdings Co., Ltd.


(Exact
name of Registrant as specified in its charter)









The
Cayman Islands


(Jurisdiction
of Incorporation or Organization)


No.
36, Jiang Chang San Road


Zhabei,
Shanghai


The
People's Republic of China


(Address
of Principal Executive Offices)





Ms.
Anthea Chung


JA
Solar Holdings Co., Ltd.


No.
36, Jiang Chang San Road


Zhabei,
Shanghai


The
People's Republic of China


Tel:
+86-21-60955999


Fax:
+86-21-60955727


(Name,
Telephone, E-mail and/or Facsimile and Address of Company Contact
Person)












Securities
registered or to be registered pursuant to Section 12 (b) of the
Act.




Title
      of Each Class
            
            Name
      of Each Exchange
                On
      Which RegisteredAmerican
      depositary shares, each representing one ordinary share, par value
      US$0.0001 per share
            
            The
      NASDAQ Stock Market LLCOrdinary
      shares, par value US$0.0001 per share
            
            The
      NASDAQ Stock Market LLC**
      Not for trading but only in connection with the registration of American
      depositary shares




Securities
registered or to be registered pursuant to Section 12(g) of the
Act.




None


(Title
of Class)




Securities
for which there is a reporting obligation pursuant to Section 15(d) of
the Act.




None


(Title
of Class)




Indicate
the number of outstanding shares of each of the issuer's classes of capital or
common stock as of the close of the period covered by the annual
report.




Ordinary
      shares, par value US$0.0001 per share ...............
            169,018,420




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.




Yes  x    No   ̈




If
this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.




Yes   ̈    No  x




Note—Checking
the box above will not relieve any registrant required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.




Yes  x    No   ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).




Yes
 ̈ No  ̈









Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
Act.  (Check one):




Large
accelerated filer  x    Accelerated
filer   ̈    Non-accelerated
filer   ̈




Indicate
by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing (Check one):




U.S.
GAAP  x




International
Financial Reporting Standards as issued by the International Accounting
Standards Board   ̈




Other   ̈




Indicate
by check mark which financial statement item the Registrant has elected to
follow.




Item 17   ̈    Item 18  
x




If
this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).




Yes   ̈    No  x











Table
of Contents




PART
      I
                                                        
                                                        
                                                        2ITEM
      1.
                                                        IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
                                                        2ITEM
      2.
                                                        OFFER
      STATISTICS AND EXPECTED TIMETABLE
                                                        3ITEM
      3.
                                                        KEY
      INFORMATION
                                                        3A.
                                                        SELECTED FINANCIAL
      DATA
                                                        3B.
                                                        CAPITALIZATION AND
      INDEBTEDNESS
                                                        4C.
                                                        REASONS
      FOR THE OFFER AND USE OF PROCEEDS
                                                        4D.
                                                        RISK
      FACTORS
                                                        4ITEM
      4.
                                                        INFORMATION
      ON THE COMPANY
                                                        30A.
                                                        HISTORY
      AND DEVELOPMENT OF THE COMPANY
                                                        30B.
                                                        BUSINESS
      OVERVIEW
                                                        32C.
                                                        ORGANIZATIONAL
      STRUCTURE
                                                        40D.
                                                        PROPERTY,
      PLANTS AND EQUIPMENT
                                                        40ITEM
      4A.
                                                        
                                                        UNRESOLVED
      STAFF COMMENTS
                                                        41ITEM
      5.
                                                        
                                                        OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS
                                                        41A.
                                                        OPERATING
      RESULTS
                                                        41B.
                                                        LIQUIDITY
      AND CAPITAL RESOURCES
                                                        57C.
                                                        RESEARCH
      AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
                                                        60D.
                                                        TREND
      INFORMATION
                                                        61E.
                                                        OFF-BALANCE
      SHEET ARRANGEMENTS
                                                        61F.
                                                        TABULAR
      DISCLOSURE OF CONTRACTUAL OBLIGATIONS
                                                        61G.
                                                        SAFE
      HARBOR
                                                        63ITEM
      6.
                                                        
                                                        DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES
                                                        65A.
                                                        DIRECTORS
      AND SENIOR MANAGEMENT
                                                        65B.
                                                        COMPENSATION
                                                        68C.
                                                        BOARD
      PRACTICES
                                                        69D.
                                                        EMPLOYEES
                                                        72E.
                                                        SHARE
      OWNERSHIP
                                                        72ITEM
      7.
                                                        
                                                        MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
                                                        73A.
                                                        MAJOR
      SHAREHOLDERS
                                                        73B.
                                                        RELATED
      PARTY TRANSACTIONS
                                                        74C.
                                                        INTERESTS
      OF EXPERTS AND COUNSEL
                                                        74ITEM
      8.
                                                        
                                                        FINANCIAL
      INFORMATION
                                                        74A.
                                                        CONSOLIDATED
      STATEMENTS AND OTHER FINANCIAL INFORMATION
                                                        74B.
                                                        SIGNIFICANT
      CHANGES
                                                        76ITEM
      9.
                                                        
                                                        THE
      OFFER AND LISTING
                                                        76A.
                                                        OFFER
      AND LISTING DETAILS
                                                        76B.
                                                        PLAN
      OF DISTRIBUTION
                                                        77C.
                                                        MARKETS
                                                        77D.
                                                        SELLING
      SHAREHOLDERS
                                                        77E.
                                                        DILUTION
                                                        77F.
                                                        EXPENSES
      OF THE ISSUE
                                                        77ITEM
      10.
                                                        
                                                        ADDITIONAL
      INFORMATION
                                                        77A.
                                                        SHARE
      CAPITAL
                                                        77B.
                                                        MEMORANDUM
      AND ARTICLES OF ASSOCIATION
                                                        78C.
                                                        MATERIAL
      CONTRACTS
                                                        90D.
                                                        EXCHANGE
      CONTROLS
                                                        90E.
                                                        TAXATION
                                                        90F.
                                                        DIVIDENDS
      AND PAYING AGENTS
                                                        95G.
                                                        STATEMENT
      BY EXPERTS
                                                        95H.
                                                        DOCUMENTS
      ON DISPLAY
                                                        95
  i
  I.
                                                        SUBSIDIARY
      INFORMATION
                                                        95ITEM
      11.
                                                        
                                                        QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                                        95ITEM
      12.
                                                        
                                                        DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES
                                                        97A.
                                                        DEBT
      SECURITIES
                                                        97B.
                                                        WARRANTS
      AND RIGHTS
                                                        97C.
                                                        OTHER
      SECURITIES
                                                        97D.
                                                        AMERICAN
      DEPOSITARY SHARES
                                                        97PART
      II
                                                        
                                                        
                                                        98ITEM
      13.
                                                        DEFAULTS,
      DIVIDEND ARREARAGES AND DELINQUENCIES
                                                        98ITEM
      14.
                                                        MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS
                                                        98ITEM
      15.
                                                        CONTROLS
      AND PROCEDURES
                                                        99ITEM
      16.
                                                        RESERVED
                                                        100ITEM
      16A.
                                                        AUDIT
      COMMITTEE FINANCIAL EXPERT
                                                        100ITEM
      16B.
                                                        CODE
      OF ETHICS
                                                        100ITEM
      16C.
                                                        PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                                                        100ITEM
      16D.
                                                        EXEMPTIONS
      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
                                                        101ITEM
      16E.
                                                        PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
                                                        101ITEM
      16F.
                                                        CHANGE
      IN REGISTRANT'S CERTIFYING ACCOUNTANT
                                                        102ITEM
      16G.
                                                        CORPORATE
      GOVERNANCE
                                                        102PART
      III
                                                        
                                                        
                                                        102ITEM
      17.
                                                        FINANCIAL
      STATEMENTS
                                                        102ITEM
      18.
                                                        FINANCIAL
      STATEMENTS
                                                        103ITEM
      19.
                                                        EXHIBITS
                                                        104




ii




CERTAIN
TERMS AND CONVENTIONS






Unless
otherwise indicated, references in this annual report to:




·
            "ADS"
      are to American depositary shares, each representing one ordinary share of
      JA Solar, par value US$0.0001 per
share;




·
            "China"
      and the "PRC" are to the People's Republic of China, excluding, for the
      purposes of this annual report only, Taiwan and the special administrative
      regions of Hong Kong and Macau;




·
            "conversion
      efficiency" are to the ability of solar power products to convert sunlight
      into electricity; "conversion efficiency rate" is commonly used in the
      solar power industry to measure the percentage of light energy from the
      sun that is actually converted into
electricity;




·
            "cost
      per watt" and "price per watt" are to the cost and price of solar power
      products, respectively, relative to the number of watts of electricity a
      solar power product generates;




·
            "JA
      BVI" are to JA Development Co., Ltd., our directly wholly-owned
      subsidiary, a British Virgin Islands
company;




·
            "JA
      Fengxian" are to Shanghai JA Solar Technology Co., Ltd., our indirectly
      wholly-owned subsidiary in Shanghai,
China;




·
            "JA
      Hebei" are to JingAo Solar Co., Ltd., our predecessor and indirectly
      wholly-owned subsidiary in China;




·
            "JA
      Hong Kong" are to JA Solar Hong Kong Limited, our directly wholly-owned
      subsidiary in Hong Kong;




·
            "JA
      Solar," "we," "us," "the company," "our company" and "our" are to JA Solar
      Holdings Co., Ltd. and, unless otherwise indicated or as the context may
      otherwise require, its predecessor entities and its consolidated
      subsidiaries;




·
            "JA
      Solar Yangzhou R&D" are to Yangzhou JA Solar R&D Corporation
      Limited, our indirectly wholly-owned subsidiary in Jiangsu,
      China;




·
            "JA
      USA" are to JA Solar USA Inc., our indirectly wholly-owned subsidiary in
      California, U.S.A.;




·
            "JA
      Yangzhou" are to JA Solar Technology YangZhou Co., Ltd., our indirectly
      wholly-owned subsidiary in Jiangsu,
China;




·
            "JA
      Zhabei" are to Shanghai JA Solar PV Technology Co., Ltd., our indirectly
      wholly-owned subsidiary in Shanghai,
China;




·
            "JHY
      Semiconductor" are to Jing Hai Yang Semiconductor Materials (Donghai) Co.,
      Ltd., a wholly-owned subsidiary of JA Hong Kong, incorporated in Donghai,
      Jiangsu, China;




·
            "Jinglong
      BVI" are to Jinglong Group Co., Ltd., a British Virgin Islands company and
      our largest shareholder;




·
            "Jinglong
      Group" are to Jinglong Industry and Commerce Group Co., Ltd. and its
      consolidated subsidiaries.  Jinglong Group is controlled by the
      shareholders of Jinglong BVI;




·
            "Lehman
      Entities" are to include Lehman Brothers Holdings Inc. and its
      subsidiaries, including Lehman Brothers Inc., Lehman Brothers
      International (Europe), Lehman Brothers Treasury Co. BV and Lehman
      Brothers OTC Derivatives Inc.




·
            "rated
      manufacturing capacity" are to the total amount of solar power products
      that can be made by a manufacturing line per annum operating at its
      maximum possible rate and is measured in megawatts, or
  MW;




·
            "RMB"
      and "Renminbi" are to the legal currency of the
  PRC;




·
            "US$"
      and "U.S. dollars" are to the legal currency of the United
      States;




1




·
            "voltage"
      or "volts" are to the rating of the amount of electrical pressure that
      causes electricity to flow in the power line;
  and




·
            "watts"
      are to the measurement of total electrical power, where "kilowatts" or
      "KW" means one thousand watts and "megawatts" or "MW" means one million
      watts.




CURRENCIES
AND EXCHANGE RATES






Our
functional currency is Renminbi. The noon buying rate for U.S. dollars in effect
on December 31, 2009 in New York City for cable transfers of Renminbi as
certified for customs purposes by the Federal Reserve Bank of New York is at
US$1.00 = RMB 6.8259.  We make no representation that any amounts of
Renminbi or U.S. dollar could be or could have been converted into each other at
any particular rate or at all.  See "Item 3. Key Information — D. Risk
Factors — Risks Related to Doing Business in China — Fluctuation in the value of
the Renminbi versus that of other foreign currencies may have a material adverse
effect on our business and on your investment."  On April 20, 2010,
the noon buying rate was RMB 6.8253 to US$1.00.






The
following table sets forth, for the periods indicated, the noon buying rates for
U.S. dollars in New York City for cable transfers in Renminbi as certified for
customs purposes by the Federal Reserve Bank of New York:




Noon
      buying ratePeriod
                      
                      Period End
                      
                      
                      Average(1)
                      
                      
                      High
                      
                      
                      Low(RMB
      per US$1.00)2005
                      
                      
                      8.0702
                      
                      
                      
                      8.1826
                      
                      
                      
                      8.2765
                      
                      
                      
                      8.07022006
                      
                      
                      7.8041
                      
                      
                      
                      7.9579
                      
                      
                      
                      8.0702
                      
                      
                      
                      7.80412007
                      
                      
                      7.2946
                      
                      
                      
                      7.5806
                      
                      
                      
                      7.8127
                      
                      
                      
                      7.29462008
                      
                      
                      6.8225
                      
                      
                      
                      6.9193
                      
                      
                      
                      7.2946
                      
                      
                      
                      6.78002009
                      
                      
                      6.8259
                      
                      
                      
                      6.8295
                      
                      
                      
                      6.8470
                      
                      
                      
                      6.8176November
                      
                      
                      6.8265
                      
                      
                      
                      6.8271
                      
                      
                      
                      6.8300
                      
                      
                      
                      6.8255December
                      
                      
                      6.8259
                      
                      
                      
                      6.8275
                      
                      
                      
                      6.8299
                      
                      
                      
                      6.82442010January
                      
                      
                      6.8268
                      
                      
                      
                      6.8269
                      
                      
                      
                      6.8295
                      
                      
                      
                      6.8258February
                      
                      
                      6.8258
                      
                      
                      
                      6.8285
                      
                      
                      
                      6.8330
                      
                      
                      
                      6.8258March
                      
                      
                      6.8258
                      
                      
                      
                      6.8262
                      
                      
                      
                      6.8270
                      
                      
                      
                      6.8254April (until April
      20)
                      
                      
                      6.8253
                      
                      
                      
                      6.8253
                      
                      
                      
                      6.8263
                      
                      
                      
                      6.8229







Source for
2005-2008: Federal Reserve Bank of New York.




Source for
2009-2010: the H10 statistical release of the Federal Reserve
Board.




(1)
            Annual
      averages are calculated by averaging the noon buying rates on the last
      business day of each month.  Monthly averages are calculated
      using the average of the daily rates during the relevant
      period.




PART I




ITEM
      1.
              IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS
 
 Not
applicable.
  2
  
 ITEM
      2.
              OFFER
      STATISTICS AND EXPECTED TIMETABLE
 
 Not
applicable.
 
 ITEM
      3.
              KEY
      INFORMATION
 
 
 A.
              SELECTED
      FINANCIAL DATA
 
 You
should read the following selected consolidated financial and operating data in
conjunction with our audited consolidated financial statements and related notes
and "Item 5. Operating and Financial Review and Prospects" included elsewhere in
this annual report.
  The
selected consolidated financial data presented below as of December 31, 2008 and
2009 and for the years ended December 31, 2007, 2008 and 2009  have
been prepared in accordance with U.S. generally accepted accounting principles
("U.S. GAAP") and are derived from our audited consolidated financial statements
included elsewhere in this annual report, which have been audited by
PricewaterhouseCoopers Zhong Tian CPAs Limited Company, an independent
registered public accounting firm.  Our selected consolidated
statement of operations data for the period from inception (May 18, 2005) to
December 31, 2005 and for the year ended December 31, 2006 and selected
consolidated balance sheet as of December 31, 2005, 2006 and 2007 have been
derived from our audited consolidated financial statements that are not included
in this annual report on Form 20-F. Historical results are not necessarily
indicative of results to be expected in any future period.
  From
      inception (May 18, 2005) to December 31,
                                      
                                      
                                      Year
      ended December 31,2005
                                      
                                      
                                      2006
                                      
                                      
                                      2007
                                      
                                      
                                      2008
                                      
                                      
                                      2009(in
      millions, except for share and per share data)RMB
                                      
                                      
                                      RMB
                                      
                                      
                                      RMB
                                      
                                      
                                      RMB
                                      
                                      
                                      RMBConsolidated
      Statements of Operations Data:Net
      revenuesSolar
      products
                                      
                                      
                                      —
                                      
                                      
                                      
                                      565.3
                                      
                                      
                                      
                                      2,532.4
                                      
                                      
                                      
                                      4,794.0
                                      
                                      
                                      
                                      3,367.1Solar
      products to related parties
                                      
                                      
                                      —
                                      
                                      
                                      
                                      131.2
                                      
                                      
                                      
                                      62.2
                                      
                                      
                                      
                                      508.0
                                      
                                      
                                      
                                      5.2Solar
      cells processing
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      99.1
                                      
                                      
                                      
                                      156.3
                                      
                                      
                                      
                                      406.9Total
      revenues
                                      
                                      
                                      —
                                      
                                      
                                      
                                      696.5
                                      
                                      
                                      
                                      2,693.7
                                      
                                      
                                      
                                      5,458.3
                                      
                                      
                                      
                                      3,779.2Cost
      of revenuesSolar
      products
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (524.2
                                      )
                                      
                                      
                                      (2,066.6
                                      )
                                      
                                      
                                      (4,414.2
                                      )
                                      
                                      
                                      (3,079.0
                                      )Solar
      cells processing
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (26.2
                                      )
                                      
                                      
                                      (52.1
                                      )
                                      
                                      
                                      (220.3
                                      )Total
      cost of revenues
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (524.2
                                      )
                                      
                                      
                                      (2,092.8
                                      )
                                      
                                      
                                      (4,466.3
                                      )
                                      
                                      
                                      (3,299.3
                                      )Gross
      profit
                                      
                                      
                                      —
                                      
                                      
                                      
                                      172.3
                                      
                                      
                                      
                                      600.9
                                      
                                      
                                      
                                      992.0
                                      
                                      
                                      
                                      479.9Selling,
      general and administrative expenses
                                      
                                      
                                      (2.6
                                      )
                                      
                                      
                                      (39.7
                                      )
                                      
                                      
                                      (150.3
                                      )
                                      
                                      
                                      (271.5
                                      )
                                      
                                      
                                      (343.3
                                      )Research
      and development expenses
                                      
                                      
                                      (0.4
                                      )
                                      
                                      
                                      (1.3
                                      )
                                      
                                      
                                      (4.2
                                      )
                                      
                                      
                                      (28.5
                                      )
                                      
                                      
                                      (45.1
                                      )Total
      operating expenses
                                      
                                      
                                      (3.0
                                      )
                                      
                                      
                                      (41.0
                                      )
                                      
                                      
                                      (154.5
                                      )
                                      
                                      
                                      (300.0
                                      )
                                      
                                      
                                      (388.4
                                      )(Loss)/income
      from operations
                                      
                                      
                                      (3.0
                                      )
                                      
                                      
                                      131.3
                                      
                                      
                                      
                                      446.4
                                      
                                      
                                      
                                      692.0
                                      
                                      
                                      
                                      91.5Impairment
      on available-for-sale securities
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (686.3
                                      )
                                      
                                      
                                      —Change
      in fair value of derivatives
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      564.0
                                      
                                      
                                      
                                      (49.1
                                      )Convertible
      notes buy back gain
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      203.5
                                      
                                      
                                      
                                      22.9Interest
      expense
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (5.1
                                      )
                                      
                                      
                                      (6.6
                                      )
                                      
                                      
                                      (160.5
                                      )
                                      
                                      
                                      (213.6
                                      )Interest
      income
                                      
                                      
                                      0.04
                                      
                                      
                                      
                                      0.8
                                      
                                      
                                      
                                      62.6
                                      
                                      
                                      
                                      42.6
                                      
                                      
                                      
                                      12.0Foreign
      exchange gain/(loss)
                                      
                                      
                                      (0.1
                                      )
                                      
                                      
                                      1.3
                                      
                                      
                                      
                                      (112.8
                                      )
                                      
                                      
                                      (127.3
                                      )
                                      
                                      
                                      10.1Investment
      loss
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (28.6
                                      )
                                      
                                      
                                      (2.3
                                      )Other
      income
                                      
                                      
                                      —
                                      
                                      
                                      
                                      0.1
                                      
                                      
                                      
                                      5.2
                                      
                                      
                                      
                                      3.6
                                      
                                      
                                      
                                      7.8Income/
      (loss) before income taxes
                                      
                                      
                                      (3.1
                                      )
                                      
                                      
                                      128.4
                                      
                                      
                                      
                                      394.8
                                      
                                      
                                      
                                      503.0
                                      
                                      
                                      
                                      (120.7
                                      )Income
      tax benefit/ (expense)
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      5.6
                                      
                                      
                                      
                                      (23.9
                                      )
                                      
                                      
                                      (8.0
                                      )Net
      income/ (loss)
                                      
                                      
                                      (3.1
                                      )
                                      
                                      
                                      128.4
                                      
                                      
                                      
                                      400.4
                                      
                                      
                                      
                                      479.1
                                      
                                      
                                      
                                      (128.7
                                      )Preferred
      shares accretion
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (1.6
                                      )
                                      
                                      
                                      (0.5
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —Preferred
      shares beneficial conversion charge
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (34.7
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —Allocation
      of net income to participating preferred shareholders
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (5.7
                                      )
                                      
                                      
                                      (1.7
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      —Net
      income/ (loss) available to ordinary shareholders.
                                      
                                      
                                      (3.1
                                      )
                                      
                                      
                                      86.4
                                      
                                      
                                      
                                      398.2
                                      
                                      
                                      
                                      479.1
                                      
                                      
                                      
                                      (128.7
                                      )Net
      income/ (loss) per share:Basic
                                      
                                      
                                      (0.04
                                      )
                                      
                                      
                                      1.08
                                      
                                      
                                      
                                      2.96
                                      
                                      
                                      
                                      3.06
                                      
                                      
                                      
                                      (0.80
                                      )Diluted
                                      
                                      
                                      (0.04
                                      )
                                      
                                      
                                      1.08
                                      
                                      
                                      
                                      2.93
                                      
                                      
                                      
                                      (2.31
                                      )
                                      
                                      
                                      (0.80
                                      )Weighted
      average number of shares outstanding:Basic
                                      
                                      
                                      80,000,000
                                      
                                      
                                      
                                      80,000,000
                                      
                                      
                                      
                                      134,525,226
                                      
                                      
                                      
                                      156,380,060
                                      
                                      
                                      
                                      161,643,312Diluted.
                                      
                                      
                                      80,000,000
                                      
                                      
                                      
                                      80,166,178
                                      
                                      
                                      
                                      136,721,772
                                      
                                      
                                      
                                      168,785,243
                                      
                                      
                                      
                                      161,643,312Consolidated
      Statements of Cash Flows Data:Cash
      flows(used in)or provided byOperating
      activities
                                      
                                      
                                      (1.6
                                      )
                                      
                                      
                                      (61.8
                                      )
                                      
                                      
                                      (1,146.5
                                      )
                                      
                                      
                                      (1,289.2
                                      )
                                      
                                      
                                      1,129.1Investing
      activities
                                      
                                      
                                      (38.0
                                      )
                                      
                                      
                                      (107.6
                                      )
                                      
                                      
                                      (1,641.6
                                      )
                                      
                                      
                                      (419.4
                                      )
                                      
                                      
                                      (557.2
                                      )Financing
      activities
                                      
                                      
                                      50.7
                                      
                                      
                                      
                                      254.8
                                      
                                      
                                      
                                      3,519.6
                                      
                                      
                                      
                                      2,610.3
                                      
                                      
                                      
                                      (242.8
                                      )Effect
      of exchange rate changes on cash and cash equivalents
                                      
                                      
                                      (0.1
                                      )
                                      
                                      
                                      (0.6
                                      )
                                      
                                      
                                      (91.3
                                      )
                                      
                                      
                                      (94.9
                                      )
                                      
                                      
                                      (4.8
                                      )
 
 3
 
 As of December 31,2005
                                                          
                                                          
                                                          2006
                                                          
                                                          
                                                          2007
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          2009(in
      millions, except for share and per share data)RMB
                                                          
                                                          
                                                          RMB
                                                          
                                                          
                                                          RMBConsolidated
      Balance Sheet Data:Cash
      and cash equivalents
                                                          
                                                          
                                                          11.0
                                                          
                                                          
                                                          
                                                          95.8
                                                          
                                                          
                                                          
                                                          736.0
                                                          
                                                          
                                                          
                                                          1,542.8
                                                          
                                                          
                                                          
                                                          1,867.2Restricted
      cash
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          409.0
                                                          
                                                          
                                                          
                                                          33.0
                                                          
                                                          
                                                          
                                                          43.6Short-term
      investments
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          803.1
                                                          
                                                          
                                                          
                                                          421.9
                                                          
                                                          
                                                          
                                                          —Account
      receivable from third party customers, net
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          47.7
                                                          
                                                          
                                                          
                                                          28.9
                                                          
                                                          
                                                          
                                                          332.0
                                                          
                                                          
                                                          
                                                          119.8Account
      receivable from related party customers, net
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          24.7
                                                          
                                                          
                                                          
                                                          23.0
                                                          
                                                          
                                                          
                                                          339.5Inventories,
      net
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          154.7
                                                          
                                                          
                                                          
                                                          157.3
                                                          
                                                          
                                                          
                                                          592.0
                                                          
                                                          
                                                          
                                                          641.1Advance
      to related party suppliers, net
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          39.8
                                                          
                                                          
                                                          
                                                          389.9
                                                          
                                                          
                                                          
                                                          416.0
                                                          
                                                          
                                                          
                                                          50.9Advance
      to third party suppliers, net
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          1.6
                                                          
                                                          
                                                          
                                                          898.7
                                                          
                                                          
                                                          
                                                          264.5
                                                          
                                                          
                                                          
                                                          372.4Other
      current assets
                                                          
                                                          
                                                          0.4
                                                          
                                                          
                                                          
                                                          6.7
                                                          
                                                          
                                                          
                                                          42.3
                                                          
                                                          
                                                          
                                                          191.1
                                                          
                                                          
                                                          
                                                          202.4Deferred
      tax assets
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          1.2
                                                          
                                                          
                                                          
                                                          14.1
                                                          
                                                          
                                                          
                                                          24.4Total
      current assets
                                                          
                                                          
                                                          11.4
                                                          
                                                          
                                                          
                                                          346.3
                                                          
                                                          
                                                          
                                                          3,491.1
                                                          
                                                          
                                                          
                                                          3,830.4
                                                          
                                                          
                                                          
                                                          3,661.3Property
      and equipment, net
                                                          
                                                          
                                                          39.4
                                                          
                                                          
                                                          
                                                          139.4
                                                          
                                                          
                                                          
                                                          532.0
                                                          
                                                          
                                                          
                                                          1,369.8
                                                          
                                                          
                                                          
                                                          1,724.4Intangible
      asset, net
                                                          
                                                          
                                                          8.3
                                                          
                                                          
                                                          
                                                          7.2
                                                          
                                                          
                                                          
                                                          6.7
                                                          
                                                          
                                                          
                                                          11.8
                                                          
                                                          
                                                          
                                                          12.0Deferred
      tax assets
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          4.4
                                                          
                                                          
                                                          
                                                          14.4
                                                          
                                                          
                                                          
                                                          25.8Advances
      to suppliers, net
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          536.3
                                                          
                                                          
                                                          
                                                          1,944.9
                                                          
                                                          
                                                          
                                                          1,835.4Prepayment
      for land use right
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          44.4
                                                          
                                                          
                                                          
                                                          49.5Derivative
      assets
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          4.5
                                                          
                                                          
                                                          
                                                          10.5Deferred
      issuance cost
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          59.0
                                                          
                                                          
                                                          
                                                          36.1Total
      assets
                                                          
                                                          
                                                          59.1
                                                          
                                                          
                                                          
                                                          492.9
                                                          
                                                          
                                                          
                                                          4,570.5
                                                          
                                                          
                                                          
                                                          7,279.2
                                                          
                                                          
                                                          
                                                          7,355.0Short-term
      bank borrowings
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          150.0
                                                          
                                                          
                                                          
                                                          200.0
                                                          
                                                          
                                                          
                                                          490.0
                                                          
                                                          
                                                          
                                                          10.0Total
      current liabilities
                                                          
                                                          
                                                          2.5
                                                          
                                                          
                                                          
                                                          187.1
                                                          
                                                          
                                                          
                                                          433.1
                                                          
                                                          
                                                          
                                                          870.8
                                                          
                                                          
                                                          
                                                          629.2Long-term
      bank borrowings
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          680.0Convertible
      notes
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          1,532.6
                                                          
                                                          
                                                          
                                                          1,171.4Total
      liabilities
                                                          
                                                          
                                                          2.5
                                                          
                                                          
                                                          
                                                          187.1
                                                          
                                                          
                                                          
                                                          434.0
                                                          
                                                          
                                                          
                                                          2,524.3
                                                          
                                                          
                                                          
                                                          2,639.6Preferred
      shares
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          110.0
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —Total
      shareholders’ equity
                                                          
                                                          
                                                          56.6
                                                          
                                                          
                                                          
                                                          195.8
                                                          
                                                          
                                                          
                                                          4,136.5
                                                          
                                                          
                                                          
                                                          4,754.9
                                                          
                                                          
                                                          
                                                          4,715.4
 
 B.
              CAPITALIZATION
      AND INDEBTEDNESS
 
 Not
applicable.
 
 C.
              REASONS
      FOR THE OFFER AND USE OF PROCEEDS
 
 Not
applicable.
 
 D.
              RISK
      FACTORS
 
 Our
operations and financial results are subject to various risks and uncertainties,
including risks related to our supply chain, sales channels, and business
including availability of project financing, liquidity, operations, technology
and intellectual property, our debt and equity securities and doing business in
China. Although we believe that we have identified and discussed below the key
risk factors affecting our business, there may be additional risks and
uncertainties that are not presently known or that are not currently believed to
be significant that may also adversely affect our business, financial condition,
results of operations, cash flows, and trading price of our ADSs as well as our
convertible notes.
  4
  Risks
Related to Our Customers
  The
increase in the global supply of solar cells and modules, and increasing
competition, may cause substantial downward pressure on the prices of such
products, resulting in lower revenues and earnings.
  Global
solar cells and modules production materially increased in previous years, and
is expected to continue to increase. Many competitors or potential competitors,
particularly in China, continue to expand their production creating a potential
oversupply of solar cells and modules in key markets. Increases in production
and industry competition have resulted, and will continue to result, in downward
pressure on the price of solar cells and modules, including our products. Such
price reductions could continue to have a negative impact on our revenue and
earnings.
  The
reduction or elimination of government subsidies and economic incentives or
change in government policies may have a material adverse effect on our business
and prospects.
  Demand
for our products depends substantially on government incentives aimed to promote
greater use of solar power.  In many countries in which we are
currently, or intend to become, active, the solar power markets, would not be
commercially viable without government incentives.  This is because
the cost of generating electricity from solar power currently exceeds, and we
believe will continue to exceed for the foreseeable future, the costs of
generating electricity from conventional or non-solar renewable energy
sources.
  The
scope of the government incentives for solar power depends, to a large extent,
on political and policy developments relating to environmental concerns in a
given country, which could lead to a significant reduction in or a
discontinuation of the support for renewable energies in such
country.  Federal, state and local governmental bodies in many of our
key markets, most notably Germany, Italy, Spain, the United States, France,
South Korea, Taiwan, India, Japan and China have provided subsidies and economic
incentives in the form of rebates, tax credits and other incentives to end
users, distributors, system integrators and manufacturers of solar power
products to promote the use of solar energy in on-grid applications and to
reduce dependency on other forms of energy.  Policy shifts could
reduce or eliminate these government economic incentives
altogether.  For example, the rapid rises of the German and Spanish
markets were largely due to the government policies of those countries that set
feed-in tariff terms at attractive rates.  However, in
September 2008, the Spanish government introduced a cap of 500 MW for the
feed-in tariff in 2009, which has resulted in limiting demand in the
grid-connected market in Spain.  In 2009, the German government
reduced solar feed-in tariffs by 9%.  In January 2010, Germany
proposed a further reduction in solar feed-in tariffs by up to 16% for rooftop
systems and an estimated 15% for ground-based systems, which may result in a
significant fall in the price of and demand for ourproducts.  We
believe that in the time of uncertainty of political and policy developments,
competition among solar manufacturers could become more
fierce.  Electric utility companies that have significant political
lobbying powers may also seek changes in the relevant legislation in their
markets that may adversely affect the development and commercial acceptance of
solar energy.  A significant reduction in the scope or discontinuation
of government incentive programs, especially those in our target markets, could
cause demand for our products and our revenues to decline, and have a material
adverse effect on our business, financial condition, results of operations and
prospects.
  The
execution of our growth strategy is dependent upon the continued availability of
financing to our customers as well as third-party financing arrangements for the
end-user of our products, and is affected by general economic
conditions.
  Given
the general economy, particularly the tightening of the credit markets, we have
extended credit to many new and existing customers or provided them with
improved credit terms, including increasing credit limits and extending the time
period before payments are due, ultimately increasing our exposure to credit
risk on our account receivable.  We recorded our provision for
doubtful accounts of RMB nil in 2007, to RMB 24.7 million  in 2008 and
RMB 41.1 million in 2009.  The failure of any of our new or existing
customers to meet their payment obligations under the credit terms granted would
materially and adversely affect our financial position, liquidity and results of
operations.
  5
  Further,
our products are a component of solar systems which are used in both on-grid
applications and off-grid applications.  Government agencies and the
private sector have, from time to time, provided financing on preferential terms
to promote the use of solar energy in both on-grid and off-grid
applications.  We believe that the availability and cost of such
financing programs could have a significant effect on the level of sales of
solar power products and the availability of financing on favorable terms, or at
all, may be limited.  If existing financing programs for on-grid and
off-grid applications are eliminated or if financing in general become
inaccessible or inadequate, the growth of the market for on-grid and off-grid
applications may be materially and adversely affected, which could cause our
sales of solar cells to decline.
  Due to
the general reduction in available credit to would-be borrowers and the poor
state of economies worldwide, customers may be unable or unwilling to finance
the cost of our products, or the parties that have historically provided this
financing may cease to do so, or only do so on terms that are substantially less
favorable for us or our customers, any of which could materially and adversely
affect our revenue and growth in all segments of our business. If economic
recovery continues to be slow in the United States or elsewhere, we may
experience decreases in the demand for our solar power products, which may harm
our operating results. In addition, a rise in interest rates would likely
increase the end users of our products cost of financing and could reduce their
profits and expected returns on investment in our products. Similarly, the
general reduction in available credit to would-be borrowers, the continued poor
state of economies worldwide, and the condition of housing markets worldwide,
could delay or reduce our sales of products to our customers. Collecting payment
from customers facing liquidity challenges may also be
difficult.
  We cannot
assure you when a full economic recovery may occur, or even when an economic
recovery does occur, that demand for our products and related services will
increase.  A protracted disruption in the ability of our significant
customers or downstream players to access sources of liquidity could cause
serious disruptions to or an overall deterioration in their businesses, which
could lead to a significant reduction in their future orders for our products
and the inability or failure on their part to meet their payment obligations to
us, any of which could have a material adverse effect on our business, financial
condition, results of operations and prospects.
  We
currently sell a significant portion of our solar cell products to a limited
number of customers.  Our dependence on these customers may cause
significant fluctuations or declines in our revenues.
  Even
though we expect our customer base to increase and our revenue streams to
further diversify among geographies including Europe and the United States, a
substantial portion of our net revenues could continue to depend on sales to a
limited number of China customers and the loss of sales to or inability to
collect from these customers would have a significant negative impact on our
business. We currently sell a substantial portion of our products to module
manufacturers based in China.  For the year ended December 31, 2009,
approximately 55.5% of our total revenues, were derived from sales of our solar
cell products to our top ten customers.  We anticipate that our
dependence on a limited number of customers will continue for the foreseeable
future.  Consequently, any one of the following events may cause
material fluctuations or declines in our revenues and have a material adverse
effect on our results of operations:
  ·
                reduction,
      delay or cancellation of orders from one or more of our significant
      customers;
 ·
                selection
      of our competitor's products by one or more of our significant
      customers;
 ·
                loss
      of one or more of our significant customers and our failure to identify
      additional or replacement customers; and
 ·
              Failure
      of any of our significant customers to make timely payment for our
      products.
  6
  We
are in the process of further penetrating the market in China and exploring
opportunities in other markets.  In light of our efforts to grow, we
may face risks associated with the marketing, distribution and sale of our
products domestically and internationally, and if we are unable to effectively
manage these risks, they could impair our ability to expand our business
overall.
  Our
revenue from customers in China was approximately 76.3% and 73.8% of our overall
revenues in 2008 and 2009, respectively.  The stability and viability
of any existing, new or potential markets are subject to many uncertainties and
may expose us to a number of risks, including:
  ·
                fluctuations
      in currency exchange rates;
 ·
                difficulty
      in engaging and retaining distributors who are knowledgeable about, and
      can function effectively in, overseas markets;
 ·
                increased
      costs associated with maintaining marketing efforts in various
      countries;
 ·
                difficulty
      and cost relating to compliance with the different commercial and legal
      requirements of the overseas markets in which we offer our
      products;
 ·
                inability
      to obtain, maintain or enforce intellectual property rights;
      and
 ·
                trade
      barriers such as export requirements, tariffs, taxes and other
      restrictions and expenses, which could increase the prices of our products
      and make us less competitive in some countries.
 If
we are unable to effectively manage these risks, we may not be able to
successfully expand our business and grow our businesses as we have
planned.
  We
generally do not have long-term agreements with our customers and accordingly
could lose customers without warning, which could cause our operating results to
fluctuate.
  Our
solar cell products are generally not sold pursuant to long-term agreements with
customers, but instead are sold on a purchase order basis.  Although
we believe that cancellations on our purchase orders to date have been
insignificant, our customers may cancel or reschedule purchase orders with us on
relatively short notice. Cancellations or rescheduling of customer orders could
result in the delay or loss of anticipated sales without allowing us sufficient
time to reduce, or delay the incurrence of, our corresponding inventory and
operating expenses. In addition, changes in forecasts or the timing of orders
from these or other customers expose us to the risks of inventory shortages or
excess inventory. These circumstances, in addition to variations in average
selling prices, and the fact that our supply agreements are generally long-term
in nature and many of our other operating costs are fixed, in turn could cause
our operating results to fluctuate and may result in a material adverse effect
in our business.
  We
compete in a highly competitive market and many of our competitors have
resources greater than ours.
  The
solar power market is intensely competitive and rapidly evolving.  We
expect to face increased competition, which may result in price reductions,
reduced margins or loss of market share.  Some of our competitors have
become vertically integrated, from upstream silicon wafer manufacturing to solar
power system integration.  We expect to compete with future entrants
to the photovoltaic market that offer new technological
solutions.  Furthermore, many of our competitors are developing or
currently producing products based on new photovoltaic technologies, including
thin film, ribbon, sheet and nano technologies, which they believe will
ultimately cost the same as or less than crystalline silicon technologies used
by us.  In addition, the entire photovoltaic industry also faces
competition from conventional and non-solar renewable energy
technologies.  Due to the relatively high manufacturing costs compared
to most other energy sources, solar energy is generally not competitive without
government incentive programs.
  7
  Many
of our existing and potential competitors have substantially greater financial,
technical, manufacturing and other resources than we do.  Our
competitors' greater size and longer operating history in some cases provide
them with a competitive advantage with respect to manufacturing costs because of
their economies of scale and their ability to purchase raw materials at lower
prices.  Many of our competitors also have greater brand name
recognition, more established distribution networks and larger customer
bases.  In addition, many of our competitors have well-established
relationships with our existing and potential customers and have extensive
knowledge of our target markets.  As a result, they may be able to
devote greater resources to the research, development, promotion and sale of
their products and respond more quickly to evolving industry standards and
changes in market conditions than we can.  Our failure to adapt to
changing market conditions and to compete successfully with existing or new
competitors may materially and adversely affect our financial condition and
results of operations.
  Problems
with product quality or product performance may cause us to incur warranty
expenses, damage our market reputation and prevent us from achieving increased
sales and market share, or result in a decrease in our revenues and market
share.
  While
we employ quality assurance procedures at key manufacturing stages to identify
and resolve quality issues, our solar cells may contain defects that are not
detected until after they are shipped or installed.  These defects
could cause us to incur significant re-engineering costs, divert the attention
of our engineering personnel from product development efforts, lead to returns
of, or requests to return our products and significantly affect our customer
relations and business reputation.  If we deliver solar cells with
errors or defects, or if there is a perception that our solar cells contain
errors or defects, our credibility and the market acceptance and sales of our
solar power products could be harmed.
  In
addition to our core business of producing solar cells, we also provide solar
module assembly services to our customers. With respect to these solar modules,
we provide either (i) a 2 or 5 year warranty that the modules will be free from
defects in materials and workmanship from the production date, or (ii) a 10 and
25 year performance warranty against declines of more than 10.0% and 20.0% of
initial power generation capacity from the time of delivery. As a result of
these warranties, we bear the risk of extensive warranty claims long after we
have sold our products and recognized revenue. We therefore, in accordance with
our own history, industry data andindustry practices, accrue 1% of our sales of solar modules as a warranty
cost. Because we only recently started to provide our solar module assembly
services, the solar modules have been in use for only a relatively short period,
we cannot assure you that our assumptions regarding the durability and
reliability of our products are reasonable. Our warranty provisions may be
inadequate, and we may have to incur substantial expense to repair or replace
defective products in the future. Furthermore, widespread product failures may
damage our market reputation and cause our sales to decline.
  Risks
Related to Our Supply Chain
  Prepayment
arrangements for procurement of silicon wafers and/or polysilicon from Jinglong
Group (a related party), GCL, Shunda and other suppliers expose us to the credit
risks of such suppliers and may also significantly increase our costs and
expenses, either of which could in turn have a material adverse effect on our
financial condition, results of operations and liquidity.
  We face
significant specific counterparty risk under long-term supply agreements when
dealing with suppliers without a long, stable production and financial history.
We make prepayments to these suppliers for procurement of polysilicon, ingots or
wafers without receiving collateral to secure such payments.  In the
event any such supplier experiences financial difficulties, or even bankruptcy,
it may be difficult or impossible, or may require substantial time and expense,
for us to recover any or all of our prepayments. Our claims for such payments
would rank as unsecured claims, which expose us to the credit risks of our
suppliers in the case of an insolvency or bankruptcy of such
suppliers.  Under such circumstances, our claims against the suppliers
would rank below those of secured creditors, which would undermine our chances
of obtaining the return of the prepayments.  Accordingly, a default by
our suppliers may have a material adverse effect on our financial condition,
results of operations and liquidity.  In addition, should a supplier
to which we make prepayment default on its obligations under the supply
contract, we may not be able to recover all or a portion of our outstanding
prepayment.  Further, even if a supplier refunds our prepayment when
it defaults on its obligations under the contract, we may still suffer losses if
we do not receive any interest payment on such refunded prepayment and, in the
situation where we made prepayment in foreign currencies, we may suffer foreign
exchange losses if we would need to exchange the U.S. dollar-denominated refund
payment into Renminbi, which may have appreciated against the U.S. dollar.We also face certain
operational risks associated with our suppliers.  For example, if our
suppliers become subject to intellectual property infringement claims by third
parties our ability to recover our outstanding prepayments may be materially and
adversely affected.  Any of the foregoing could materially and
adversely affect our results of operations and financial
condition.
  8
  Fluctuation
in the price of polysilicon, increased competition, the global economic crisis
and other changing market conditions may cause further decline in the demand and
average selling prices of solar cells and may continue to increase the level of
our earnings volatility and reduce our profitability.
  Fluctuation
in the price of polysilicon and wafers may affect the average selling prices of
solar cells since any significant increase in the polysilicon and wafer supply
may decrease raw material costs, allow higher utilization of existing and
planned solar cell production capacity, and allow greater price
competition.  In addition, increased competition from existing solar
cell producers and new market participants as well as changes in other market
conditions, such as the reduced demand for solar power products in the end user
markets caused by the global economic crisis, may cause a decline in the demand
and average selling prices of solar cells from time to time.  If we
are unable to lower our production cost per watt, to the same extent as the
average selling price per watt declines, the level of our earnings volatility
would increase and our profitability would decline, which would materially and
adversely affect our business, financial condition and results of
operations.
  We
have entered into long-term, firm commitment supply agreements, including
prepayment provisions, that could result in excess or insufficient inventories
and financial loss and place us at a competitive disadvantage.
  To match
our estimated customer demand forecasts and growth strategy for the next several
years, we have entered into multiple long-term supply agreements. We currently
purchase polysilicon, ingots and wafers from a limited number of suppliers,
including Jinglong Group and Jiangsu Zhongneng Silicon Technology Development
Co., Ltd., a subsidiary of GCL Silicon Technology Holdings Ltd. ("GCL") and
Shunda.  See "Item 4. Information on the Company — B. Business
Overview — Raw Material and Utilities — Silicon Wafers."  Some
agreements provide for fixed pricing, substantial prepayment obligations, and/or
firm purchase commitments that require us to pay for the supply whether or not
we accept delivery.
  If
such agreements require us to purchase more polysilicon, ingots or wafers than
required to meet our actual customer demand, over time, the resulting excess
inventory could materially and negatively impact our results of operations and
financial condition.
  If
our agreements provide insufficient inventory to meet customer demand, or if our
suppliers are unable or unwilling to provide us with the quantities within the
contracted timetable, we may purchase additional supply at available market
prices which could be greater than expected and could materially and negatively
impact our results of operations. Such market prices could also be greater than
prices paid by our competitors, placing us at a competitive disadvantage, which
could materially and adversely affect our results of operations and financial
position.  Further, any failure by us to meet obligations to our
customers could have a material adverse effect on our reputation, retention of
customers, market share, business and results of operations and may subject us
to claims from our customers and other disputes. Any such failure may also cause
our customers to switch to our competitors as alternative
suppliers.  Failure to obtain sufficient wafers may also result in
underutilization of our existing and planned production facilities and increase
our marginal production costs.  Any of the above events could have a
material adverse effect on our growth, results of operations and financial
condition.
  9
  If
the prices under our long-term supply agreements result in our paying more for
such supplies than the current market prices available to our competitors, we
may also be placed at a competitive disadvantage, and could materially and
adversely affect our results of operations and financial position if we are
unable to renegotiate the prices with our suppliers. Furthermore, we may choose
not to procure polysilicon, ingots or wafers under certain contracts if we deem
the prices under such contracts are unfavorable to us under prevailing market
conditions and/or we are unable to renegotiate the price of the polysilicon,
ingots or wafers under the supply arrangements to better reflect the relevant
market conditions.  In the event we choose not to procure polysilicon,
ingots or wafers under certain contracts, we have been and may be forced to
forfeit certain prepayment amounts which could materially and adversely affect
our results of operations, and financial position.
  We
obtain certain manufacturing equipment from sole or a limited number of
suppliers and if such equipment is damaged or otherwise unavailable, our ability
to deliver products on time will suffer, which in turn could result in order
cancellations and loss of revenue.
  Some
of our equipment used in the manufacture of our solar cell products has been
developed and made specifically for us, is not readily available from
alternative vendors and would be difficult to repair or replace if it were to
become damaged or stop working.  In addition, we obtain some equipment
from sole or a limited number of suppliers.  If any of these suppliers
were to experience financial difficulties or go out of business, or if there
were any damage to or a breakdown of our manufacturing equipment at a time when
we are manufacturing commercial quantities of our products, our business would
suffer.  In addition, a supplier's failure to supply our ordered
equipment in a timely manner, with adequate quality and on terms acceptable to
us, could delay and otherwise disrupt our production schedule or increase our
costs of production.
  Risks
Related to Technology and Intellectual Property
  Our
failure to further refine our technology and manufacturing processes and develop
and introduce new solar power products could render our products uncompetitive
or obsolete, and reduce our sales and market share.
  The
solar power industry is rapidly evolving and becoming more
competitive.  We will need to invest significant financial resources
in research and development to keep pace with technological advances in the
solar power industry and to effectively compete in the
future.  However, research and development activities are inherently
uncertain, and we might encounter practical difficulties in commercializing our
research results.  A variety of competing photovoltaic technologies
that other companies may develop could prove to be more cost-effective and have
better performance than solar power products that we
develop.  Therefore, our development efforts may be rendered obsolete
by the technological advances of others.  Breakthroughs in
photovoltaic technologies that do not use crystalline silicon could mean that
companies such as us that rely entirely on crystalline silicon would encounter a
sudden, sharp drop in sales.  Our failure to further refine our
technology and develop and introduce new solar power products could render our
products uncompetitive or obsolete, and result in a decline in our market share
as well as our revenues and profits.
  One
of the alternative technologies in the production of solar cells is thin film
technology, which involves depositing several thin layers of silicon or more
complex materials on a substrate such as glass to make a solar
cell.  The use of thin film technology in the production of solar
cells would significantly reduce the consumption of silicon materials and
manufacturing costs.  Some universities, research institutions and
companies in the solar power industry have devoted resources to the research and
development on commercialization of thin film technology in the production of
solar cells.  New developments in commercialization of thin film
technology may render our existing technologies obsolete and our products
uncompetitive, which would result in loss in our profitability and market share
and could materially and adversely affect our business, financial condition and
results of operations.
  In
addition, any new development or adjustment in the manufacturing processes may
affect our ability to maintain our competitive position.  Any failure
to refine our manufacturing processes to competitively produce new solar cell
products may result in a loss of our market share and revenue, which could
materially and adversely affect our business, financial condition and results of
operations.
  10
  If
we fail to successfully develop and introduce new and enhanced products and
services, we may not be able to compete effectively, and our ability to generate
revenues will suffer.
  The
solar power market is characterized by continually changing technology requiring
improved features, such as increased efficiency and higher power output and
improved aesthetics. Technologies developed by our direct competitors, including
thin film solar panels, concentrating solar cells, solar thermal electric and
other solar technologies, may provide power at lower costs than our products. We
also face competition in some markets from other power generation sources,
including conventional fossil fuels, wind, biomass, and hydro.  Our
failure to further refine our technology and develop and introduce new solar
power products could cause our products to become uncompetitive or obsolete,
which could reduce our market share and cause our sales to decline. This will
require us to continuously develop new solar power products and enhancements for
existing solar power products to keep pace with evolving industry standards,
competitive pricing and changing customer requirements.  As we
introduce new or enhanced products or integrate new technology into our
products, we will face risks relating to such transitions including, among other
things, technical challenges, disruption in customers' ordering patterns,
insufficient supplies of new products to meet customers' demand, possible
product and technology defects arising from the integration of new technology
and a potentially different sales and support environment relating to any new
technology.  Our failure to manage the transition to newer products or
the integration of newer technology into our products could adversely affect our
business' operating results and financial condition.
  Our
efforts to further develop our technology and know-how through increased
research and development of crystalline silicon technology may not yield
satisfactory results, if any.
  We
may expend significant financial resources in research and development of
crystalline silicon and commercialization of silicon ink technology to
effectively compete with other market players in the future.  Our
research and development efforts are focused on improving conversion
efficiencies and enhancing production processes to reduce silicon usage per
watt.  Research and development activities are inherently uncertain
and we might encounter practical difficulties in commercializing our research
results, if any.  In addition, other companies may develop more
cost-effective and better performing products than what our research and
development may yield.  Therefore, our development efforts may be
rendered obsolete by the technological advances of others.  For
example, breakthroughs in photovoltaic technologies that do not use crystalline
silicon could mean that companies such as us that currently rely on crystalline
silicon would encounter a sudden, sharp drop in sales.  Our failure to
further improve our technology, develop and introduce new products or respond to
rapid market changes and technology evolutions in the solar energy industry
could render our products uncompetitive or obsolete, and reduce our sales and
market share.
  If
photovoltaic technology is not suitable for widespread adoption, or sufficient
demand for solar power products does not develop or takes longer to develop than
we anticipated, our sales may not continue to increase or may even decline, and
we may be unable to sustain profitability.
  The
solar power market is at a relatively early stage of development and the extent
to which solar power products will be widely adopted is
uncertain.  Market data in the solar power industry are not as readily
available as those in other more established industries where trends can be
assessed more reliably from data gathered over a longer period of
time.  Many factors may affect the viability of widespread adoption of
photovoltaic technology and demand for solar power products,
including:
  ·
                cost-effectiveness
      of solar power products compared to conventional and other non-solar
      energy sources and products;
 ·
                performance
      and reliability of solar power products compared to conventional and other
      non-solar energy sources and products;
 ·
                availability
      of government subsidies and incentives to support the development of the
      solar power industry;
 ·
                success
      of other alternative energy generation technologies, such as fuel cells,
      wind power and biomass;
  11
 ·
                fluctuations
      in economic and market conditions that affect the viability of
      conventional and non-solar alternative energy sources, such as increases
      or decreases in the prices of oil and other fossil fuels;
    and
 ·
                capital
      expenditures by end users of solar power products, which tend to decrease
      when the economy slows down.
 The
solar power market also competes with other sources of renewable energy and
conventional power generation.  If prices for conventional and other
renewable energy resources decline, or if these resources enjoy greater policy
support than solar power, the solar power market could suffer.  If
photovoltaic technology proves unsuitable for widespread adoption or if demand
for solar power products fails to develop sufficiently, we may not be able to
grow our business or generate sufficient revenues to sustain our
profitability.  In addition, demand for solar power products in our
target markets may not develop or may develop to a lesser extent than we
anticipated.
  Our
failure to protect our intellectual property rights may undermine our
competitive position, and litigation to protect our intellectual property rights
may be costly and may not be resolved in our favor.
  We
seek to protect our proprietary manufacturing processes, documentation and other
written materials primarily through intellectual property laws, contractual
restrictions, trade secrets and other similar restrictions.  However,
we have sought patent protection from patent authorities in China and the United
States for a limited number of technologies related to our business and may seek
further protection in other jurisdictions if deemed necessary.  We
also require employees and consultants with access to our proprietary
information to execute confidentiality agreements with us.  The steps
taken by us to protect our proprietary information may not be adequate to
prevent misappropriation of our technology.  In addition, our
proprietary rights may not be adequately protected because:
  ·
                people
      may not be deterred from misappropriating our technologies despite the
      existence of laws or contracts prohibiting it;
 ·
                policing
      unauthorized use of our intellectual property may be difficult, expensive
      and time-consuming, and we may be unable to determine the extent of any
      unauthorized use; and
 ·
              enforcement
      under intellectual property laws in China may be slow and difficult in
      light of the application of such laws and the uncertainties associated
      with the PRC legal system.  See "Item 3. Key Information — D.
      Risk Factors — Risks related to Doing Business in China — Uncertainties
      with respect to the PRC legal system could have a material adverse effect
      on us."
  Reverse
engineering, unauthorized copying or other misappropriation of our proprietary
technologies could enable third parties to benefit from our technologies without
paying us for doing so.  Any inability to adequately protect our
proprietary rights could harm our ability to compete, to generate revenue and to
grow our business.
  We
cannot assure you that infringement of our intellectual property rights by other
parties does not exist now or that it will not occur in the
future.  To protect our intellectual property rights and to maintain
our competitive advantage, we may file suits against parties who we believe
infringe our intellectual property.  Such litigation may be costly and
may divert management attention as well as expend our other resources away from
our business.  In certain situations, we may have to bring suit in
foreign jurisdictions, in which case we are subject to additional risks as to
the result of the proceedings and the amount of damage that we can
recover.  An adverse determination in any such litigation will impair
our intellectual property rights and may harm our business, prospects and
reputation.  In addition, we have no insurance coverage against
litigation costs and would have to bear all costs arising from such litigation
to the extent we are unable to recover them from other parties.  The
occurrence of any of the foregoing could have a material adverse effect on our
business, results of operations and financial condition.
  12
  We
may be exposed to infringement or misappropriation claims by third parties,
which, if determined adversely to us, could cause us to lose significant rights
and pay significant damage awards.
  Our
success also depends largely on our ability to use and develop our technology
and know-how without infringing the intellectual property rights of third
parties.  The validity and scope of claims relating to photovoltaic
technology patents involve complex scientific, legal and factual questions and
analysis and, therefore, may be highly uncertain.  Although we are not
currently aware of any parties pursuing or intending to pursue infringement
claims against us, we cannot assure you that we will not be subject to such
claims in the future.  Also, because patent applications in many
jurisdictions are kept confidential for 18 months before they are published, we
may be unaware of other persons' pending patent applications that relate to our
products or processes.  Our suppliers may also become subject to
infringement claims, which in turn could negatively impact our business as they
may no longer be able to fulfill their delivery obligations under their
contracts with us or refund our outstanding prepayments in a timely manner or at
all.  The defense and prosecution of intellectual property suits,
patent opposition proceedings and related legal and administrative proceedings
can be both costly and time consuming and may significantly divert the efforts
and resources of our technical and management personnel.  An adverse
determination in any such litigation or proceedings to which we may become a
party could subject us to significant liability to third parties, require us to
seek licenses from third parties, to pay ongoing royalties, or to redesign our
products or subject us to injunctions prohibiting the manufacture and sale of
our products or the use of our technologies.  Protracted litigation
could also result in our customers deferring or limiting their purchase or use
of our products until resolution of such litigation.  The occurrence
of any of the foregoing could have a material adverse effect on our business,
results of operations and financial condition.
  Although
a substantial portion of our solar cells are used in products sold outside
China, we currently have very limited protection for our intellectual property
outside China.  Our business, results of operations and financial
condition would be materially and adversely affected if our sales outside China
were to be restricted by intellectual property claims by third
parties.
  We
are in the process of obtaining patent protection for certain of our proprietary
technologies in the United States and China and may also seek protection in
various other jurisdictions, if deemed necessary.  In the meantime,
others may independently develop substantially equivalent technologies, or
otherwise gain access to our proprietary technologies, and obtain patents for
such intellectual properties in other jurisdictions, including the countries to
which our solar cell products are sold ultimately.  If any third
parties are successful in obtaining patents for technologies that are
substantially equivalent or the same as the technologies we use in our solar
cell products in any of our markets before we do and enforce their intellectual
property rights against us, our ability to sell products containing the
allegedly infringing intellectual property in those markets will be materially
and adversely affected.  If we are required to stop selling such
allegedly infringing products, seek license and pay royalties for the relevant
intellectual properties, or redesign such products with non-infringing
technologies, our business, results of operations and financial condition may be
materially and adversely affected.
  Risks
Related to Our Operations
  We
may not be able to increase our growth rate, and we may not be able to manage
our future growth effectively.
  We
may not be able to expand our business or manage future growth. Depending on
market conditions, our plans to grow our business will require the successful
execution of:
  ·
                expanding
      our existing manufacturing facilities, which would increase our fixed
      costs and, if such facilities are underutilized, would negatively impact
      our results of operations;
 ·
                ensuring
      delivery of adequate polysilicon and ingots;
 ·
                developing
      more efficient solar cells;
 ·
                enhancing
      our customer resource management and manufacturing management
      systems;
  13
 ·
                implementing
      and improving additional and existing administrative, financial and
      operations systems, procedures and controls, including the implementation
      of our new ERP system;
 ·
                hiring
      additional employees;
 ·
                expanding
      and upgrading our technological capabilities;
 ·
                managing
      multiple relationships with our customers, suppliers and other
      third-parties;
 ·
                maintaining
      adequate liquidity and financial resources; and
 ·
                continuing
      to increase our revenues from operations.
 We
have not had significant international activities and customers; however we plan
to expand our international efforts, which subject us to additional business
risks, including logistical complexity and political instability.
  We
sell a substantial portion of our products to customers inside China, and we buy
a substantial portion of our raw materials and equipment from vendors located
inside China. In addition, all our solar cell production lines are located in
China.  Our continued focus on expanding our business internationally
presents us with additional risks we face in conducting business internationally
including:
  ·
                multiple,
      conflicting and changing laws and regulations, export and import
      restrictions, employment laws, regulatory requirements and other
      government approvals, permits and licenses;
 ·
                difficulties
      and costs in staffing and managing foreign operations as well as cultural
      differences;
 ·
                potentially
      adverse tax consequences associated with our permanent establishment of
      operations in more countries;
 ·
                relatively
      uncertain legal systems, including potentially limited protection for
      intellectual property rights, and laws, regulations and policies which
      impose additional restrictions on the ability of foreign companies to
      conduct business in certain countries or otherwise place them at a
      competitive disadvantage in relation to domestic
  companies;
 ·
                inadequate
      local infrastructure and developing telecommunications
      infrastructures;
 ·
                financial
      risks, such as longer sales and payment cycles and greater difficulty
      collecting accounts receivable;
 ·
                currency
      fluctuations and government-fixed foreign exchange rates and the effects
      of currency hedging activity or inability to hedge currency fluctuations;
      and
 ·
                political
      and economic instability, including wars, acts of terrorism, political
      unrest, boycotts, curtailments of trade and other business
      restrictions.
 If
we are unable to successfully manage any such risks, our business, financial
condition and results of operations could be materially and adversely
affected.
  Our
quarterly revenues and operating results may be difficult to predict and could
fall below investor expectations, which could cause the market price of our ADSs
to decline.
  Our
quarterly revenues and operation results have fluctuated in the past and may
continue to fluctuate significantly depending upon numerous factors, including
seasonality of demand for solar power products, changes in market conditions and
industry environment, and changes in government policies or
regulations.  For example, purchases of solar power products tend to
decrease due to severe weather conditions in winter months, which complicates
the installation of solar power systems.  Many of these factors are
beyond our control, making our quarterly results difficult to predict, which
could cause the trading price of our ADSs to decline if our operating results
for any particular quarter fall below investor expectations.
  14
  If
we do not achieve satisfactory yields or quality in our production of solar
cells, our sales could decrease and our relationships with our customers and our
reputation may be harmed.
  The
manufacture of solar cells is a highly complex process.  Minor
deviations in the manufacturing process can cause substantial decreases in
yields, affect the quality of the product and in some cases, cause production to
be suspended or yield products unfit for commercial sale.  This often
occurs during the production of new products or the installation and start-up of
new process technologies or equipment.
  In
addition, as is typical with any new equipment or process, we may experience
lower yields and conversion efficiencies in our newly built manufacturing
lines.  We also expect to experience lower yields initially if we
modify our manufacturing processes by utilizing thinner wafers.  If we
do not achieve satisfactory yields or quality, our product costs could increase,
our sales could decrease and our relationships with our customers and our
reputation could be harmed, any of which could have a material adverse effect on
our business and results of operations.
  We
are a young company and our limited operating history makes it difficult to
evaluate our future prospects and results of operations.
  We
have only been in existence since May 2005.  We completed our first
solar cell manufacturing line in March 2006 and made our first commercial
shipment of solar cells in April 2006.  We have since then increased
our total rated manufacturing capacity from 25 MW per annum to 800 MW per annum
as of December 31, 2009.  Our business model and ability to achieve
satisfactory financial results at higher manufacturing volumes are
unproven.  We must, among other things, continue to respond to
competitive developments, attract, retain and motivate qualified personnel,
implement and successfully execute our business plan and improve our
technologies.  We cannot assure you that we will be successful in
achieving these goals.  Our limited operating history makes the
prediction of future results of operations difficult, and therefore, past
revenue growth experienced by us should not be taken as indicative of the rate
of revenue growth, if any, that can be expected in the future.  We
believe that period to period comparisons of our operating results are not
meaningful and that the results for any period should not be relied upon as an
indication of future performance.  You should consider our business
and prospects, in light of the risks, uncertainties, expenses and challenges
that we will face as an early-stage company seeking to develop and manufacture
new products in a rapidly growing market.
  Our
future success is dependent on our initiation, maintenance and expansion of
relationships with new and existing customers, suppliers and other third
parties, some of which may terminate for reasons beyond our
control.
  Due
to market conditions and other factors beyond our control, certain customer
and/or supplier relationships that we entered into for expanding our
customer/supplier base may be terminated or suspended.  If we are
unable to initiate relationships with new customers, suppliers or other third
parties, maintain or expand relationships with existing customers, suppliers or
other third parties, or resume or replace such relationships, our business,
results of operations or financial condition may be materially and adversely
affected.
  Our
future success depends in part on our ability to expand our business into
downstream and upstream markets.  Any failure to successfully
implement this strategy could have a material adverse effect on our growth,
business prospects and results of operations in future periods.
  Our
current business strategy includes plans to expand into upstream and downstream
markets, such as solar modules, which we believe are natural extensions of our
vertically integrated business model.  These expansion plans may
include investments in upstream and downstream companies and joint ventures and
formation of strategic alliances with third parties.  We have already
established a manufacturing and R&D centers in Donghai for wafer production
and Fengxian for module production. However, our continued pursuit of these
expansion plans may require significant capital expenditures going forward,
which could be used in pursuit of other opportunities and
investments.  Our expansion downstream into solar module production
could result in competition with existing customers. We may also face intense
competition from companies with greater experience or established presence in
the targeted downstream markets or competition from our industry peers with
similar expansion plans.
  15
  Our
senior management has worked together for a relatively short period of time,
which may make it difficult for you to evaluate their effectiveness and ability
to address challenges.
  Due
to our limited operating history and recent changes to our management team,
certain of our senior management and employees have worked together at our
company for a relatively short period of time.  For example, we have
experienced turnover in our senior management ranks and hired or appointed a
number of executive officers and senior management in 2009 and 2010, including
our chief executive officer and chief technology officer.  In light of
the foregoing circumstances, it may be difficult for you to evaluate the
effectiveness of our senior management and their ability to address future
challenges to our business.  Members of our senior management may not
work together effectively as a team to manage our growth successfully, which may
expose us to a higher risk of internal control deficiencies and result in us
losing market share, business opportunity and revenues.
  The
success of our business depends on the continuing efforts of our key personnel
and our business may be severely disrupted if we lose their
services.
  Our
future success depends, to a significant extent, on our ability to attract,
train and retain qualified technical personnel, particularly those with
expertise in the solar power industry.  There is substantial
competition for qualified technical personnel, and there can be no assurance
that we will be able to attract or retain our qualified technical
personnel.  If we are unable to attract and retain qualified technical
personnel, our business may be materially and adversely affected.
  We
rely heavily on the continued services of our executive officers.  If
one or more of our executive officers are unable or unwilling to continue in
their present positions, we may not be able to replace them easily or at
all.  As a result, our business may be severely disrupted and we may
incur additional expenses to recruit and retain new officers.  In
addition, if any of our executives joins a competitor or forms a competing
company, we may lose some or all of our customers.  We believe our
future success will depend upon our ability to retain these key employees and
our ability to attract and retain other skilled managerial, engineering and
sales and marketing personnel.  Each of our executive officers and
other key personnel has entered into an employment agreement with us, which
contains confidentiality and non-competition provisions.  However, if
any disputes arise between our employees and us, we cannot assure you, in light
of uncertainties associated with the PRC legal system, the extent to which any
of these agreements could be enforced in China, where some of our executive
officers reside and hold some of their assets.
  As
we have awarded and will continue to award employee share options and other
share-based compensation to certain of our directors, officers, employees and
consultants, our net income will be adversely affected.
  Under
our 2006 stock incentive plan, we may award stock options and other share-based
compensations to purchase up to 10% of our issued share capital to certain of
our directors, employees and consultants.  As of April 20, 2010, we
have awarded 3,852,000 shares of restricted stock and granted options to
purchase 17,432,000 ordinary shares to a number of our directors, employees and
consultants.  See "Item 6. Directors, Senior Management and Employees
— B. Compensation — Stock Option Plans."
  In
accordance with ASC 718, Compensation-Stock Compensation, which requires all
companies to recognize, as an expense, the fair value of share options and other
share-based compensation to employees, we are required to account for
compensation costs for all restricted stocks and share options granted to our
directors, employees and consultants using a fair-value based method and
recognize expenses in our consolidated statement of operations in accordance
with the relevant rules under U.S. GAAP. Our share-based compensation expenses
have a material and adverse effect on our reported earnings for the year during
which the share-base compensation are granted and over their vesting
periods.
  16
  Moreover,
the additional expenses associated with share-based compensation may reduce the
attractiveness of such incentive plan to us.  However, if we stop
granting options, or reduce the number of options granted, under our stock
incentive plan, we may not be able to attract and retain key personnel, as share
options are an important employee recruitment and retention tool.  In
addition, the decline in the price of our ordinary shares below the exercise
price of many of the previously granted options has lessened the effectiveness
of the options as a means to retain the services of the option
holders.  As a result, we have granted more stock options to certain
individuals and will continue to grant employee share options or other
share-based compensation in the future that may adversely affect our net
income.
  There
are potential conflicts of interest between us and our largest shareholder,
Jinglong BVI.
  Jinglong
BVI, which is controlled by the shareholders of Jinglong Group, is our largest
shareholder.  In addition, Mr. Baofang Jin, the chairman of our Board
of Directors, is a shareholder of Jinglong BVI and is also the chairman of
Jinglong Group.  Jinglong Group currently provides a number of
products and services to us, including silicon wafer supply (on prepayment
terms) and real property leases.  Our transactions with Jinglong Group
are governed by a number of contracts between Jinglong Group and us, the terms
of which were negotiated at what we believe are on an arm's length
basis.  See "Item 7. Major Shareholders and Related Party Transactions
— B. Related Party Transactions."  However, the interest of Jinglong
BVI may conflict with our own interest with respect to our transactions with
Jinglong Group.  As a result, we may have limited ability to negotiate
with Jinglong Group over the terms of the agreements because Jinglong BVI may
exert significant influence on our affairs through our Board of Directors which
could cause us to take actions that may not be in our best
interests.  In addition, Jinglong BVI may be able to prevent us from
taking actions to enforce or exercise our rights under the agreements we entered
into with Jinglong Group.  Furthermore, we cannot assure you that our
transactions with Jinglong Group will always be concluded on terms favorable to
us or maintained at the current level or at all in the future.
  Changes
to existing regulations over the utility sector and the solar power industry may
present technical, regulatory and economic barriers to the purchase and use of
solar power products, which may significantly reduce demand for our
products.
  The
market for power generation products is heavily influenced by government
regulations and policies concerning the electric utility industry, as well as
the internal policies of electric utilities companies.  These
regulations and policies often relate to electricity pricing and technical
interconnection of end user-owned power generation.  In a number of
countries, these regulations and policies are being modified and may continue to
be modified.  End users' purchases of alternative energy sources,
including solar power products, could be deterred by these regulations and
policies, which could result in a significant reduction in the potential demand
for our solar power products.  For example, utility companies commonly
charge fees to larger, industrial customers for disconnecting from the
electricity transmission grid or for having the capacity to use power from the
electricity transmission grid for back-up purposes.  These fees could
increase end users' costs of using our solar power products and make products
that use our solar cells less desirable, thereby having an adverse effect on our
business, prospects, results of operations and financial condition.
  We
anticipate that products that use our solar cells and their installation will be
subject to oversight and regulation in accordance with national and local
ordinances relating to building codes, safety, environmental protection, utility
interconnection and metering and related matters in various
countries.  It is also burdensome to track the requirements of
individual localities and design equipment to comply with the varying
standards.  Any new government regulations or utility policies
pertaining to products that use our solar cells may result in significant
additional expenses to us and end users and, as a result, could cause a
significant reduction in demand for our solar cells and the products that use
our solar cells.
  17
  Compliance
with environmental regulations can be expensive, and noncompliance with these
regulations may result in adverse publicity and potentially significant monetary
damages and fines.
  As
we use, generate and discharge toxic, volatile and otherwise hazardous chemicals
and wastes in our research and development and manufacturing activities, we are
required by PRC law to obtain pollutant discharging permits and undergo
government-administered safety examinations with respect to our production
facilities.  As of the date of this annual report, our pollutant
discharging permits are pending renewal by PRC environmental regulatory
agencies, which we expect to be completed after these agencies complete their
inspection of our new manufacturing lines.  So far, we have not been
assessed any penalty for any non-compliance with PRC environmental laws and
regulations.  However, we may be required to pay fines, suspend
production or cease operation.  Any failure by us to control the use
of or to adequately restrict the discharge of hazardous substances could subject
us to potentially significant monetary damages and fines or suspensions in our
business operations.
  We
have limited insurance coverage and may incur significant losses resulting from
operating hazards, product liability claims or business
interruptions.
  As
with other solar power product manufacturers, our operations involve the use,
handling, generation, processing, storage, transportation and disposal of
hazardous materials, which may result in fires, explosions, spills and other
unexpected or dangerous accidents causing personal injuries or death, property
damages, environmental damages and business interruptions.  We do not
currently carry any third-party liability insurance against claims relating to
personal injury, property or environmental damage arising from accidents on our
properties or relating to our operations.  Any occurrence of these or
other accidents in our operation could have a material adverse effect on our
business, financial condition or results of operations.
  We
are also exposed to risks associated with product liability claims in the event
that the use of the solar power products we sell results in
injury.  Although our solar cell products do not generate electricity
without being incorporated into modules or other solar power devices, it is
possible that users could be injured or killed by modules or other devices
incorporating our solar cells, whether by product malfunctions, defects,
improper installation or other causes.  While we have not experienced
any product liability claims brought against us, we are unable to predict
whether such claims will be brought against us in the future or the effect of
any resulting adverse publicity on our business.  Moreover, we do not
have any product liability insurance and may not have adequate resources to
satisfy a judgment in the event of a successful claim against us.  The
successful assertion of product liability claims against us could result in
potentially significant monetary damages and require us to make significant
payments.
  In
addition, the normal operation of our manufacturing facilities may be
interrupted by accidents caused by operating hazards, power supply disruptions,
equipment failures, as well as natural disasters.  As the insurance
industry in China is still in an early stage of development, business
interruption insurance available in China offers limited coverage compared to
that offered in many other countries, and we do not carry any business
interruption insurance.  Any business disruption or natural disaster
could result in substantial costs and diversion of resources, and our business
and results of operations may be materially and adversely affected.
  For
strategic reasons and in an effort to maximize returns on our unused capital
reserves, we may, from time to time, invest in securities purchased on the open
market, which may, due to market forces beyond our control, result in the
recognition of losses that will adversely affect our financial
results.
  For
both strategic reasons and in an effort to maximize the return on our unused
capital reserves, we have, and may, from time to time invest in certain
securities purchased on the open market.  The fair value of these
securities are driven by market forces beyond our control and may decline over
time.  To protect the value of our investment and minimize the
recognition of losses, if any, we may, from time to time, dispose of such
securities at the discretion of our Board of Directors.  To the extent
that we, in compliance with U.S. GAAP and other applicable rules and
regulations, determine that a decline in the fair value of any of our securities
is other-than-temporary, we are obligated to recognize such decline as a loss,
which will in turn adversely affect our financial results.
  18
  See
also "Item 3. Key Information — D. Risk Factors — Risks Related to Liquidity,
the 2008 Convertible Note Offering and Our Relationship with the Lehman
Entities."
  We
may incur significant legal expenses in connection with, and allocate management
time and attention to, legal actions involving us that may take place from time
to time, including the legal actions currently filed against us, and it is
possible that we will not be able to prevail in our legal actions.
  In
December 2008, we learned that we were named as defendant in two putative
securities class actions filed in the Unite States District Court for the
Southern District of New York:  Ellenburg v. JA Solar Holdings Co.,
Ltd., et al., Civil Action No. 08 CV 10475 (filed on December 3, 2008)
and Zhang v. JA Solar Holdings
Co., Ltd., et al., Civil Action No. 08 CV 11366 (filed on December 31,
2008).  The complaints in the two actions, which are substantially
identical, also name as defendants Mr. Huaijin Yang, our former chief executive
officer, and Mr. Daniel Lui, our former chief financial officer and chief
strategy officer, and allege that the defendants committed securities fraud in
violation of Section 10(b) of the United States Securities and Exchange
Act.  On April 17, 2009, the court consolidated the two cases,
appointed a lead plaintiff, and ordered the lead plaintiff to file a
consolidated complaint.  The lead plaintiff filed the consolidated
complaint on June 1, 2009. We filed a motion to dismiss the consolidated
complaint on July 15, 2009. In response, lead plaintiff filed a second amended
complaint on August 21, 2009. We moved to dismiss the second amended complaint
on October 8, 2009. The lead plaintiff filed a response to our motion to dismiss
the second amended complaint on November 5, 2009, and we filed our reply on
November 25, 2009.  The court ordered an oral argument to be held on
April 9, 2010 to hear arguments regarding our motion to dismiss.  That
oral argument was adjourned to April 20, 2010 and then to April 26, 2010, again
at lead plaintiff’s request.  On April 26, 2010, the oral arguments
were heard and we are currently awaiting the ruling.   Although
we cannot predict the outcome of the litigation, we will defend ourselves
vigorously in this litigation and do not believe any loss is probable and
estimable.
  During
these processes, and in other legal actions that may take place from time to
time, we may incur significant legal expenses and allocate management time and
attention to the legal actions.  Despite our expense and efforts,
however, no assurance can be provided that we will be able to prevail in our
legal actions, or against the plaintiffs in the class action described
above.
  Risks
Related to Doing Business in China
  Adverse
changes in political and economic policies of the PRC government could have a
material adverse effect on the overall economic growth of China, which could
reduce the demand for our products and materially and adversely affect our
competitive position.
  Substantially
all of our business operations are conducted in China.  Accordingly,
our business, financial condition, results of operations and prospects are
affected significantly by economic, political and legal developments in
China.  The Chinese economy differs from the economies of most
developed countries in many respects, including:
 ·
                the
      amount of government
involvement;
 ·
                the
      level of development;
 ·
                the
      growth rate;
 ·
                the
      control of foreign exchange;
and
 ·
                the
      allocation of resources.
 While
the Chinese economy has grown significantly in the past years, the growth has
been uneven, both geographically and among various sectors of the
economy.  The PRC government has implemented various measures to
encourage economic growth and guide the allocation of resources.  Some
of these measures benefit the overall Chinese economy, but may also have a
negative effect on us.  For example, our financial condition and
results of operations may be adversely affected by government control over
capital investments or changes in tax regulations that are applicable to
us.
  19
  The
Chinese economy has been transitioning from a planned economy to a more
market-oriented economy.  Although in recent years the PRC government
has implemented measures emphasizing the utilization of market forces for
economic reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a
substantial portion of the productive assets in China is still owned by the PRC
government.  The continued control of these assets and other aspects
of the national economy by the PRC government could materially and adversely
affect our business.  The PRC government also exercises significant
control over Chinese economic growth through the allocation of resources,
controlling payment of foreign currency-denominated obligations, setting
monetary policy and providing preferential treatment to particular industries or
companies.  Efforts by the PRC government to slow the pace of growth
of the Chinese economy could result in decreased capital expenditure by solar
energy users, which in turn could reduce demand for our products.
  Any
adverse change in the economic conditions or government policies in China could
have a material adverse effect on the overall economic growth and the level of
renewable energy investments and expenditures in China, which in turn could lead
to a reduction in demand for our products and consequently have a material
adverse effect on our businesses.
  Uncertainties
with respect to the PRC legal system could have a material adverse effect on
us.
  We
conduct substantially all of our business inside China through our various
wholly-owned subsidiaries and are therefore subject to laws and regulations
applicable to foreign investment in China, including laws applicable to wholly
foreign-owned enterprises.  The PRC legal system is based on written
statutes.  Prior court decisions may be cited for reference but have
limited precedential value.  Since 1979, PRC legislation and
regulations have significantly enhanced the protections afforded to various
forms of foreign investments in China.  However, since these laws and
regulations are relatively new and the PRC legal system continues to rapidly
evolve, the interpretations of many laws, regulations and rules are not always
uniform and enforcement of these laws, regulations and rules involve
uncertainties, which may limit legal protections available to us.  In
addition, any litigation in China may be protracted and result in substantial
costs and diversion of resources and management attention.
  Our
operating subsidiaries in China are subject to legal limitations in paying
dividends to us.
  The
payment of dividends by entities organized in China is subject to limitations.
Regulations in the PRC currently permit payment of dividends by our PRC
subsidiaries only out of accumulated profits as determined in accordance with
accounting standards and regulations in China. Our subsidiaries are also
required to set aside at least 10.0% of their after-tax profits based on PRC
accounting standards each year to their general reserves until the accumulative
amount of such reserves reach 50.0% of their respective registered capital. In
addition, at the discretion of their respective Board of Directors, our PRC
subsidiaries may allocate a portion of their after-tax profits to their
respective staff welfare and bonus funds, which may not be distributed to equity
owners except in the event of liquidation.  Further, if our PRC
subsidiaries incur debt on their own behalves in the future, the instruments
governing the debt may restrict their ability to pay dividends or make other
distributions to us.  Limitations on the ability of our PRC
subsidiaries to pay dividends to us could materially and adversely limit our
ability to grow, make investments or acquisitions that could be beneficial to
our businesses, pay dividends, or otherwise fund and conduct our
business.
  Fluctuation
in the value of the Renminbi versus that of other foreign currencies may have a
material adverse effect on our business and on your investment.
  The
change in value of the Renminbi against the U.S. dollar, Euro and other
currencies is affected by, among other things, changes in China's political and
economic conditions.  On July 21, 2005, the PRC government changed its
decade-old policy of pegging the value of the Renminbi to the U.S.
dollar.  Under the new policy, the Renminbi is permitted to fluctuate
within a narrow and managed band against a basket of certain foreign
currencies.  This change in policy has resulted in an appreciation of
the Renminbi from approximately RMB 8.2765 per US$1.00 as of July 21, 2005 to
RMB 6.8259 per US$1.00 as of December 31, 2009.  There remains
significant international pressure on the PRC government to adopt an even more
flexible currency policy, which could result in a further and more significant
appreciation of the Renminbi against the U.S. dollar.  As a
significant portion of our costs and expenses is denominated in Renminbi,
potential future revaluation could further increase our costs.
  20
  In
addition, any significant revaluation of the Renminbi may have a material
adverse effect on our revenues and financial condition, and the value of, and
any dividends payable on, our ADSs in foreign currency terms.  For
example, to the extent that we need to convert Euros and U.S. dollars into
Renminbi for our operations, an appreciation of the Renminbi against the Euros
and U.S. dollars would have an adverse effect on the Renminbi amount we receive
from the conversion.  We cannot predict the impact of future exchange
rate fluctuations on our results of operations and may incur net foreign
currency losses in the future.  Conversely, if we decide to convert
our Renminbi into U.S. dollars for the purpose of making payments for dividends
on our ordinary shares or ADSs or for other business purposes, appreciation of
the U.S. dollar against the Renminbi may have a negative effect on the U.S.
dollar amount available for these purposes.
  From
time to time, we enter into foreign currency forward contracts with commercial
banks to hedge part of our exposure to foreign currency exchange risk for
forecasted sales denominated in foreign currencies.  As with all
hedging instruments, there are risks associated with the use of foreign currency
forward contracts.  While the use of such foreign currency forward
contracts provides us with protection from certain fluctuations in foreign
currency exchange, we potentially forgo the benefits that might result from
favorable fluctuations in foreign currency exchange.  Any default by
the counterparties to these transactions could adversely affect our financial
condition and results of operations.  Furthermore, these financial
hedging transactions may not provide adequate protection against future foreign
currency exchange rate fluctuations and, consequently, such fluctuations could
adversely affect our financial condition and results of operations.
  In
addition, an appreciation in the value of the Renminbi against foreign
currencies could make our solar cells more expensive for our international
customers as well as reduce the competitiveness of our PRC customers in the
international market, thus potentially leading to a reduction in our sales and
profitability.  Furthermore, many of our competitors are foreign
companies that could benefit from such a currency fluctuation, making it more
difficult for us to compete with these companies.  We cannot predict
the impact of future exchange rate fluctuations on our results of operations and
may continue to incur net foreign currency losses in the
future.  Although we intend to reduce the effect of exchange rate
exposure through hedging arrangements, we cannot assure you that such hedging
activities will be effective in managing our foreign exchange risk
exposure.  Continued fluctuations in exchange rates, particularly
among the U.S. dollar, Euro and the Renminbi could result in foreign
exchange losses and affect our gross and net profit margins.
  PRC
regulations on currency exchange and foreign investment may limit our ability to
receive and use our revenues effectively and may delay or prevent us from using
the proceeds from our fundraising activities to make loans or additional capital
contributions to our PRC operating subsidiaries.
  Substantially
all of our revenues and a significant portion of our expenses are denominated in
Renminbi.  If our revenues denominated in Renminbi increase or
expenses denominated in Renminbi decrease in the future, we may need to convert
a portion of our revenues into other currencies to meet our foreign currency
obligations, including, among others, payment of dividends declared, if any, in
respect of our ordinary shares.  Under China's existing foreign
exchange regulations, our PRC subsidiaries are able to pay dividends in foreign
currencies, without prior approval from the State Administration of Foreign
Exchange ("SAFE"), by complying with certain procedural
requirements.  However, we cannot assure you that the PRC government
will not take further measures in the future to restrict access to foreign
currencies for current account transactions.
  21
  Foreign
exchange transactions by our PRC subsidiaries under the capital account continue
to be subject to significant foreign exchange controls and require the approval
of PRC governmental authorities, including the SAFE.  To utilize the
proceeds of our initial public offering and our follow-on offering as an
offshore holding company of our PRC operating subsidiaries, we may make loans to
our PRC subsidiaries, or we may make additional capital contributions to our PRC
subsidiaries.  Any loans to our PRC subsidiaries are subject to PRC
regulations.  For example, loans by us to our subsidiaries in China,
which are foreign-invested enterprises ("FIEs"), to finance their activities
cannot exceed statutory limits and must be registered with the
SAFE.
  We
may also finance our subsidiaries by means of capital
contributions.  These capital contributions must be approved by the
PRC Ministry of Commerce or its local counterparts ("MOFCOM").  We
cannot assure you that we will be able to obtain these government approvals on a
timely basis, if at all, with respect to future capital contributions by us to
our subsidiaries.  If we fail to receive such approvals, our ability
to use the proceeds we have received from our initial public offering and our
follow-on offering and to capitalize our PRC operations may be negatively
affected, which could materially and adversely affect our liquidity and our
ability to fund and expand our business.
  Our
business benefits from certain PRC government incentives.  Expiration
of, or changes to, these incentives could have a material adverse effect on our
operating results.
  Under
the previous Income Tax Law of the People's Republic of China for Enterprises
with Foreign Investment and Foreign Enterprises ("FEIT Law") and the related
implementation rules which was repealed on 1 January 2008, Foreign Invested
Enterprises ("FIEs") established in the PRC are generally subject to FEIT at a
state tax rate of 30% plus a local tax rate of 3% on PRC taxable
income.  Our operating subsidiary, JA Hebei, was established as a FIE
in the PRC and is thus subject to PRC enterprise income tax of
33%.  The PRC government has provided certain incentives to FIEs in
order to encourage foreign investments, including tax exemptions, tax reductions
and other measures.  Under the FEIT Law and the related implementation
rules, FIEs are entitled to be exempted from FEIT for a 2-year period starting
from their first profit-making year followed by a 50% reduction of FEIT payable
for the subsequent three years, provided that they fall into the category of
production-oriented enterprises with an operational period of more than 10 years
in China, subject to approval from and modification by local taxation
authorities.  Specifically, with respect to income generated by assets
acquired by JA Hebei during the fiscal years 2005 and 2006, JA Hebei will
receive a two-year enterprise income tax exemption for 2006 and 2007, as well as
a 50% enterprise income tax reduction for 2008, 2009 and 2010.  With
respect to income generated by assets newly acquired by JA Hebei during 2007, JA
Hebei will receive a two-year enterprise income tax exemption for 2007 and 2008,
as well as a 50% enterprise income tax reduction for 2009, 2010 and 2011,
subject to the approval of the provincial tax authority.  JA Hebei has
obtained the approval of the relevant county-level and provincial-level tax
authority in this regard, which, however, may be subject to PRC central
government's further policies, decisions or rulings.
  In March
2007, the National People's Congress of China enacted a new Corporate Income Tax
Law of the People’s Republic of China (or "CIT Law"), which became effective on
January 1, 2008 and replaced the FEIT Law.  The CIT Law imposes a
unified income tax rate of 25% on all domestic enterprises and FIEs unless they
qualify under certain limited exceptions.  The CIT Law provides a
transition period to FIEs, during which they are permitted to grandfather their
existing preferential income tax treatment until such treatment expires in
accordance with its current terms.  In December 2007, the State
Council promulgated the Notice on Implementation of Corporate Income Tax
regarding Transition Period Preferential Treatment (the "Transition Period
Implementation Rules").  In general, the CIT law does not affect the
preferential tax treatment enjoyed by JA Hebei during the 5-year transition
period.  However, the CIT law and the Transition Period Implementation
Rules did not clearly address the application of the transitional preferential
policies to assets acquired through new capital injection made to a qualified
entity after March 16, 2007, the date of enactment of the new CIT
law.  If future guidance is issued by the State Taxation of
Administration to clarify this issue and it is determined that capital injection
made after March 16, 2007 does not qualify for a separate "two plus three" tax
holiday, the tax rate of JA Hebei as well as the income tax liability of JA
Hebei could increase for 2008 and 2009.  In addition, when our
currently available tax benefits expire or otherwise become unavailable, the
effective income tax rate of JA Hebei will increase significantly, and any
increase of JA Hebei's income tax rate in the future could have a material
adverse effect on our financial condition and results of
operations.
  22
  Dividends
we receive from our operating subsidiaries located in the PRC may be subject to
PRC withholding tax.
  The
newly enacted CIT Law provides that a maximum income tax rate of 20% may be
applicable to dividends payable to non-PRC investors that are "non-resident
enterprises," to the extent such dividends are derived from sources within the
PRC, and the State Council has reduced such rate to 10% through the
implementation regulations.  We are a Cayman Islands holding company
and substantially all of our income may be derived from dividends we receive
from our operating subsidiaries located in the PRC.  Thus, dividends
paid to us by our subsidiaries in China may be subject to the 10% income tax if
we are considered as a "non-resident enterprise" under the CIT
Law.  If we are required under the CIT Law to pay income tax for any
dividends we receive from our subsidiaries, it will materially and adversely
affect the amount of dividends, if any, we may pay to our shareholders and ADS
holders.
  We
may be deemed a PRC resident enterprise under the CIT Law and be subject to the
PRC taxation on our worldwide income.
  The
CIT Law also provides that enterprises established outside of China whose "de
facto management bodies" are located in China are considered "resident
enterprises" and are generally subject to the uniform 25% enterprise income tax
rate as to their worldwide income.  Under the implementation
regulations for the CIT Law issued by the PRC State Council, "de facto
management body" is defined as a body that has material and overall management
and control over the manufacturing and business operations, personnel and human
resources, finances and treasury, and acquisition and disposition of properties
and other assets of an enterprise.  If we are treated as a resident
enterprise for PRC tax purposes, we will be subject to PRC tax on our worldwide
income at the 25% uniform tax rate, which could have an impact on our effective
tax rate and an adverse effect on our net income and results of operations,
although dividends distributed from our PRC subsidiaries to us could be exempt
from Chinese dividend withholding tax, since such income is exempted under the
new CIT Law to a PRC resident recipient.
  Dividends
payable by us to our foreign investors and gain on the sale of our ADSs or
ordinary shares may become subject to taxes under PRC tax laws.
  Under
the CIT Law and implementation regulations issued by the State Council, PRC
income tax at the rate of 10% is applicable to dividends payable to investors
that are "non-resident enterprises," which do not have an establishment or place
of business in the PRC, or which have such establishment or place of business
but the relevant income is not effectively connected with the establishment or
place of business, to the extent such dividends have their sources within the
PRC.  Similarly, any gain realized on the transfer of ADSs or shares
by such investors is also subject to 10% PRC income tax if such gain is regarded
as income derived from sources within the PRC.  If we are considered a
PRC "resident enterprise," it is unclear whether dividends we pay with respect
to our ordinary shares or ADSs, or the gain you may realize from the transfer of
our ordinary shares or ADSs, would be treated as income derived from sources
within the PRC and be subject to PRC tax.  If we are required under
the CIT Law to withhold PRC income tax on dividends payable to our non-PRC
investors that are "non-resident enterprises," or if you are required to pay PRC
income tax on the transfer of our ordinary shares or ADSs, the value of your
investment in our ordinary shares or ADSs may be materially and adversely
affected.
  New
labor laws in the PRC may adversely affect our results of
operations.
  On
June 29, 2007, the PRC government promulgated a new labor law, namely, the
Labor Contract Law of the PRC, or the New Labor Contract Law, which became
effective on January 1, 2008.  The New Labor Contract Law imposes
greater liabilities on employers and significantly increases the cost of an
employer's decision to reduce its workforce.  Furthermore, it requires
certain terminations to be based upon duration of employment and not the merits
of employees.  In the event we decide to significantly change or
decrease our workforce, the New Labor Contract Law could adversely affect our
ability to enact such changes in a manner that is most advantageous to our
business or in a timely and cost effective manner, thus materially and adversely
affecting our financial condition and results of operations.
  23
  We
face risks related to health epidemics and other outbreaks.
  Our
business could be adversely affected by the effects of swine flu, avian flu,
SARS or other epidemics or outbreaks.  China reported a number of
cases of SARS in April 2004.  In 2006, 2007 and 2008, there have
been reports on the occurrences of avian flu in various parts of China,
including a few confirmed human cases and deaths.  In April 2009,
an outbreak of swine flu occurred in Mexico and the United States.  In
May 2009, the World Health Organization declared a level 6 flu pandemic,
its highest pandemic alert phase, indicating a global pandemic
underway.  Any prolonged occurrence or recurrence of swine flu, avian
flu, SARS or other adverse public health developments in China or any of the
major markets in which we do business may have a material adverse effect on our
business and operations.  These could include our ability to travel or
ship our products outside of China and to designated markets, as well as
temporary closure of our manufacturing facilities, logistic facilities and/or
our customers' facilities, leading to delayed or cancelled
orders.  Any severe travel or shipment restrictions and closures would
disrupt our operations and adversely affect our business and results of
operations.  We have not adopted any written preventive measures or
contingency plans to combat any future outbreak of swine flu, avian flu, SARS or
any other epidemic.
  Recent
PRC regulations relating to the establishment of offshore special purpose
companies by PRC residents may subject our PRC resident shareholders to personal
liability and limit our ability to inject capital into our PRC subsidiaries,
limit our PRC subsidiaries' ability to distribute profits to us, or otherwise
adversely affect us.
  In
October 2005, the PRC SAFE issued a circular concerning foreign exchange
regulations on investments by PRC residents in China through special purpose
companies incorporated overseas (or "SPV"), or Circular No. 75, and the
implementation procedures of such regulations have been further clarified by
circular No. 106 issued by the Department of General Affairs of SAFE on May 29,
2007.  Circular No. 75 states that, if PRC residents use assets or
equity interests in their domestic entities as capital contribution to establish
offshore companies or inject assets or equity interests of their PRC entities
into offshore companies to raise capital overseas, such PRC residents must
register with local SAFE branches with respect to their overseas investments in
offshore companies and must also file amendments to their registrations if their
offshore companies experience material events, such as changes in share capital,
share transfer, mergers and acquisitions, spin-off transactions or use of assets
in China to guarantee offshore obligations. Our shareholders who are PRC
residents as determined by the relevant branch of SAFE have registered with the
relevant branch of SAFE with respect to their investments in us and our
acquisition of their interests in JA Hebei as currently
required.  However, we cannot provide any assurances that their
existing registrations have fully complied with, and they will make necessary
amendments to their registration to fully comply with, all applicable
registrations or approvals required by these SAFE circulars.  The
failure or inability of our PRC resident shareholders to comply with the
registration procedures set forth therein may subject these PRC resident
shareholders to fines and legal sanctions, restrict our cross-border investment
activities, or limit our PRC subsidiary' ability to distribute dividends to our
company.
  As
it is uncertain how SAFE will interpret or implement these circulars, we cannot
predict how this circular and other SAFE circulars will affect our business
operations or future strategies.  For example, we may be subject to
more stringent review and approval process with respect to our foreign exchange
activities, such as remittance of dividends and foreign currency-denominated
borrowings, which may adversely affect our business and prospects.
  PRC
rules on mergers and acquisitions may subject us to sanctions, fines and other
penalties and affect our future business growth through acquisition of
complementary business.
  On
August 8, 2006, six PRC government and regulatory authorities, including the
MOFCOM and the China Securities Regulatory Commission (or the "CSRC"),
promulgated a rule entitled Interim Provisions on the Takeover of Domestic
Enterprises by Foreign Investors  (or the "New M&A Rule"), which
became effective on September 8, 2006.  The New M&A Rule, among
other things, requires that an offshore SPV, formed for the listing purpose
through acquisition of PRC domestic entity and controlled by PRC residents
should obtain approval from the CSRC prior to publicly listing its securities on
an overseas stock market.  Based on consultation with the
International Department of the CSRC regarding its interpretation of the New
M&A Rule, our PRC counsel, Tian Yuan Law Firm, advised us that the CSRC
approval was not required for our initial public offering and the listing of our
ADSs on The Nasdaq Global Market and follow-on offerings.  However, we
cannot assure you that the relevant PRC governmental agencies, including MOFCOM
and other applicable departments of the CSRC, would reach the same conclusion as
our PRC counsel.  If the CSRC or other PRC regulatory body
subsequently determines that the CSRC's approval was required for our initial
and follow-on offerings and the listing of our ADSs on the Nasdaq Global Market,
we may face sanctions by the CSRC or other PRC regulatory
agencies.  In such event, these regulatory agencies may impose fines
and penalties on our operations in the PRC, limit our operating privileges in
the PRC, delay or restrict the repatriation of the proceeds from our public
offering into the PRC, or take other actions that could have a material adverse
effect on our business, financial condition, results of operations, reputation
and prospects, as well as the trading price of our ADSs.
  24
  The
New M&A Rule also established additional procedures and requirements that
could make merger and acquisition activities by foreign investors more
time-consuming and complex, including requirements in some instances that MOFCOM
be notified in advance of any change-of-control transaction in which a foreign
investor takes control of a PRC domestic enterprise.  In the future,
we may grow our business in part by acquiring complementary businesses, although
we do not have any plans to do so at this time.  Complying with the
requirements of the New M&A Rule to complete such transactions could be
time-consuming, and any required approval processes, including obtaining
approval from MOFCOM, may delay or inhibit the completion of such transactions,
which could affect our ability to expand our business or maintain our market
share.
  Failure
to comply with PRC regulations regarding the registration requirements for
employee stock ownership plans or share option plans may subject the PRC plan
participants or us to fines and other legal or administrative
sanctions.
  In
December 2006, the People's Bank of China promulgated the Administrative
Measures for Individual Foreign Exchange, which set forth the respective
requirements for foreign exchange transactions by PRC individuals under either
the current account or the capital account.  The Implementation Rules
of the Administrative Measures for Individual Foreign Exchange, issued on
January 5, 2007 by the SAFE, specify approval requirements for PRC citizens who
are granted shares or share options by an overseas listed company according to
its employee stock ownership plan or stock option plan.  On March 28,
2007, the SAFE promulgated the Processing Guidance on Foreign Exchange
Administration for Domestic Individuals Participating in Employee Stock Holding
Plans or Stock Option Plans of Overseas-Listed Companies, or the Share Option
Rule.  According to the Share Option Rule, if a PRC citizen
participates in any employee stock ownership plan or stock option plan of an
overseas listed company, a qualified PRC domestic agent or the PRC subsidiaries
of such overseas listed company shall, among other things, file, on behalf of
such individual, an application with the SAFE to obtain approval for an annual
allowance with respect to the purchase of foreign exchange in connection with
the share purchase or share option exercise as PRC domestic individuals may not
directly use overseas funds to purchase shares or exercise share options. Such
PRC citizen's foreign exchange income received from the sale of shares or
dividends distributed by the overseas listed company shall be fully remitted
into a collective foreign currency account in the PRC opened and managed by the
PRC subsidiaries of the overseas listed company or the PRC agent before
distribution to such individual.  If we or our PRC option holders fail
to comply with these regulations, we or our PRC option holders may be subject to
fines and other legal or administrative sanctions.
  In
addition, the State Administration of Taxation has issued certain circulars
concerning employee share options.  Under these circulars, our
employees working in the PRC who exercise share options will be subject to PRC
individual income tax.  Our PRC subsidiaries have obligations to file
documents related to employee share options with relevant tax authorities and to
withhold individual income taxes of those employees who exercise their share
options.  If our employees fail to pay or we fail to withhold their
income taxes according to relevant laws and regulations, we may face sanctions
imposed by the tax authorities or other PRC government authorities.
  25
  Risks
Related to Liquidity, the 2008 Convertible Notes Offering and
 Our
Relationship with the Lehman Entities
  We
have financed our operations primarily through equity contributions by our
shareholders, our initial and follow-on public offerings, a convertible note
offering, bank borrowings and cash flow from operations.  However, we
may require additional cash in the future and may not be able to secure such
cash on favorable terms, if at all.
  Working
capital and access to financing for purchase of silicon raw materials are
critical to growing and sustaining our business.  We have significant
working capital commitments because suppliers of silicon wafers and polysilicon
require us to make prepayments in advance of shipments.  Although we
believe that current cash and cash equivalents and anticipated cash flow from
operations will be sufficient to meet our anticipated cash needs, including our
cash needs for working capital and capital expenditures, for at least the next
twelve months, we may, however, require additional cash to repay existing debt
obligations or to re-finance our existing debts or due to changing business
conditions or other future developments.
  If
our existing cash is insufficient to meet our requirements, we may seek to sell
additional equity securities, debt securities or borrow from lending
institutions.  The current global liquidity and credit crisis since
the second half of 2008 has been having a significant negative impact on the
financing abilities of businesses worldwide, including that of our
company.  If we are not able to generate sufficient cash flow to meet
such obligations, we may need to refinance or restructure our debt, sell assets,
reduce or delay capital investments, or seek additional equity or debt
financing.  We cannot assure you that financing will be available in
the amounts we need or on terms acceptable to us, if at all.  The sale
of additional equity securities, including convertible debt securities, would
dilute our shareholders.  The incurrence of debt would result in
increased interest rate risk, divert cash for working capital and capital
expenditures to service debt obligations and could result in operating and
financial covenants that restrict our operations and our ability to pay
dividends to our shareholders, if any.  A shortage of such funds could
in turn impose limitations on our ability to plan for, or react effectively to,
changing market conditions or to expand through organic and acquisitive growth,
thereby reducing our competitiveness.
  The
significant amount and the structure of our offering of senior convertible notes
in May 2008 could adversely affect our business, financial condition and results
of operations.
  We
incurred a significant amount of debt and substantial debt service requirements
as a result of the May 2008 offering ("2008 Offering") of the 4.5% senior
convertible notes issue by us and maturing on May 15, 2013 (the "Senior
Notes").  As of December 31, 2009, we had US$228.173 million of
indebtedness outstanding.  Our substantial indebtedness could have
significant consequences on our future operations, including:
  ·
                requiring
      us to use a substantial portion of our cash flow from operations to
      service our indebtedness, which would reduce our cash flow available for
      working capital, capital expenditures, development projects and other
      general corporate purposes;
 ·
                limiting
      our flexibility in planning for or reacting to, and increasing our
      vulnerability to, changes in our business, the industry in which we
      operate and the general economy; and
 ·
                placing
      us at a competitive disadvantage compared to our competitors who have less
      debt or are less leveraged.
 Any
of the above-listed factors could have an adverse effect on our business,
financial condition and results of operations.
  Our
ability to meet our payment and other obligations depends on our ability to
generate significant cash flow in the future.  This, to some extent,
is subject to general economic, financial, competitive, legislative and
regulatory factors as well as other factors that are beyond our
control.  We cannot assure you that our business will generate
sufficient cash flows from operations, or that future borrowings will be
available to us in amounts sufficient and on terms reasonable to us to support
our liquidity needs.  If we are not able to generate sufficient cash
flow to service our debt obligations, we may need to refinance or restructure
our debt, including our Senior Notes, sell assets, reduce or delay capital
investments, or seek to raise additional capital.
  26
  Our
functional currency is different from the denomination of the Senior Notes and
the company's early redemption option is contingent upon its ADS
price.  Therefore, in accordance with ASC 815, Derivatives and
Hedging, the company accounted for the conversion feature, early redemption
option and conversion rate adjustment feature (together, "Embedded Derivatives")
as a freestanding instrument separately in the balance sheet.  The
Senior Notes were recorded with a discount equal to the value of the Embedded
Derivatives at the transaction date and will be accreted to the redemption value
of the Senior Notes over the life of the Senior Notes.  The change in
fair value of the Embedded Derivatives and capped call options are recorded in
the Consolidated Statements of Operations which may potentially increase the
level of our earnings volatility. For additional information, see Note 14 of
Notes to consolidated financial statements.
  We
may incur additional indebtedness.  If we do so, our increased debt
service requirements may adversely affect our ability to meet our payment
obligations on our currently outstanding Senior Notes and otherwise successfully
grow and operate our business.
  Legal
action against the Lehman Entities in connection with the Lehman Entities'
insolvency proceedings could be expensive, time-consuming and ultimately
unsuccessful.
  We
currently have the following business relationships with the Lehman Entities
around the world:
  1.)
                an
      investment of US$ 100 million in note issued by Lehman Brothers Treasury
      Co. BV ("Lehman BV") (the "Lehman Note"(1));
 2.)
                an
      ADS lending agreement dated as of May 13, 2008 with Lehman Brothers
      International (Europe) ("LBIE"); and
 3.)
                a
      capped call confirmation dated May 13, 2008 with Lehman Brothers OTC
      Derivatives Inc. ("Lehman OTC") (the "Capped Call").
 All
of the Lehman Entities are now undergoing insolvency proceedings in various
countries.  Therefore, even though the Lehman Note matured in October
2008, the insolvency proceedings prevented the payment of the Lehman Note and
our attempts to collect the amounts due on the Lehman Note.  In
addition, we are in the process of seeking the return of the ADSs borrowed by
LBIE under the ADS lending agreements.  Furthermore, in light of the
insolvency proceedings, the Lehman OTC's obligations under the Capped Call may
not be enforced and, as a result, are currently under dispute.  During
this process, we may incur significant legal expenses and allocate management
time and attention to the legal action.  Despite our expense and
efforts, however, no assurance can be provided that we will be able to recover
any of the shares or monies-owed or be awarded any damages from the Lehman
Entities.  For additional information, see Note 14 of Notes to
consolidated financial statements.
  (1)
              Lehman
      Note.  We have an approximately US$100 million USD 3-Month
      Lehman Brothers Commodity Alpha Trading Strategies I Excess
      Return  ("LCMNER") Index-Linked note, issued by Lehman BV and
      guaranteed by Lehman Brothers Holdings Inc. (or "LBHI").  The
      Lehman Note is linked to an index of LCMNER.  The maturity date
      of the Lehman Note was October 9, 2008, with 100% principal protection
      guaranteed by LBHI.  The Lehman Note and the guarantee rank
      equally with all unsecured obligations of the issuer and
      guarantor.  On September 19, 2008, the Amsterdam District Court
      granted Lehman BV a provisional suspension of payments and subsequently
      declared Lehman BV bankrupt on October 8, 2008.  The Lehman Note
      was not repaid by Lehman BV and we have made a full impairment amounting
      to RMB 686 million against the Lehman Note.  We have filed a
      claim with the administrators of Lehman BV for recovery of the US$100
      million and are working with lawyers to monitor the status of the
      bankruptcy.  Any portion of its investment that we are able to
      recover in the future will be recorded as other
  income.
  27
  Risks
Related to Our Ordinary Shares and ADSs
  The
market price for our ADSs has been volatile.
  The
market price for our ADSs has been and may continue to be highly volatile and
subject to wide fluctuations.  From the initial listing of our ADSs on
the Nasdaq Global Market on February 7, 2007 to February 7, 2008, the closing
prices of our ADSs have ranged from US$16.30 to US$75.43 per
ADS.  Then from the day after the date of our 3-for-1 ADS split
(February 7, 2008) to the date of this annual report, the closing prices of our
ADSs have ranged from US$1.8 to US$25.75 per ADS.  The last reported
trading price of our ADSs on April 20, 2010 was US$6.01 per ADS.  The
price of our ADSs may continue to fluctuate in response to factors including the
following:
  ·
                announcements
      of technological or competitive developments;
 ·
                regulatory
      developments in our target markets affecting us, our customers, our
      potential customers or our competitors;
 ·
                announcements
      regarding patent litigation or the issuance of patents to us or our
      competitors;
 ·
                announcements
      of studies and reports relating to the conversion efficiencies of our
      products or those of our competitors;
 ·
                actual
      or anticipated fluctuations in our quarterly operating
      results;
 ·
                changes
      in financial estimates by securities research analysts;
 ·
                changes
      in the economic performance or market valuations of other photovoltaic
      technology companies;
 ·
                addition
      or departure of our executive officers and key research
      personnel;
 ·
                fluctuations
      in the exchange rate between the U.S. dollar and RMB;
 ·
                release
      or expiry of lock-up or other transfer restrictions on our outstanding
      ordinary shares or ADSs;
 ·
                sales
      or perceived sales of additional ordinary shares or ADSs;
    and
 ·
                the
      outcome of the various legal actions we are taking against the Lehman
      Entities are uncertain.
 In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are not related to the operating performance
of particular companies.  These market fluctuations may also have a
material adverse effect on the market price of our ADSs.
  Our
most current memorandum and articles of association contain anti-takeover
provisions that could have a material adverse effect on the rights of holders of
our ordinary shares and ADSs.
  Our
most current memorandum and articles of association limit the ability of others
to acquire control of our company or cause us to engage in change-of-control
transactions.  These provisions could have the effect of depriving our
shareholders of an opportunity to sell their shares at a premium over prevailing
market prices by discouraging third parties from seeking to obtain control of
our company in a tender offer or similar transaction.  For example,
our Board of Directors has the authority, without further action by our
shareholders, to issue preferred shares in one or more series and to fix their
designations, powers, preferences, privileges, and relative participating,
optional or special rights and the qualifications, limitations or restrictions,
including dividend rights, conversion rights, voting rights, terms of redemption
and liquidation preferences, any or all of which may be greater than the rights
associated with our ordinary shares, in the form of ADS or otherwise. Preferred
shares could be issued quickly with terms calculated to delay or prevent a
change in control of our company or make removal of management more
difficult.  If our Board of Directors decides to issue preferred
shares, the price of our ADSs may fall and the voting and other rights of the
holders of our ordinary shares and ADSs may be materially and adversely
affected.
  28
  Holders
of ADSs have fewer rights than shareholders and must act through the depositary
to exercise those rights.
  Holders
of ADSs do not have the same rights of our shareholders and may only exercise
the voting rights with respect to the underlying ordinary shares in accordance
with the provisions of the deposit agreement.  Under our most current
memorandum and articles of association, the minimum notice period required to
convene a general meeting will be ten days.  When a general meeting is
convened, you may not receive sufficient notice of a shareholders' meeting to
permit you to withdraw your ordinary shares to allow you to cast your vote with
respect to any specific matter.  In addition, the depositary and its
agents may not be able to send voting instructions to you or carry out your
voting instructions in a timely manner.  We will make all reasonable
efforts to cause the depositary to extend voting rights to you in a timely
manner, but we cannot assure you that you will receive the voting materials in
time to ensure that you can instruct the depositary to vote your
ADSs.  Furthermore, the depositary and its agents will not be
responsible for any failure to carry out any instructions to vote, for the
manner in which any vote is cast or for the effect of any such
vote.  As a result, you may not be able to exercise your right to vote
and you may lack recourse if your ADSs are not voted as you
requested.  In addition, in your capacity as an ADS holder, you will
not be able to call a shareholder meeting.
  You
may be subject to limitations on transfers of your ADSs.
  Your
ADSs are transferable on the books of the depositary.  However, the
depositary may close its transfer books at any time or from time to time when it
deems expedient in connection with the performance of its duties.  In
addition, the depositary may refuse to deliver, transfer or register transfers
of ADSs generally when our books or the books of the depositary are closed, or
at any time if we or the depositary deem it advisable to do so because of any
requirement of law or of any government or governmental body, or under any
provision of the deposit agreement, or for any other reason.
  ADS
holders' right to participate in any future rights offerings may be limited,
which may cause dilution to your holdings and you may not receive cash dividends
if it is impractical to make them available to you.
  We
may from time to time distribute rights to our shareholders, including rights to
acquire our securities.  However, we cannot make rights available to
you in the United States unless we register the rights and the securities to
which the rights relate under the Securities Act or an exemption from the
registration requirements is available.  Also, under the deposit
agreement, the depositary bank will not make rights available to you unless the
distribution to ADS holders of both the rights and any related securities are
either registered under the Securities Act, or exempted from registration under
the Securities Act.  We are under no obligation to file a registration
statement with respect to any such rights or securities or to endeavor to cause
such a registration statement to be declared effective.  Moreover, we
may not be able to establish an exemption from registration under the Securities
Act.  Accordingly, you may be unable to participate in our rights
offerings and may experience dilution in your holdings.
  In
addition, the depositary of our ADSs has agreed to pay to you the cash dividends
or other distributions it or the custodian receives on our ordinary shares or
other deposited securities after deducting its fees and expenses.  You
will receive these distributions in proportion to the number of ordinary shares
your ADSs represent.  However, the depositary may, at its discretion,
decide that it is inequitable or impractical to make a distribution available to
any holders of ADSs.  For example, the depositary may determine that
it is not practicable to distribute certain property through the mail, or that
the value of certain distributions may be less than the cost of mailing
them.  In these cases, the depositary may decide not to distribute
such property and you will not receive such distribution.
  29
  We
are a Cayman Islands company and, because judicial precedent regarding the
rights of shareholders is more limited under Cayman Islands law than that under
U.S. law, you may have less protection for your shareholder rights than you
would under U.S. law.
  Our
corporate affairs are governed by our most current memorandum and articles of
association, the Cayman Islands Companies Law and the common law of the Cayman
Islands.  The rights of shareholders to take action against the
directors, actions by minority shareholders and the fiduciary responsibilities
of our directors to us under Cayman Islands law are to a large extent governed
by the common law of the Cayman Islands.  The common law of the Cayman
Islands is derived in part from comparatively limited judicial precedent in the
Cayman Islands as well as that from English common law, which has persuasive,
but not binding, authority on a court in the Cayman Islands.  The
rights of our shareholders and the fiduciary responsibilities of our directors
under Cayman Islands law are not as clearly established as they would be under
statutes or judicial precedent in some jurisdictions in the United
States.  In particular, the Cayman Islands has a less developed body
of securities laws than the United States.  In addition, some U.S.
states, such as Delaware, have more fully developed and judicially interpreted
bodies of corporate law than the Cayman Islands.
  As
a result of all of the above, public shareholders may have more difficulty in
protecting their interests in the face of actions taken by our management, our
Board of Directors or our controlling shareholders than they would as
shareholders of a U.S. public company.
  You
may have difficulty enforcing judgments obtained against us.
  We
are a Cayman Islands company and substantially all of our assets are located
outside of the United States.  Substantially all of our current
operations are conducted in the PRC.  In addition, most of our
directors and officers are nationals and residents of countries other than the
United States.  A substantial portion of the assets of these persons
are located outside the United States.  As a result, it may be
difficult for you to effect service of process within the United States upon
these persons.  It may also be difficult for you to enforce in U.S.
courts judgments obtained in U.S. courts based on the civil liability provisions
of the U.S. federal securities laws against us and our officers and directors,
most of whom are not residents in the United States and the substantial majority
of whose assets are located outside of the United States.  In
addition, there is uncertainty as to whether the courts of the Cayman Islands or
the PRC would recognize or enforce judgments of U.S. courts against us or such
persons predicated upon the civil liability provisions of the securities laws of
the United States or any state.  In addition, it is uncertain whether
such Cayman Islands or PRC courts would be competent to hear original actions
brought in the Cayman Islands or the PRC against us or such persons predicated
upon the securities laws of the United States or any state.
  We
may be classified as a passive foreign investment company, which could result in
adverse United States federal income tax consequences to U.S.
Holders.
 
 Based on
the price of our ADSs, the value of our assets, and the composition of our
income and assets, we do not believe that we were a passive foreign investment
company, or PFIC, for United States federal income tax purposes for the taxable
year ended December 31, 2009.  Because the value of our assets for
purposes of the PFIC test will generally be determined by reference to the
market price of our ADSs or ordinary shares, fluctuations in the market price of
the ADSs and ordinary shares may cause us to become a PFIC.  While we
do not expect to become a PFIC in the current or future taxable years, no
assurance can be given because the determination of whether we are a PFIC is a
factual determination made annually and because there are uncertainties in the
application of the relevant rules.If we were to be
classified as a PFIC in any taxable year, a U.S. Holder (as defined in "Taxation
– Material U.S. Federal Tax Considerations") would be subject to special rules
generally intended to reduce or eliminate any benefits from the deferral of
United States federal income tax that a U.S. Holder could derive from investing
in a non-United States corporation that does not distribute all of its earnings
on a current basis.  Further, if we are classified as a PFIC for any
year during which a U.S. Holder holds our ADSs or ordinary shares, we generally
will continue to be treated as a PFIC for all succeeding years during which such
U.S. Holder holds our ADSs or ordinary shares.  For more information
see the section titled “Taxation – Material U.S. Federal Tax Considerations -
PFIC Considerations”.
 
 ITEM
      4.
              INFORMATION
      ON THE COMPANY
 
 
 A.
              HISTORY
      AND DEVELOPMENT OF THE COMPANY
 
 We
commenced our business in May 2005 through JingAo Solar Co., Ltd., or JA Hebei,
a limited liability company established in China.  To enable us to
raise equity capital from investors outside of China, we established a holding
company structure by incorporating JA Development Co., Ltd., or JA BVI, in the
British Virgin Islands in July 2006.
  We
undertook a restructuring by incorporating JA Solar Holdings Co., Ltd., or JA
Solar, a limited liability company in the Cayman Islands as our listing vehicle,
followed by JA Solar's issuance of shares to all existing shareholders of JA BVI
in exchange for all of the shares that these shareholders held in JA
BVI.  Upon completion of the restructuring in August 2006, JA BVI
became a wholly-owned subsidiary of JA Solar, and JA Solar became our ultimate
holding company.
  30
  In
November 2006, we established our subsidiary Shanghai JA Solar Technology Co.,
Ltd., or JA Fengxian, in Fengxian, Shanghai in the form of a Sino-foreign joint
venture limited liability company that is 43.75% owned by JA Hebei and 56.25%
owned by JA BVI.  In March 2007, JA BVI and JA Hebei entered into a
share transfer agreement, under which JA BVI acquired JA Hebei's 43.75% equity
interest in JA Fengxian and became the sole shareholder of JA
Fengxian.  In April 2007, JA BVI incorporated a wholly-owned
subsidiary in California, U.S.A., JA Solar USA Inc., to engage in after-sales
and other related services in the U.S.  In June 2007, JA BVI
established JA Solar PV Technology Co., Ltd., a wholly-owned subsidiary, in
Zhabei, Shanghai. In November 2007, for purposes of conducting our future
operations in Yangzhou, Jiangsu Province, we acquired Yangzhou Jinhong
Technology Development Co., Ltd., a shell company established in 2006 but has
not yet actively engaged in any operations.  We renamed this entity JA
Solar Technology Yangzhou Co., Ltd., which is now wholly owned by JA
BVI.  In December 2007, we established another wholly-owned subsidiary
in Hong Kong, JA Solar Hong Kong Limited, or JA Hong Kong.  In October
2008, JA Hong Kong incorporated Jing Hai Yang Semiconductor Materials (Donghai)
Co., Ltd., a wholly owned subsidiary, in Donghai, Jiangsu
Province.  In March 2009, JA Yangzhou incorporated Yangzhou JA Solar
R&D Corporation Limited, a wholly owned subsidiary, in Yangzhou, Jiangsu
Province.  In June 2009, for purposes of our 3MW photovoltaic project
in Korea, we acquired Greenhills S.a.r.l. and renamed it JA Solar Luxembourg
S.a.r.l., which is now wholly owned by JA Hong Kong.  JA Solar
Luxembourg purchased Jindosun Park Inc. in Korea in June 5, 2009.  In
November 2009, JA Hong Kong incorporated Yangzhou JA Solar PV Engineering Co.
Ltd., a wholly owned subsidiary, in Yangzhou, Jiangsu Province.  In
February 2010, for purposes of our business in Europe, JA Luxembour acquired
ZETA sechzigste VV GmbH and renamed it JA Solar GmbH.
  See
also "Item 5. Operating and Financial Review and Prospects – B. Liquidity and
Capital Resources – Capital Expenditures" and "Item 14.  Material
Modifications to the Rights of Security Holders and Use of Proceeds – B. Use of
Proceeds."
  The
following diagram illustrates our corporate structure, the place of formation in
the parentheses and the ownership interests of our subsidiaries as of the date
of this annual report.
  
  Our
principal executive offices are located atNo. 36, Jiang Chang San
Road, Zhabei, Shanghai, The People's Republic of China.  Our telephone
number at this address is (86) 21-60955999 and our fax number is
(86) 21-60955727.
  Investor
inquiries should be directed to us at the address and telephone number of our
principal executive offices set forth above.  Our website is www.jasolar.com.  The
information contained on our website is not part of this annual
report.  Our agent for service of process in the United States is CT
Corporation System, located at 111 Eighth Avenue, New York, New York
10011.
  31
  
 B.
              BUSINESS
      OVERVIEW
 
 Overview
  We
are a leading China-based manufacturer of high-performance solar products as
measured by solar cell production in 2009.  We were established in May
2005 and commenced commercial operations in April 2006 with one solar cell
manufacturing line of 25 MW per annum.  With our experienced technical
and production teams, we reached full production capacity on our first
manufacturing line in July 2006 and, by the end of 2009, have increased our cell
production capacity to 800 MW per annum.  We expect to expand our name
plate cell manufacturing capacity to 1.1 GW by the end of 2010. We generally
sell our cell products to solar module manufacturers who assemble and integrate
our solar cells into modules and systems that convert sunlight into
electricity.  Solar modules and systems that incorporate our products
are distributed globally, including to end-customers in Europe, Asia and the
Americas.  As part of our business strategy to achieve more vertical
integration, we began engaging in module and wafer manufacturing in
2010.
  Our
Solar Cell Products
  We
are primarily focused on solar cell design and manufacturing, a stage in the
solar power industry value chain that we believe has a significant amount of
technology value added which results in higher profit potential and higher
barriers to entry.  We design, manufacture and market high-performance
solar cells, which are made from specially processed silicon
wafers.  Our solar cells are assembled and integrated into solar
modules and systems that convert sunlight into electricity through a process
known as the photovoltaic effect.  Solar cells are the key components
of solar modules.
  We
currently produce and sell both monocrystalline and multicrystalline solar
cells.  We also provide cell processing services to some of our
customers who supply us with their own wafers and we process these wafers into
solar cells that are sold back to them.
  Product
Features
  Efficiency,
format and cell thickness are the most important properties in determining
production costs and sale price of solar cells.
  ·
                Cell Efficiency.Cell
      efficiency refers to the ratio of the maximum power output of electric
      energy released and the light received.  A cell with a higher
      degree of efficiency (having the same format) generates more
      electricity.  Efficiency is a key determinant for sale price and
      therefore affects the profitability margins of the
      manufacturer.  In 2009, our monocrystalline solar cells
      generally achieved efficiency levels with an average of up to 17.6% and
      our multicrystalline solar cells generally achieved efficiency levels with
      an average of up to 16.2%.  In September 2009, we began working
      to commercialize a silicon ink technology to further improve the
      efficiency levels of our solar cells. Cell efficiency is mainly affected
      by the following factors:
 ·
                Wafer
      Quality.  The quality of the wafer from which a cell is
      produced is of significant importance for the processing and the
      efficiency of the cells.
 ·
              Manufacturing
      Process.We believe that we have developed and
      implemented advanced manufacturing processes in our production
      facilities.  For example, we use special techniques in the
      diffusion process in order to fabricate high-performance cells with
      improved cell efficiency.  In addition, we have a well-trained
      maintenance team that continuously monitors each step of our manufacturing
      process.  We believe that this monitoring system has helped us
      maintain consistency and uniformity in the solar cells we produce and
      overall improved our cell efficiency, as well as helped us minimize the
      down-time of our manufacturing
lines.
  32
  ·
                Format.The
      larger the format of a cell, the greater its power output (having the same
      efficiency).  Accordingly, larger cells (having the same
      efficiency) can be sold for a higher price.  On the other hand,
      a larger format generally results in increased breakage rates and higher
      material cost per watt.  Given the different size of the wafers
      we currently obtain from our suppliers, we currently produce both
      monocrystalline and multicrystalline solar cells with formats of 125 mm ×
      125 mm and 156 mm × 156 mm.
 ·
                Cell
      Thickness.The thinner a cell, the less polysilicon is
      generally needed for its production.  This facilitates a cost
      reduction per cell and the production of more cells from a given amount of
      polysilicon.  However, thinner cells also tend to be more
      fragile and have higher breakage rates.  Some of our research
      and development projects focus on refining process technologies for
      ultra-thin wafers. The average thickness of the silicon wafers from our
      suppliers is in the range of 210-170 microns.
 Manufacturing
Capacity and Facilities
  Our
current manufacturing facilities are located in Ningjin, Hebei Province and
Yangzhou, Jiangsu Province. We are building an additional 210 MW of cell
manufacturing capacity in Ningjin, Hebei and Yangzhou, Jiangsu, which we expect
will commence production before the end of 2010.
  Manufacturing
Facility in Ningjin, Hebei
  Our
main manufacturing center is located in Ningjin, Hebei, where we have 21
operational solar cell manufacturing lines with a total rated manufacturing
capacity per annum of 525 MW.
  For
our manufacturing facilities in Ningjin, Hebei, we lease approximately 106,582
square meters and 7,000 square meters from Jinglong Group and another related
company controlled by our chairman, respectively, inside Jinglong industrial
park, which houses our manufacturing lines, as well as offices, warehouses and
R&D laboratories.  See also "Item 7. Major Shareholders and
Related Party Transactions — B. Related Party Transactions."
  R&D
and Manufacturing Facilities in Yangzhou, Jiangsu
  We
have established a manufacturing and R&D center in Yangzhou, Jiangsu, where
we have installed 11 solar cell manufacturing lines with a total rated
manufacturing capacity of 275 MW per annum.  In addition, in March
2009, we established a new R&D center in Yangzhou under our wholly-owned
subsidiary, JA Solar Yangzhou R&D.  The new Yangzhou R&D
center is located within our original manufacturing and R&D center in
Yangzhou and is dedicated to research and development activities.  We
lease approximately 10,400 square meters from third parties for our R&D and
manufacturing facilities in Yangzhou.
  Manufacturing
Process
  We
use a semi-automated manufacturing process to lower our operating costs and
capital expenditures.  We intend to optimize automation and manual
operations in our manufacturing process to take advantage of our location in
China, where the costs of skilled labor and engineering and technical resources
tend to be lower than those in developed countries.  The following
provides a brief overview of the most important steps in our solar cell
manufacturing process:
  ·
              Texturing and
      cleaning.  The solar cell manufacturing process begins
      with texturing of the surface of wafers which reduces the solar cell's
      reflection of sunlight, followed by surface cleaning of the
      cells.  The texturing process for multicrystalline wafers is
      slightly different from that for monocrystalline
      wafers.  However, we believe we are capable of producing
      multicrystalline solar cells by making certain minor adjustments in our
      texturing process.
  33
  ·
                Diffusion.  Next,
      through a thermal process, a negatively charged coating is applied to the
      positively charged raw wafers in a diffusion furnace.  At the
      high furnace temperature, the phosphorous atoms diffuse into the wafer
      surface.  As a result, the wafer now has two separate layers — a
      negatively charged layer on the surface and a positively charged layer
      below it.
 ·
                Isolation.  To
      achieve a clean separation of the negative and positive layers, the edges
      of the wafers are isolated through etching, a process that removes a very
      thin layer of silicon around the edges of the solar cell resulting from
      the diffusion process.
 ·
                Anti-reflection
      coating.  We then apply an anti-reflection coating to the
      front surface of the solar cell to enhance its absorption of
      sunlight.
 ·
                Printing.  In
      a screen printing process, we print silver paste and aluminum paste to the
      front and back surfaces of the solar cell, respectively, to act as
      contacts, with the front contact in a grid pattern to allow sunlight to be
      absorbed.
 ·
                Co-firing.  Subsequently,
      contacts are connected through an electrode firing process in a conveyor
      belt furnace at high temperature.  The high temperature causes
      the silver paste to become embedded in the surface of the silicon layer
      forming a reliable electrical contact.  The aluminum paste on
      the back of the cell serves as a mirror for particles, further enhancing
      the efficiency level.
 ·
                Testing and
      sorting.  Finally, we complete the manufacturing of solar
      cells by testing and sorting.  The finished cells are sorted
      according to efficiency levels and optical criteria.  Each cell
      is tested and subsequently assigned to a performance and quality class
      depending on the testing results.
 Production
Equipment
  The
major manufacturing equipment for solar cell production includes texturing
machines, diffusion furnaces, edge isolators, wafer cleaning machines, coating
systems, contact printers, co-firing machines and sorting
machines.  We purchase our equipment from various recognized equipment
manufacturers in China, the United States, Europe and Japan.  We have
close relationships with the world's leading equipment manufacturers in the
solar power industry and work closely with selected equipment manufacturers to
develop and build our solar cell manufacturing lines.  In addition, we
have developed technical specifications for the design of certain equipment and
engaged manufacturers to construct the equipment in accordance with our
specifications.  This custom-made equipment is manufactured locally
and used to substitute for certain equipment that we would otherwise be required
to import from overseas at a higher cost.  Our technical team is
responsible for overseeing the installation of the manufacturing lines to ensure
that the interaction between the various individual components and the entire
production process is optimized.
  Raw
Materials and Utilities
  Silicon
wafers are the most important raw materials to produce solar
cells.  Securing an adequate supply of silicon wafers is of great
significance for us.  Other than silicon wafers, raw materials for
manufacturing solar cells include auxiliary materials such as metal pastes,
chemicals and gases.  For these auxiliary materials, we choose our
suppliers through a bidding process based on the quality of their materials and
the competitiveness of their pricing terms.  We seek to maintain
active relationships with multiple suppliers for each of these auxiliary raw
materials, and we believe we can readily find alterative sources of supply on
terms acceptable to us if any of our current suppliers can not meet our
requirements.
  Silicon
Wafers
  Our basic
raw material for producing solar cells is silicon wafers, which are sliced from
crystalline ingots developed from melted polysilicon.  As such,
polysilicon is an essential raw material that is used to make silicon
wafers.  The success of our business and our growth strategy depend
heavily on securing a sufficient supply of silicon wafers and polysilicon at
commercially reasonable prices and terms to meet our existing and planned
production capacity.  In past years, in order to better manage our
unit costs and to secure adequate supply of silicon wafers, we entered into a
number of multi-year supply agreements for silicon wafers and polysilicon in
amounts that were expected to meet our anticipated production
needs.  For example, we entered into a long-term supply agreement with
Jinglong Group that is renewable at the end of 2010 for an additional three-year
term and a 72-month supply agreement with GCL beginning in January
2010.
  34
  The
unit prices of silicon wafers and polysilicon under those agreements were either
fixed or fixed during an initial period of several months, after which, the
prices would be determined by further negotiations.  We have completed
re-negotiating various terms of our supply agreements with certain of our
suppliers and are continuing to engage in discussions with our other various
suppliers to re-adjust the pricing, prepayment, quantity, delivery and other
terms of our existing supply agreements to better reflect current market
conditions.
  As
part of our business strategy to achieve more vertical integration and to reduce
wafer cost, we have established a wafer manufacturing facility in Donghai,
Jiangsu Province under our wholly-owned subsidiary JHY Semiconductor, which has
commenced production in 2010.  Initial wafer production capacity for
JHY Semiconductor is expected to be 120MW by the end of 2010.  We
leased approximately 10,400 square meters for this facility. In April 2009 and
September 2009, we obtained the land use right with respect to 86,576 and
133,412 square meters of land, respectively, for our R&D and manufacturing
facilities in Donghai. We intend to use these lands for wafer
manufacturing.
  See
also "Item 3. Key Information — D. Risk Factors — Risks Related to Our Supply
Chain" and "Item 5. Operating and Financial Review and Prospects – F. Tabular
Disclosure of Contractual Obligations."
  Utilities
  We
consume a significant amount of electrical power and water in our production of
solar cells.  We have obtained the necessary approvals and/or permits
from the relevant PRC governmental authority for our water and electricity usage
in our existing manufacturing and R&D centers.
  Quality
Assurance and Certifications
  Our
senior management team is actively involved in setting quality assurance
policies and managing quality assurance performance to ensure the high quality
of our solar cell products. We have received an ISO 9001:2008 certification from
TüV SüD Management Service GmbH for JA Yangzhou’s quality management system in
designing, manufacturing and sale of solar cells. During the manufacturing
process, we continuously monitor the quality of our products in process by
following procedures including: (i) automatic monitoring and sorting system
based on measurement of the efficiency level, breakage rate, and purity level of
our solar cell products and (ii) manual inspection of the surface outlook of
solar cells.  If any of our solar cell products is damaged, defective,
or does not meet other quality standards, it will be sorted out during the
monitoring process.
  We
believe that we have a strong equipment maintenance team with well-trained
personnel to oversee the operation of our manufacturing lines to avoid any
unintended interruption, and to minimize the regular down time, of such
manufacturing lines.  To ensure that our quality assurance procedures
are effectively applied, manufacturing line employees are provided with regular
job training.
  Markets
and Customers
  We
sell our solar cells principally to solar module manufacturers who assemble and
integrate our products into modules and systems.  We plan to continue
to expand our direct sales in selected overseas markets, including Germany,
Spain, Sweden, South Korea and the United States.  Our sales and
marketing strategy is to selectively and quickly expand our customer base to
include established players in the global solar power industry by (i)
establishing long-term relationships with existing customers to develop a loyal
customer base, and (ii) expanding our international sales and distribution
channels worldwide by selectively adding more sales and marketing
personnel.  Over the past year, our strategy has allowed us to
successfully grow our international presence to the point that approximately 26%
of our total sales revenue in 2009, and approximately 29% of our total sales
revenue in the fourth quarter of 2009, were from customers outside
China.
  35
  For
the years ended December 31, 2007, 2008 and 2009, approximately 85.8%, 76.3% and
73.8% of our total sales revenue was made to customers based in China,
respectively.
  The
following table summarizes our net revenues generated from different geographic
markets:
  Year
      Ended December 31,2007
                    
                    
                    2008
                    
                    
                    2009(RMB
      in millions)China
                    
                    
                    2,310.5
                    
                    
                    
                    4,162.0
                    
                    
                    
                    2,789.8Outside
      China:Spain
                    
                    
                    154.8
                    
                    
                    
                    613.5
                    
                    
                    
                    57.5Germany
                    
                    
                    0.4
                    
                    
                    
                    144.9
                    
                    
                    
                    396.9Rest
      of the world
                    
                    
                    228.0
                    
                    
                    
                    537.9
                    
                    
                    
                    535.0383.2
                    
                    
                    
                    1,296.3
                    
                    
                    
                    989.4Total
      net revenue
                    
                    
                    2,693.7
                    
                    
                    
                    5,458.3
                    
                    
                    
                    3,779.2
 In
order to maximize the effective utilization of our production capacity, we also
provide cell processing services to some of our customers who supply us with
their own wafers and we process these wafers into solar cells that are sold back
to them.  For the year ended December 31, 2009, we generated revenues
of RMB406.9 million from solar cell processing services.
  As
an additional service to our customers, we also engage third party OEM producers
to assemble the solar cells we produce into solar modules that meet our
customers’ requirements.  Beginning in 2010, as part of our business
strategy to achieve more vertical integration, we launched our module
manufacturing service in Fengxian, Shanghai under our wholly-owned subsidiary JA
Fengxian.  For our module manufacturing facilities in Fengxian,
Shanghai, we lease approximately 21,000 square meters from Jinglong Group, which
houses our module processing facilities, as well as offices, warehouses and
R&D laboratories.  See also "Item 7. Major Shareholders and
Related Party Transactions — B. Related Party Transactions."
  36
  Intellectual
Property
  We
currently do not own any registered intellectual property rights and we rely on
trade secrets and other similar protections.  Dr. Ximing Dai, our
former chief technology officer prior to her resignation in December 2007, had
contributed to us in 2005, through her wholly-owned company, Australia PV
Science & Engineering Co., certain process technology that she had developed
for the production of solar cells.  This technical know-how had an
implied value of RMB 9.0 million and was counted as part of Dr. Ximing Dai's
equity investment in us.  Following Dr. Ximing Dai's resignation, we
have continued to improve on such technology.
  Competition
  The
solar power market is intensely competitive and rapidly evolving.  The
number of solar power product manufacturers has rapidly increased due to the
growth of actual and forecast demand for solar power products and the relatively
low barriers to entry. Our competitors include Suntech Power Holdings Co., Ltd.
and Trina Solar Limited. We expect to face increased competition, which may
result in price reductions, reduced margins or loss of market
share.  Some of our competitors have become vertically integrated,
from upstream silicon wafer manufacturing to solar power system
integration.  We expect to compete with future entrants to the
photovoltaic market that offer new technological
solutions.  Furthermore, many of our competitors are developing or
currently producing products based on new photovoltaic technologies, including
thin film, ribbon, sheet and nano technologies, which they believe will
ultimately cost the same as or less than crystalline silicon technologies used
by us.  In addition, the entire photovoltaic industry also faces
competition from conventional and non-solar renewable energy
technologies.  Due to the relatively high manufacturing costs compared
to most other energy sources, solar energy is generally not competitive without
government incentive programs.
  Many
of our existing and potential competitors have substantially greater financial,
technical, manufacturing and other resources than we do.  Our
competitors' greater size and longer operating history in some cases provide
them with a competitive advantage with respect to manufacturing costs because of
their economies of scale and their ability to purchase raw materials at lower
prices.  Many of our competitors also have greater brand name
recognition, more established distribution networks and larger customer
bases.  In addition, many of our competitors have well-established
relationships with our existing and potential customers and have extensive
knowledge of our target markets.  As a result, they may be able to
devote greater resources to the research, development, promotion and sale of
their products and respond more quickly to evolving industry standards and
changes in market conditions than we can.
  See
"Item 3. Key Information — D. Risk Factors — Risks Related to Our Sales Channels
— We compete in a highly competitive market and many of our competitors have
resources greater than ours."
  Regulation
  This
section sets forth a summary of the most significant regulations or requirements
that affect our business activities in China and our shareholders’ rights to
receive dividends and other distributions from us.
  Renewable Energy
Law and Other Government Directives
  The
Renewable Energy Law of the People’s Republic of China enacted by China in
February 2005 (effective January 1, 2006) sets forth policies to encourage the
development and use of solar and other non-fossil fuel renewable energy and
their on-grid application. The law also sets forth the national policy to
encourage the installation and use of solar energy water-heating systems, solar
energy heating and cooling systems, solar photovoltaic systems and other solar
energy utilization systems. In addition, the Renewable Energy Law also expressly
permits financial incentives, such as governmental funding, preferential loans
and tax preferences for the development of renewable energy
projects.
  37
  Since
the enactment of the Renewable Energy Law in 2005, the State Council, the NDRC,
the Ministry of Construction, and the Ministry of Finance promulgated a number
of directives to encourage the expansion of the renewable energy power
generation industry, including the solar industry. These directives established
specific measures relating to the pricing of electricity generated by solar and
other renewable power generation systems and the sharing of certain costs
incurred by solar and other renewable power generation systems by utility
end-users. The directives also provide specific allocations of administrative
and supervisory powers and responsibilities amongst various relevant government
agencies at the national and provincial levels.  Further, the
directives stipulate relevant responsibilities among electricity grid companies
and power generation companies with a view to the implementation of the
renewable energy Law.
  In
June 2005, China’s Ministry of Construction issued a directive to expand the use
of solar energy in residential and commercial buildings and the increased
application of solar energy in China’s townships. In addition, China’s State
Council promulgated a directive in July 2005 that set forth specific measures to
conserve energy resources and encourage exploration, development and use of
solar energy in China’s western and rural areas, which had not been covered by
electricity transmission grids.
  In
January 2006, the NDRC, issued two implementing rules relating to the Renewable
Energy Law: (1) the Trial Measures on the Administration over the Pricing and
Cost Allocation of Renewable Energy Power Generation and (2) the Administrative
Regulations Relating to the Renewable Energy Power Generation. These
implementing rules, among other things, set forth general policies for the
pricing of on-grid power generated by solar and other renewable energy. In
addition, on May 30, 2006, the PRC Ministry of Finance issued the Provisional
Measures for Administration of Specific Funds for Development of Renewable
Energy, which provides that the PRC government will establish a fund
specifically for the purpose of supporting the development of the renewable
energy industry, including the solar energy industry.
  On
March 3, 2008, the NDRC issued the “11th Five-Year Plan for the Development of
Energy Resources,” which announced the PRC government’s support for the
development of renewable energy resources in China, including solar
power.
  On
March 23, 2009, China’s Ministry of Finance promulgated the Interim Measures for
Administration of Government Subsidy Funds for Application of Solar Photovoltaic
Technology in Building Construction, or the Interim Measures, to support the
demonstration and the promotion of solar photovoltaic application in China.
Local governments are encouraged to issue and implement supporting policies for
the development of solar photovoltaic technology. Under these Interim Measures,
the Ministry of Finance provides subsidies for projects with individual solar
installations that are greater that 50 kilowatt-peak in size and have more than
16% conversion efficiency for monocrystalline photovoltaic products, more than
14% conversion efficiency for multicrystalline photovoltaic products and more
than 6% conversion efficiency for amorphous silicon photovoltaic products, and
gives priority support to solar photovoltaic technology integrated into building
construction, grid-connected solar photovoltaic building applications and some
public photovoltaic building applications such as schools, hospitals and
offices. For 2009, the standard subsidy is set at RMB20 per watt in principle
and the detailed standard is to be determined by factors including, but not
limited to, the level of integration of buildings with photovoltaic and the
technology of photovoltaic products. The Interim Measures do not apply to
projects completed before March 23, 2009, the promulgation date of the Interim
Measures.
  38
  On
April 16, 2009, the General Offices of the PRC Ministry of Finance and the PRC
Ministry of Housing and Urban-Rural Development jointly issued the Guidelines
for Declaration of Demonstration Project of Solar Photovoltaic Building
Applications. These guidelines set the subsidy given out in 2009 to qualified
solar projects at no more than RMB20 per watt for projects involving the
integration of photovoltaic components into buildings’ structural elements and
at no more than RMB15 per watt for projects involving the installation of
photovoltaic components onto building rooftops and wall surfaces.
  Environmental
Regulations
  We
may use, generate and discharge toxic, volatile or otherwise hazardous chemicals
and wastes in our research, development and manufacturing activities. We are
subject to a variety of governmental regulations related to the storage, use and
disposal of hazardous materials. The major environmental regulations applicable
to us include the Environmental Protection Law of the PRC, the Law of PRC on the
Prevention and Control of Water Pollution, Implementation Rules of the Law of
PRC on the Prevention and Control of Water Pollution, the Law of PRC on the
Prevention and Control of Air Pollution, Implementation Rules of the Law of PRC
on the Prevention and Control of Air Pollution, the Law of PRC on the Prevention
and Control of Solid Waste Pollution, the Law of PRC on the Prevention and
Control of Noise Pollution and PRC regulations regarding Administration of
Construction Project Environmental Protection.
  Restrictions on
Foreign Businesses and Investments
  Catalogue
of Industries for Guiding Foreign Investment, updated and effective as of
December 1, 2007, is the principal regulation governing foreign ownership of
solar photovoltaic businesses in the PRC. Under this regulation, the solar
photovoltaic business is listed as an industry where foreign investments are
encouraged.
  Taxation
  See
“Item 10. Additional Information. E. Taxation.”
  Dividend
Distribution
  The
principal regulations governing distribution of dividends paid by wholly
foreign-owned enterprises, include:
  •
                Wholly
      Foreign-Owned Enterprise Law of 2000, as amended; and•
                Wholly
      Foreign-Owned Enterprise Law Implementation Rules of 2000, as
      amended.
  Under
the current regulatory regime in China, foreign-invested enterprises in China
may only pay dividends out of their accumulated profits, if any, determined in
accordance with the PRC accounting standards and regulations. In addition, a
wholly foreign-owned enterprise in China is required to set aside at least 10%
of its after-tax profit calculated in accordance with the PRC accounting
standards and regulations each year as its general reserves until the cumulative
amount of such reserves reaches 50% of its registered capital. These reserves
are not distributable as cash dividends. The board of directors of a wholly
foreign-owned enterprise has the discretion to allocate a portion of its
after-tax profits to its staff welfare and bonus funds, which is also not
distributable to its equity owners except in the event of a liquidation of the
foreign-invested enterprise.
  39
 Foreign Currency
Exchange
  China
regulates foreign currency exchanges primarily through the following
regulations:
  •
                  Regulation
      of the People’s Republic of China on Foreign Exchange Administration
      (2000), as amended; and•
                  Regulations
      of Settlement, Sale and Payment of Foreign Exchange
  (1996).
 Under
the Regulation of the People’s Republic of China on Foreign Exchange
Administration, foreign currencies are prohibited from circulation and shall not
be quoted for pricing or settlement within the territory of the People’s
Republic of China, unless otherwise provided for by the State. The Renminbi is
convertible for current account items, including distribution of dividends,
payment of interest, trade and service-related foreign exchange transactions.
Conversion of Renminbi for capital account items, such as direct investment,
loan, securities investment and repatriation of investment, however, is still
subject to the approval of SAFE. Foreign exchange receipts for current account
transactions may, in accordance with the relevant provisions of the State, be
retained or sold to financial institutions conducting foreign exchange
settlement and sale operations.
  Under
the Regulations of Settlement, Sale and Payment of Foreign Exchange,
foreign-invested enterprises may only buy, sell and/or remit foreign currencies
at those banks authorized to conduct foreign exchange business after providing
valid commercial documents and, in the case of capital account item
transactions, obtaining approval from the SAFE. Capital investments by
foreign-invested enterprises outside of China are also subject to limitations,
which include approvals by the Ministry of Commerce, SAFE and the
NDRC.
 
 C.
              ORGANIZATIONAL
      STRUCTURE
 
 For
a description of our organizational structure, See "Item 4. Information on the
Company — A. History and Development of the Company."
 
 D.
              PROPERTY,
      PLANTS AND EQUIPMENT
 
 We
lease office space in various locations around the world where we maintain sales
and regional offices.  We believe that our existing facilities,
together with the facilities under construction and to be constructed under our
current plans, are adequate for our current requirements.  In
addition, we own our principal executive office building located in Zhabei,
Shanghai that is approximately 12,695 square meters.
  See
also "Item 4. Information on the Company — B. Business Overview — Manufacturing
Capacity and Facilities."
  Environmental
Matters
  As
we use, generate and discharge toxic, volatile and otherwise hazardous chemicals
and wastes in our research and development and manufacturing activities, we are
required by PRC law to obtain pollutant discharging permits and undergo
government-administered safety examinations with respect to our production
facilities.  As of the date of this annual report, we have obtained
the necessary permits and passed the necessary examinations with respect to the
first three of our manufacturing lines and are in the process of doing the same
with respect to our other manufacturing lines.  So far, we have not
been assessed any penalties for any non-compliance with PRC environmental law
and regulations.  However, if we fail to comply with such laws and
regulations in the future, we may be required to pay fines, suspend production
or cease operation.  Any failure by us to control the use of or to
adequately restrict the discharge of hazardous substances could subject us to
potentially significant monetary damages and fines or suspensions in our
business operations.
  40
  ITEM
      4A.
              UNRESOLVED
      STAFF COMMENTS
  None.
 
 ITEM
      5.
              OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS
 
 The
following discussion and analysis of our financial condition and results of
operations are based upon and should be read in conjunction with our
consolidated financial statements and the related notes included in this annual
report.  This discussion contains forward-looking statements that
involve risks, uncertainties and assumptions.  We caution you that our
business and financial performance are subject to substantial risks and
uncertainties.  Our actual results could differ materially from those
projected in the forward-looking statements as a result of various factors,
including those set forth in "Item 3. Key Information — D. Risk Factors" and
elsewhere in this annual report.
 
 A.
              OPERATING
      RESULTS
 
 Overview
  We
are one of the leading manufacturers of high-performance solar cells based in
China.  We conduct our business primarily through our wholly-owned
subsidiaries in China, and operate and manage our business as a single
segment.  We commenced our business through JA Hebei in May
2005.  Pursuant to a recapitalization plan, all of the former
shareholders of JA Hebei transferred their equity interests in JA Hebei to JA
BVI, our wholly-owned subsidiary incorporated under the laws of the British
Virgin Islands.  This recapitalization is accounted for as a legal
reorganization of entities under common control, in a manner similar to a
pooling-of-interest.  Accordingly, our consolidated financial
statements have been prepared as if the current corporate structure had been in
existence throughout the periods presented.
  We
derive revenues primarily from sales of solar cells to solar module
manufacturers.  For the year ended December 31, 2009, our revenues and
net loss were RMB 3.78 billion and RMB 128.7 million, respectively.
  We
have a limited operating history, which may not provide a meaningful basis to
evaluate our business.  You should consider the risks and difficulties
frequently encountered by early-stage companies, such as us, in new and rapidly
evolving markets, such as the solar power market.  Recent growth in
our results of operations should not be taken as indicative of the rate of
growth, if any, that can be expected in the future.  In addition, our
limited operating history provides a limited historical basis to assess the
impact that critical accounting policies may have on our business and our
financial performance.
  Factors
Affecting our Results of Operations
  We
believe that the following factors have had, and we expect that they will
continue to have, a significant effect on the development of our business,
financial condition and results of operations.
  ·
              Industry
      Demand.  Demand
      for solar cells is critical to our business and revenue
      growth.  In the past year, demand for solar cells has become
      more sluggish due to issues such as the lack of financing caused by the
      global financial crisis and the reduction of incentives, for example,
      Spain's 500 MW cap on subsidized solar power.  Furthermore, the
      past year has seen a significant drop in crude oil prices – a factor that
      has led to a further decrease in demand for solar cell
      products.
  41
  See
      "Item 3. Key Information — D. Risk Factors — Risks Related to Our Sales
      Channels — The execution of our growth strategy is dependent upon the
      continued availability of financing to our customers as well as
      third-party financing arrangements for the end-user of our products, and
      is affected by general economic conditions."
 ·
              Capacity
      Utilization.  We have expanded our manufacturing capacity
      from 25 MW to 800 MW per annum since inception.  In order to
      improve the effective utilization of our production capacity, we have also
      entered into additional solar cell processing arrangements with customers
      who have their own wafer supplies where we obtain silicon wafer supplies
      from these customers, and sell all or a substantial portion of the solar
      cells manufactured with these wafers back to those
    customers.
 
 See
      "Item 3. Key Information — D. Risk Factors — Risks Related to Our
      Operations — We may not be able to increase or sustain our recent growth
      rate, and we may not be able to manage our future growth
      effectively."
 ·
              Price of
      Silicon Wafers and Related Raw Materials.  The
      success of our business and our growth strategy depends heavily on
      acquiring a supply of silicon wafers at commercially reasonable prices and
      terms that is consistent with our existing and planned production
      capacity.  We have entered into prepaid long-term supply
      contracts with suppliers like Jinglong Group  and GCL where, in
      some instances, these agreements provide for fixed pricing, substantial
      prepayment obligations and/or firm purchase commitments that require us to
      pay for the supply whether or not we accept delivery.  These
      prepayment arrangements exposes us to the credit risks of such suppliers
      and may also significantly increase our costs and expenses, as compared to
      our competitors, based on factors like fluctuations in the market price
      for silicon wafers/polysilicon and/or if such arrangements require us to
      purchase more raw materials than required to meet our actual customer
      demand (e.g., carrying excess inventory), either of which could in turn
      have a material adverse effect on our financial condition, results of
      operations and liquidity.
 
 See
      "Item 3. Key Information — D. Risk Factors — Risks Related to Our Supply
      Chain — Limited competition among suppliers has required us in some
      instances to enter into long-term, firm commitment supply agreements,
      including prepayment provisions that could result in excess or
      insufficient inventory and financial loss placing us at a competitive
      disadvantage."
 ·
              Pricing of
      Our Solar Products.  Pricing of solar cells is
      principally affected by manufacturing costs, including the cost of silicon
      wafers, as well as the overall demand in the solar power
      industry.  The average selling price of our solar cells was
      approximately RMB 22.5, RMB 22.1 and RMB9.0 per watt for the years ended
      December 31, 2007, 2008 and 2009, respectively.  The decline in
      average selling price of our solar cells over these periods was mainly due
      to the significant decline in silicon wafer cost, our key raw materials,
      increased competition, and changes in other market
      conditions.  We expect the prices of products in solar value
      change, including our own products, over time to continue to decline due
      to increased supplies, reduced manufacturing costs and industry pursuit to
      grid parity of traditional forms of
electricity.
 
 See
      "Item 3. Key Information — D. Risk Factors — Risks Related to Our Supply
      Chain —Fluctuation in the price of polysilicon, increased competition, the
      global economic crisis and other changing market conditions may cause
      further decline in the demand and average selling prices of solar cells
      and may continue to increase the level of our earnings volatility and
      reduce our profitability."
 ·
              Technology
      Improvement.  Solar power companies, including us, are
      continuously pursuing technology improvements in an effort to increase
      conversion efficiencies.  We intend to further enhance our
      research and development efforts on process technologies in solar cell
      production which can increase conversion efficiency of solar cells and
      reduce production costs.
 
 See
      "Item 3. Key Information — D. Risk Factors — Risks Related to Technology
      and Intellectual Property."
  42
  Critical
Accounting Policies
  The
discussion and analysis of our operating results and financial condition are
based on our audited financial statements, which we have prepared in accordance
with U.S. GAAP.  The preparation of financial statements in conformity
with U.S. GAAP requires our management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reporting periods.  We base
our estimates and assumptions on historical experience and various other factors
that we believe to be reasonable under the circumstances, the result of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources.  Our
management evaluates these estimates on an ongoing basis.  Actual
results may differ from these estimates as facts, circumstances and conditions
change or as a result of different assumptions.
  In
reviewing our financial statements, our management considers (i) the
selection of critical accounting policies; and (ii) the judgments and other
uncertainties affecting the application of those critical accounting
policies.  The selection of critical accounting policies, the
judgments and other uncertainties affecting application of those policies and
the sensitivity of reported results to changes in conditions and assumptions are
factors to be considered when reviewing our financial statements.  Our
principal accounting policies are set forth in detail in Note 2 to our audited
consolidated financial statements included elsewhere in this annual
report.  We believe the following critical accounting policies involve
the most significant judgments and estimates used in the preparation of our
financial statements.
  Revenue
recognition
  Revenue
recognition for solar cells and modules (hereafter "solar
products")
  We,
generally, recognize revenue from the sale of solar products at the time of
shipment, at which point title and risk of loss transfer.  We sell our
solar products at agreed upon prices to our customers, which reflect prevailing
market prices.
  Our
considerations for recognizing revenue are based on the following:
  ·
                Persuasive
      evidence that an arrangement (sales contract) exists between a willing
      customer and us that outlines the terms of the sale (including customer
      information, product specification, quantity of goods, purchase price and
      payment terms).  Customers do not have a right of
      return.  We do provide a warranty on our solar module
      products.
 ·
                Some
      shipping terms are EXW, at which point we deliver goods at our own place
      of business and all other transportation costs and risks are assumed by
      the customer.  Some shipping terms are CIF destination
      point.  At this point, once the acceptance from the customer is
      received, the customer takes title to the goods and is responsible for all
      risks and rewards of ownership.  Some shipping terms are FOB
      shipping point from our premises.  At this point the customer
      takes title to the goods and is responsible for all risks and rewards of
      ownership.
 ·
                Our
      price to the customer is fixed and determinable as specifically outlined
      in the sales contract.
 ·
                For
      customers to whom credit terms are extended, we assess a number of factors
      to determine whether collection from them is probable, including past
      transaction history with them and their credit-worthiness. All credit
      extended to customers is pre-approved by management. If we determine that
      collection is not reasonably assured, we defer the recognition of revenue
      until collection becomes reasonably assured, which is generally upon
      receipt of payment.
  43
 Revenue
recognition for solar cells processing
  We
provide solar cell processing services to produce solar cells on behalf of third
parties who have their own wafer supplies.  Under certain of these
solar cell processing service arrangements, we purchase raw materials from a
customer and agree to sell a specified quantity of solar cells produced from
such materials back to the same customer.  The quantity of solar cells
sold back to the customer under these processing arrangements is consistent with
the amount of raw materials purchased from such customer based on current
production conversion rates.  We record revenues from these processing
transactions based on the amount received for solar cells sold less the amount
paid for the raw materials purchased from the customer.  The revenue
recognized is recorded as solar cell processing revenue and the production costs
incurred related to providing the processing services are recorded as solar cell
processing costs within cost of revenue.
  Fair
Value of Financial Instruments
  We
adopted the provisions of ASC 820, Fair Value Measurements and
Disclosures, which defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.  Before January
1, 2009, our adoption of ASC 820 was limited to our financial assets and
financial liabilities.  We do not have any nonfinancial assets or
nonfinancial liabilities that we recognize or disclose at fair value in our
financial statements on a recurring basis.  ASC 820 establishes a
hierarchy for inputs used in measuring fair value that gives the highest
priority to observable inputs and the lowest priority to unobservable
inputs.  Valuation techniques used to measure fair value shall
maximize the use of observable inputs.
  When
available, the company measures the fair value of financial instruments,
including cash and cash equivalents, restricted cash, available-for-sale
securities, trading security and derivative assets and liabilities, based on
quoted market prices in active markets, valuation techniques that use observable
market-based inputs or unobservable inputs that are corroborated by market
data.  Pricing information the company obtains from third parties is
internally validated for reasonableness prior to use in the consolidated
financial statements.  When observable market prices are not readily
available, the company generally estimates the fair value using valuation
techniques that rely on alternate market data or inputs that are generally less
readily observable from objective sources and are estimated based on pertinent
information available at the time of the applicable reporting
periods.  In certain cases, fair values are not subject to precise
quantification or verification and may fluctuate as economic and market factors
vary and the company's evaluation of those factors changes.  Although
the company uses its best judgment in estimating the fair value of these
financial instruments, there are inherent limitations in any estimation
technique.  In these cases, a minor change in an assumption could
result in a significant change in its estimate of fair value, thereby increasing
or decreasing the amounts of the company's consolidated assets, liabilities,
stockholders' equity (deficit) and net income or loss.
  Allowance for
doubtful accounts.  We maintain allowances for doubtful
accounts for estimated losses resulting from the inability of our customers to
make required payments.  We make our estimates of the collectibility
of our accounts receivable by analyzing historical bad debts, specific customer
creditworthiness and current economic trends.  We recorded RMB nil,
RMB 24.7 million and RMB 41.1 million for doubtful accounts as of December 31,
2007, 2008 and 2009.  If the financial condition of our customers were
to deteriorate such that their ability to make payments was impaired, additional
allowances could be required.
  Advances to
suppliers.Consistent with industry practice, we make
short-term and long-term advances from time to time to secure our raw material
needs of silicon wafers, which are then offset against future
purchases.  We do not require collateral or other security against our
advances to our related or third party suppliers.  We continually
assess the credit quality of our suppliers and the factors that affect the
credit risk.  If there is deterioration in the credit worthiness of
our suppliers, we will provide for such losses on these advances.  We
recorded RMB nil, RMB 18.6 million and RMB 52.0 million for potential losses
against supplier advances as of December 31, 2007, 2008 and 2009.  If
the financial condition of our suppliers were to deteriorate such that their
ability to deliver product or repay our advances was impaired, additional
provisions could be required.
  44
  InventoryValuation.  Inventory is
valued at the lower of cost or market value.  Cost of inventories is
determined by the weighted-average cost method.  Provisions are made
for excess, slow moving and obsolete inventory as well as inventory whose
carrying value is in excess of net realizable value.  Certain factors
could impact the realizable value of our inventory, so we continually evaluate
the recoverability based on assumptions about customer demand and market
conditions.  The evaluation may take into consideration historic
usage, expected demand, anticipated sales price, new product development
schedules, the effect new products might have on the sale of existing products,
product obsolescence, customer concentrations, and other factors.  The
reserve or write-down is equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand and
market conditions.  If actual market conditions are less favorable
than those projected by management, additional inventory reserves or write-downs
may be required that could negatively impact our gross margin and operating
results.  If actual market conditions are more favorable, we may have
higher gross margin when products that have been previously reserved or written
down are eventually sold.  We recorded RMB nil, RMB 78.0 million and
RMB 122.2 for inventory valuation as of December 31, 2007, 2008 and
2009.
  Impairment of
long-lived assets.  We evaluate our long-lived assets and
finite-lived intangible assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not
recoverable.  Factors considered important that could result in an
impairment review include significant underperformance relative to expected
historical or projected future operating results, significant changes in the
manner of use of acquired assets and significant negative industry or economic
trends. Impairments are recognized based on the difference between the fair
value of the asset and its carrying value. Fair value is generally measured
based on either quoted market prices, if available, or discounted cash flow
analyses. Any write-downs would be treated as permanent reductions in the
carrying amounts of the assets and an operating loss would be
recognized.
  Share-based
compensation.We account for
the grant of employees share-based compensation in accordance with ASC 718,
Compensation-Stock
Compensation, which requires all share-based payments to employees and
directors, to be recognized in the financial statements based on their grant
date fair values.
  The
compensation expense is recognized over the applicable service period in
accordance with the guidance provided by ASC 718,   which
provides a graded vesting method over the vesting periods of the share
options.  The graded vesting method provides for vesting of portions
of the overall awards at interim dates and results in accelerated vesting as
compared to the straight-line method.
  Grants
to Employees
  The
determination of the fair value of share-based awards and related share-based
compensation expense requires input of subjective assumptions, including but not
limited to the valuation model adopted, risk-free interest rate, expected life
of the share-based awards, stock price volatility, and expected forfeiture
rate.  The selection of an appropriate valuation technique or model
depends on the substantive characteristics of the instrument being
valued.  Risk free interest rates are decided based on the yield to
maturity of U.S. government bonds as at respective dates of grant of
options.  Expected life of stock options granted is based on the
average between the vesting period and the contractual term for each grant,
taking into account assumptions used by comparable
companies.  Volatility is measured using a combination of historical
daily price changes of comparable companies stock over the respective expected
life of the option and implied volatility derived from traded options of
comparable companies.  Forfeiture rate is estimated based on our
expectation for the future.
  The
assumptions used in calculating the fair value of share-based awards and related
share-based compensation represent management's best estimations, but these
estimates involve inherent uncertainties and the application of management
judgment.  As a result, if factors change or we utilize different
assumptions, our share-based compensation expense could be materially different
for any period.
  45
  Prior
to our initial public offering, the fair value of the ordinary shares was
determined retrospectively to the time of grant.  Determining the fair
value of our ordinary shares on a pre-IPO basis requires making complex and
subjective judgments.  Management is responsible for determining the
fair value and considered a number of factors including
valuations.  Our approach to valuation is based on a discounted future
cash flow approach which involves complex and subjective judgments regarding
projected financial and operating results, our unique business risks, our
operating history and prospects at the time of grant.  These judgments
are consistent with the plans and estimates that we use to manage the
business.  There is inherent uncertainty in making these estimates and
if we make different judgments or adopt different assumptions, material
differences could result in the timing and amount of the share-based
compensation expenses recorded because the estimated fair value of the
underlying ordinary shares for the options granted would be
different.
  Grants
to Non-Employees
  We
account for equity instruments issued to the non-employee consultant in
accordance with the provisions of ASC505-50 Equity Based Payments to
Non-Employees All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable.  The
measurement date of the fair value of the equity instrument issued is the date
on which the counterparty's performance is complete.  We believe that
our assumptions, including the risk-free interest rate and expected life used to
determine fair value, are appropriate.  However, if different
assumptions had been used, the fair value of the equity instruments issued to
non-employee vendors would have been different from the amount we computed and
recorded which would have resulted in either an increase or decrease in the
compensation expense.
  Income
taxes.  We account for income taxes under the asset and
liability method.  We recognize deferred tax assets and liabilities
for the future tax consequences attributable to differences between the
financial statements carrying amounts of existing assets and liabilities and
their respective tax assets bases and operating loss and tax credit carry
forwards.  We measure deferred tax assets and liabilities using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled.  We recognize the effect on deferred tax assets and
liabilities of a change in tax rates in income in the period that includes the
enactment date.  A valuation allowance is provided to reduce the
carrying amount of deferred tax assets if it is considered more likely than not
that some portion, or all, of the deferred tax assets will not be
realized.  We recorded valuation allowances to reduce our net deferred
tax assets to the amount of RMB2.1 million, RMB 13.4 million and RMB 49.0
million as of December 31, 2007, 2008 and 2009, respectively.  We have
adopted the provisions of ASC 740, Income Taxes. We have performed assessment on
our tax positions related to ASC 740, and concluded that the adoption of ASC 740
did not have any material impact on our financial position as of December 31,
2009.
  Product
warranties.  It is
customary in our business and industry to warrant or guarantee the performance
of our solar module products at certain levels of conversion efficiency for
extended periods. Our standard solar modules are typically sold with either a
two-year or five-year guarantee for defects in materials and workmanship and a
10-year and 25-year warranty against declines of more than 10.0% and 20.0%,
respectively, of the initial minimum power generation capacity at the time of
delivery. In addition, we usually provide the same warranty for solar modules
assembled for third party OEM companies.  We therefore maintain
warranty reserves (recorded as accrued warranty costs) to cover potential
liabilities that could arise from these guarantees and warranties. The potential
liability is generally in the form of product replacement or repair. We accrue
1.0% of our net revenues from sales of solar modules as warranty costs at the
time revenues are recognized and include that amount in our cost of revenues.
Due to zero warranty claims to date, we accrue the estimated costs of warranties
based primarily on our own history, industry data and an assessment of our
competitors' accrual history. Through our relationships with, and management's
experience working at, other solar power companies and on the basis of publicly
available information regarding other solar power companies' accrued warranty
costs, we believe that accruing 1.0% of our net revenues from sales of solar
modules as warranty costs is within the range of industry practice and is
consistent with industry-standard accelerated testing, which assists us in
estimating the long-term reliability of solar modules, estimates of failure
rates from our quality review and other assumptions that we believe to be
reasonable under the circumstances. However, although we conduct quality testing
and inspection of our solar module products, our solar module products have not
been and cannot be tested in an environment simulating the up to 25-year
warranty periods. We have not experienced any material warranty claims to date
in connection with declines of the power generation capacity of our solar
modules. Actual warranty costs are accumulated and charged against the accrued
warranty liability. To the extent that the actual warranty costs differ from the
estimates, we will prospectively revise our accrual rate.
  46
  Short
term investments.
  The
company accounts for short-term investments in accordance with ASC 320, Investments-Debt and Equity
Securities.  The company classifies the short-term investments
in debt and equity securities as "held-to-maturity", "trading" or
"available-for-sale", whose classification determines the respective accounting
methods stipulated by the accounting standard for financial
instruments.  Investments that are bought and held principally for the
purpose of selling them in the near term are classified as trading
securities.  Trading securities are reported at fair value with
unrealized gains and losses included in investment income.  The
company does not have investments classified as held-to-maturity.
  Investments
designated as available-for-sale are reported at fair value, with unrealized
gains and losses, net of tax, recorded in accumulated other comprehensive income
(loss) in shareholders' equity.  Realized gains or losses are charged
to the income during the period in which the gain or loss is
realized.  If we determine a decline in fair value is
other-than-temporary, the cost basis of the individual security is written down
to fair value as a new cost basis and the amount of the write-down is accounted
for as a realized loss.  The new cost basis will not be changed for
subsequent recoveries in fair value.  Determination of whether
declines in value are other-than-temporary requires significant
judgment.  Subsequent increases and decreases in the fair value of
available-for-sale securities will be included in comprehensive income through a
credit or charge to shareholders' equity except for an other-than-temporary
impairment, which will be charged to income.
  For
the year ended December 31, 2008, the Company has provided a full impairment
amounted to RMB 686.3 million against its investment in the 3-Month LCMNER
Index-Linked Note (the "Note") issued by Lehman Brothers Treasury Co. B.V.
("Lehman Treasury") incorporated in the Netherlands, guaranteed by
Lehman.  For the year ended December 31, 2009, the Company has not
recorded any impairment on short-term investments.
  Revenues
  Our
revenues for the years ended December 31, 2007, 2008 and 2009 and as a
percentage of our total revenues over the same period are as
follows:
  Year ended
      December 31,2007
                
                
                2008
                
                
                2009(in
      millions, except for percentages)RMB
                
                
                %
                
                
                RMB
                
                
                %
                
                
                RMB
                
                
                %Solar
      products to third parties
                
                
                2,532.4
                
                
                
                94.0
                %
                
                
                4,794.0
                
                
                
                87.8
                %
                
                
                3,367.1
                
                
                
                89.1
                %Solar
      products to related parties
                
                
                62.2
                
                
                
                2.3
                %
                
                
                508.0
                
                
                
                9.3
                %
                
                
                5.2
                
                
                
                0.1
                %Solar
      cells processing
                
                
                99.1
                
                
                
                3.7
                %
                
                
                156.3
                
                
                
                2.9
                %
                
                
                406.9
                
                
                
                10.8
                %Total
      Revenues
                
                
                2,693.7
                
                
                
                100.0
                %
                
                
                5,458.3
                
                
                
                100.0
                %
                
                
                3,779.2
                
                
                
                100.0
                %
 We
derive revenues primarily from sales of solar cell products to solar module
manufacturers, who then assemble and integrate our products into modules and
systems.  For the year ended December 31, 2007, we sold a substantial
portion of our products to a limited number of customers, primarily module
manufacturers based in China.  However, in 2008 and 2009, we increased
our number of overseas customers and expanded our overall customer base where,
for the year ended December 31, 2008 and 2009, approximately 23.7% and 26.2% of
our total sales were to customers outside of China.  For the year
ended December 31, 2007, 2008 and 2009 sales to our largest customer represented
approximately 18.9%, 13.4% and 11.4% of our total revenues,
respectively.  For the year ended December 31, 2007, 2008 and 2009,
sales to our three largest customers represented approximately 41.1%, 32.1% and
29.2% of our total revenues, respectively.  Our three largest
customers were all unrelated third parties.  Sales to our top ten
customers accounted for approximately 78.8%, 74.1% and 55.5% of total revenues
for the years ended December 31, 2007, 2008 and 2009,
respectively.  We believe most of the solar modules incorporating our
solar cell products are distributed globally.
  47
  The
average selling price of our solar cell products has declined in 2009 due to, a
large extent, the decline in cost of silicon wafer, a global economic slowdown,
an increased supply of solar cells, increased competition, and changes in other
market conditions.  We expect the prices of solar cell products,
including our own products, to continue to decline over time due to increased
supplies, reduced manufacturing costs and industry pursuit to grid cost parity
of traditional forms of electricity.
  For the
year ended December 31, 2009, our revenues also included revenues from solar
cell processing services which amounted to approximately RMB 406.9 million, or
10.8% of our total revenues.  We provide solar cell processing
services to customers who have their own wafer supplies.  We provide
solar cell processing services to customers mainly to utilize our excess
production capacities when our wafer supplies or customer orders are
insufficient for us to operate our manufacturing lines at their full
capacities.  For the year ended December 31, 2009, our revenues also
included revenues from sales of solar modules which amounted to approximately
RMB 82.6 million, or 2.2% of our total revenues.  For the year ended
December 31, 2009, we sold approximately 6.0 MW of solar modules under these
solar module contracts.  We accrued 1.0% of our net revenues as
warranty costs at the time revenues are recognized and include that amount in
our cost of revenues. Because we have zero warranty claims to date, we accrue
the estimated costs of warranties based primarily on our own history, industry
data and an assessment of our competitors' accrual history.
  Cost
of Revenues and Operating Expenses
  For
the year ended December 31, 2009, our cost of revenues and our operating
expenses as a percentage of our total revenues were 87.3% and 10.3%,
respectively as compared to 81.8% and 5.5%, respectively, for the year ended
December 31, 2008, and 77.7% and 5.7%, respectively, for the year ended December
31, 2007.  Our cost of revenues primarily consists of silicon wafers,
other direct raw materials and other cost of revenues.  The following
table sets forth the amounts of our cost of silicon wafers and other cost of
revenues and each of them as a percentage of total cost of revenues for the
periods indicated:
  Year ended
      December 31,2007
                
                
                2008
                
                
                2009(in
      millions, except for percentages)RMB
                
                
                %
                
                
                RMB
                
                
                %
                
                
                RMB
                
                
                %Silicon
      wafers
                
                
                1,884.6
                
                
                
                90.1
                %
                
                
                3,991.4
                
                
                
                89.4
                %
                
                
                2,546.0
                
                
                
                77.2
                %Other
                
                
                208.2
                
                
                
                9.9
                %
                
                
                474.9
                
                
                
                10.6
                %
                
                
                753.3
                
                
                
                22.8
                %Total
      cost of revenues
                
                
                2,092.8
                
                
                
                100.0
                %
                
                
                4,466.3
                
                
                
                100
                %
                
                
                3,299.3
                
                
                
                100
                %
 Silicon
wafers.  Silicon wafers are the most important raw material of
our solar cell products.  For the years ended December 31, 2007,
2008 and 2009, cost of silicon wafers accounted for approximately 90.1%, 89.4%
and 77.2% of our cost of revenues, respectively.  The decrease in
percentage of silicon wafer cost in cost of revenues in 2009 is primarily due to
the significant decrease in the poly price from the fourth quarter of
2008.  We expect that the cost of silicon wafers will continue to
constitute a significant portion of our cost of revenues in the foreseeable
future despite the recent decrease in price of silicon wafers and
polysilicon.
  48
  Other.  Other
cost of revenues consists primarily of other direct raw materials used in the
manufacturing of solar cell products, direct labor, depreciation of
manufacturing equipment and facilities, facilities rental expenses, overhead
expenses, as well as outsourcing costs and warranty expenses related to our
solar module business.  For the years ended December 31, 2007,
2008 and 2009, other cost of revenues accounted for approximately 9.9%, 10.6%
and 22.8% of our cost of revenues, respectively.  The increase in
other cost of revenues from December 31, 2008 to 2009 is primarily attributable
to the increase of shipments in 2009.
  Our
operating expenses consist of selling, general and administrative expenses and
research and development expenses.  The following table sets forth the
components of our operating expenses and each of them as a percentage of our
total operating expenses for the periods indicated:
  Year
      ended December 31,2007
                
                
                2008
                
                
                2009(in
      millions, except for percentages)RMB
                
                
                %
                
                
                RMB
                
                
                %
                
                
                RMB
                
                
                %Selling,
      general and administrative expenses
                
                
                150.3
                
                
                
                97.3
                %
                
                
                271.5
                
                
                
                90.5
                %
                
                
                343.3
                
                
                
                88.4
                %Research
      and development expenses
                
                
                4.2
                
                
                
                2.7
                %
                
                
                28.5
                
                
                
                9.5
                %
                
                
                45.1
                
                
                
                11.6
                %Total
      operating expenses
                
                
                154.5
                
                
                
                100
                %
                
                
                300.0
                
                
                
                100
                %
                
                
                388.4
                
                
                
                100
                %
 Selling,
general and administrative expenses.
  Selling
expenses primarily consist of promotional and other sales and marketing expenses
and salaries and benefits for our sales and marketing
personnel.  General and administrative expenses primarily consist of
leasing expenses associated with our administrative offices, salaries and
benefits for our administrative, finance and human resources personnel,
share-based compensation, business travel expenses and professional services
expenses.  Our selling, general and administrative expenses accounted
for 97.3%, 90.5% and 88.4% of our total operating expenses for the years ended
December 31, 2007, 2008 and 2009, respectively.  We expect that
selling expenses will increase in absolute terms as we add more sales and
marketing personnel and increase our sales and marketing efforts to accommodate
the growth of our business and expansion of our customer base in China and
abroad.  We also expect general and administrative expenses to
increase in absolute terms as a result of the expansion of our
business.
  In
2007, 2008 and 2009, we granted options to purchase 6,909,000, 6,132,000 and
1,013,000 ordinary shares, respectively, to a number of our directors, employees
and consultants.  See "Item 6. Directors, Senior Management and
Employees — B. Compensation — Stock Option Plans."  Our share-based
compensation expenses relating to our option grants and stock awards have had a
material and adverse effect on our reported earnings for the years ended
December 31, 2007, 2008 and 2009.  We recognized a share-based
compensation charge of RMB 91.6 million, RMB113.2 million and RMB 96.2 million
for the years ended December 31, 2007, 2008 and 2009,
respectively.  The above charges are net of forfeiture reversal
amounts of RMB 4.8 million, RMB 59.6 million and RMB 49.6 million for the
years ended December 31, 2007, 2008 and 2009, respectively.  Share
based compensation expenses are amortized over the vesting period of these
options ranging from two to four years starting from the grant
date.
  49
  Research
and development expenses
  Research
and development expenses primarily consist of research materials, compensation
and benefits for research and development personnel.  Research and
development expenses are expensed when incurred.  Our research and
development expenses accounted for 2.7%, 9.5% and 11.6% of our total operating
expenses for the years ended December 31, 2007, 2008 and 2009,
respectively.  We believe that research and development is critical to
the success of our business and as a result, we intend to increase our
investments in research and development.  As part of our business
strategy, we are increasing our research and development efforts in
China.
  Interest
(Income) Expense, net
  We
generated net interest income of RMB 56.0 million in 2007.  We
generated interest income of RMB 42.6 million and RMB 12.0 million and incurred
interest expense of RMB 160.5 million and RMB 213.6 million for the year ended
December 31, 2008 and 2009 respectively.  Our net interest expense in
2008 and 2009 was primarily the interest related to the Senior
Notes.  The interest expense recognized for interest payable to Senior
Notes holders was RMB 75.4 million and RMB 88.7 million for the year ended
December 31, 2008 and 2009 respectively.  The interest expense
recognized for accretion to the redemption value of the Senior Notes was RMB
81.8 million and RMB 104.2 million for the year ended December 31, 2008 and 2009
respectively.  Other interest expenses were RMB 3.3 million and RMB
20.7 million for the year ended December 31, 2008 and 2009
respectively.
  Foreign
Exchange Gain (Loss)
  We
incurred foreign exchange losses of RMB 112.8 million and RMB 127.4 million in
2007 and 2008 respectively.  We generated foreign exchange gain of RMB
10.1 million in 2009.  The exchange losses were incurred because a
significant portion of our monetary assets and liabilities are denominated in US
dollars and Euros, which depreciated in 2007 and 2008 relative to the
RMB.  Fluctuations in currency exchange rates may continue to have a
significant effect on our financial results.
  Taxation
  We
are a tax exempted company incorporated in the Cayman Islands, and under the
current laws of the Cayman Islands, we are not subject to tax on income or
capital gain.  Our subsidiary JA BVI is a business company
incorporated in the British Virgin Islands; under current laws of the British
Virgin Islands, JA BVI is not subject to tax on income or capital
gain.
  In
accordance with the PRC's FEIT Law and the related implementation rules, FIEs,
established in the PRC are generally subject to FEIT at a state tax rate of 30%
plus a local tax rate of 3% on PRC taxable income.  Our operating
subsidiary, JA Hebei, was established as a FIE in the PRC and is thus subject to
PRC enterprise income tax of 33%.  The PRC government has provided
certain incentives to FIEs in order to encourage foreign investments, including
tax exemptions, tax reductions and other measures.  Under the FEIT Law
and the related implementation rules, FIEs are entitled to be exempted from FEIT
for a 2-year period starting from their first profit-making year followed by a
50% reduction of FEIT payable for the subsequent three years, provided that they
fall into the category of production-oriented enterprises with an operational
period of more than 10 years in China, subject to approval from and modification
by local taxation authorities.  Specifically, with respect to income
generated by assets acquired by JA Hebei during the fiscal years 2005 and 2006,
JA Hebei has received approval from the relevant tax authorities for a separate
two-year enterprise income tax exemption for 2006 and 2007, as well as a 50%
enterprise income tax reduction for 2008, 2009 and 2010; with respect to income
generated by assets newly acquired by JA Hebei during 2007, JA Hebei will
receive a two-year enterprise income tax exemption for 2007 and 2008, as well as
a 50% enterprise income tax reduction for 2009, 2010 and 2011, which however,
maybe subject to PRC central government's further policies, decision or
rulings.
  50
  In
March 2007, the National People's Congress of China enacted a new CIT Law, which
became effective on January 1, 2008 and replaced the FEIT Law.  The
CIT Law imposes a unified income tax rate of 25% on all domestic enterprises and
FIEs unless they qualify under certain limited exceptions.  The CIT
Law provides a 5-year transition period to FIEs, during which they are permitted
to grandfather their existing preferential tax treatment until such treatment
expires in accordance with its current terms.  In December 2007, the
State Council promulgated the Transition Period Implementation
Rules.  In general, the CIT Law does not affect the preferential tax
treatment enjoyed by JA Hebei during the 5-year transition
period.  However, the CIT Law and the Transition Period Implementation
Rules did not clearly address the application of the transitional preferential
policies to assets acquired through new capital injection made to a qualified
entity after March 16, 2007, the date of enactment of the new CIT
Law.  If future guidance is issued by the State Taxation of
Administration to clarify this issue and it is determined that capital injection
made after March 16, 2007 does not qualify for a separate "two plus three" tax
holiday, the tax rate of JA Hebei as well as the income tax liability of JA
Hebei could increase for 2008 and 2009 In addition, when our currently available
tax benefits expire or otherwise become unavailable, the effective income tax
rate of JA Hebei will increase significantly, and any increase of JA Hebei's
income tax rate in the future could have a material adverse effect on our
financial condition and results of operations.
  Our
operating subsidiaries, JA Fengxian and JA Yangzhou both had cumulative losses
as of December 31, 2008 and their tax holidays were deemed to commence in 2008
and can be utilized until expiry pursuant to the new CIT law.  JA
Fengxian and JA Yangzhou are subject to the uniform rate of 25% from 2008
onwards.
  Our
operating subsidiary, JA Zhabei, which is not a production-oriented enterprise,
is subject to the uniform rate of 25% from 2008 onwards and not entitled to the
tax holiday.
  Our
operating subsidiaries, JA Lianyungang, JA Yangzhou R&D and JA Yangzhou PV,
which were established after 2008, are not entitled to the tax holiday, and are
subject to the uniform rate of 25%.
  The
CIT Law provides that enterprises established outside of China whose "de facto
management bodies" are located in China are considered "resident enterprises"
and are generally subject to the uniform 25% enterprise income tax rate as to
their worldwide income.  Under the implementation regulations for the
CIT Law issued by the PRC State Council, "de facto management body" is defined
as a body that has material and overall management and control over the
manufacturing and business operations, personnel and human resources, finances
and treasury, and acquisition and disposition of properties and other assets of
an enterprise.
  Under
the CIT Law and implementation regulations issued by the State Council, PRC
income tax at the rate of 10% is applicable to dividends payable to investors
that are "non-resident enterprises," which do not have an establishment or place
of business in the PRC, or which have such establishment or place of business
but the relevant income is not effectively connected with the establishment or
place of business, to the extent such dividends have their sources within the
PRC.  Similarly, any gain realized on the transfer of ADSs or shares
by such investors is also subject to 10% PRC income tax if such gain is regarded
as income derived from sources within the PRC.  If we are considered a
PRC "resident enterprise," it is unclear whether dividends we pay with respect
to our ordinary shares or ADSs, or the gain you may realize from the transfer of
our ordinary shares or ADSs, would be treated as income derived from sources
within the PRC and be subject to PRC tax.  It is also unclear whether,
if we are considered a PRC "resident enterprise," holders of our ordinary shares
or ADSs might be able to claim the benefit of income tax treaties entered into
between China and other countries.
  As
such, our historical operating results may not be indicative of our operating
results for future periods as a result of the expiration of various tax holidays
we currently enjoy or the incurrence of any new taxes we are required to
pay.
  We
have made a partial valuation allowance against our net deferred tax
assets.  We evaluate a variety of factors in determining the amount of
the valuation allowance, including our exit from the development stage during
the year ended December 31, 2006, our limited earnings history, the tax
holiday period, the existence of taxable temporary differences, and near-term
earnings expectations.  We expect to recognize future reversal of the
valuation allowance either when the benefit is realized or when it has been
determined that it is more likely than not that the benefit will be realized
through future earnings.
  51
  Inflation
  Since
our inception, inflation in China has not materially affected our results of
operations.  According to the National Bureau of Statistics of China,
the change of consumer price index in China was 4.8%, 5.9% and -0.7% in 2007,
2008 and 2009, respectively.  If our costs were to become subject to
significant inflationary pressures, we may not be able to fully offset such
higher costs through price increases.
  Recently
Pronounced Accounting Standards
  In
August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, Fair
Value Measurements and Disclosures (Topic 820) - Measuring Liabilities at Fair
Value.  The fair value measurement of a liability assumes transfer to
a market participant on the measurement date, not a settlement of the liability
with the counterparty.  ASU 2009-05 describes various valuation
methods that can be applied to estimating the fair values of liabilities,
requires the use of observable inputs and minimizes the use of unobservable
valuation inputs.  ASU 2009-05 is effective for the fourth quarter of
2009.  The adoption of ASU 2009-05 did not have a material impact on
our financial position, results of operations or cash flows.
  In
October 2009, the FASB issued ASU 2009-15, Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other
Financing.  ASU 2009-15 amends the accounting and reporting guidance
for debt (and certain preferred stock) with specific conversion features or
other options.  ASU 2009-15 is effective for fiscal years beginning on
or after December 31, 2009, with retrospective adjustment.  The
Company is currently evaluating the impact of the adoption of ASU 2009-15 on
measurement of its convertible debt.
  In
December 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) –
Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities.  ASU 2009-17 changes how a reporting entity
determines when an entity that is insufficiently capitalized or is not
controller through voting (or similar rights) should be
consolidated.  ASU 2009-17 also requires a reporting entity to provide
additional disclosures about its involvement with variable interest entities and
any significant changes in risk exposure due to that involvement.  ASU
2009-17 is effective at the start of a reporting entity's first fiscal year
beginning after November 15, 2009, or January 1, 2010, for a calendar year
entity.  Early adoption is not permitted.  We do not expect
that the adoption of ASU 2009-17 will have a material impact on our financial
position, results of operations or cash flows.
  In
January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and
Disclosures (Topic 820) – Improving Disclosures about Fair Value
Measurements.  This ASU requires new disclosures and clarifies certain
existing disclosure requirements about fair value measurements.  ASU
2010-06 requires a reporting entity to disclose significant transfers in and out
of Level 1 and Level 2 fair value measurements, to describe the reasons for the
transfers and to present separately information about purchases, sales,
issuances and settlements for fair value measurements using significant
unobservable inputs.  ASU 2010-06 is effective for interim and annual
reporting periods beginning after December 15, 2009, except for the disclosures
about purchases, sales, issuances and settlements in the roll forward of
activity in Level 3 fair value measurements, which is effective for interim and
annual reporting periods beginning after December 15, 2010; early adoption is
permitted.  We do not expect that the adoption of ASU 2010-06 will
have a material impact on our financial position, results of operations or cash
flows.
  In
February 2010, the FASB issued ASU 2010-09 to amend ASC 855, Subsequent Events .
ASC 855, which was originally issued by the FASB in May 2009, provides guidance
on events that occur after the balance sheet date but prior to the issuance of
the financial statements. ASC 855 distinguishes events requiring recognition in
the financial statements and those that may require disclosure in the financial
statements. As a result of ASU 2010-09, SEC registrants will not disclose the
date through which management evaluated subsequent events in the financial
statements, either in originally issued financial statements or reissued
financial statements. ASC 855 was effective for interim and annual periods
ending after June 15, 2009, and ASU 2010-09 is effective immediately. We have
evaluated subsequent events in accordance with ASU 2010-09.
  52
  Results
of Operations
  The
following table sets forth certain consolidated results of operations data in
terms of amount and as a percentage of our total revenues for the periods
indicated:
  Year
      ended December 31,2007
                
                
                2008
                
                
                2009(in
      millions, except for operating data and percentages)RMB
                
                
                %
                
                
                RMB
                
                
                %
                
                
                RMB
                
                
                %Income
      Statement Data:Total
      revenues
                
                
                2,693.7
                
                
                
                100.0
                %
                
                
                5,458.3
                
                
                
                100
                %
                
                
                3,779.2
                
                
                
                100
                %China
                
                
                2,310.5
                
                
                
                85.8
                %
                
                
                4,162.0
                
                
                
                76.3
                %
                
                
                2,789.8
                
                
                
                73.8
                %Outside China
                
                
                383.2
                
                
                
                14.2
                %
                
                
                1,296.3
                
                
                
                23.7
                %
                
                
                989.4
                
                
                
                26.2
                %Cost
      of revenues
                
                
                (2,092.8
                )
                
                
                (77.7
                )%
                
                
                (4,466.3
                )
                
                
                (81.8
                )%
                
                
                (3,299.3
                )
                
                
                (87.3
                )%Gross
      profit
                
                
                600.9
                
                
                
                22.3
                %
                
                
                992.0
                
                
                
                18.2
                %
                
                
                479.9
                
                
                
                12.7
                %Selling,
      general and administrative expenses
                
                
                (150.3
                )
                
                
                (5.5
                )%
                
                
                (271.5
                )
                
                
                (5.0
                )%
                
                
                (343.3
                )
                
                
                (9.1
                )%Research
      and development expenses
                
                
                (4.2
                )
                
                
                (0.2
                )%
                
                
                (28.5
                )
                
                
                (0.5
                )%
                
                
                (45.1
                )
                
                
                (1.2
                )%Total
      operating expenses.
                
                
                (154.5
                )
                
                
                (5.7
                )%
                
                
                (300.0
                )
                
                
                (5.5
                )%
                
                
                (388.4
                )
                
                
                (10.3
                )%Income
      from operations
                
                
                446.4
                
                
                
                16.6
                %
                
                
                692.0
                
                
                
                12.7
                %
                
                
                91.5
                
                
                
                2.4
                %Impairment
      on available-for-sale securities
                
                
                —
                
                
                
                —
                
                
                
                (686.3
                )
                
                
                (12.6
                %)
                
                
                -
                
                
                
                -Change
      in fair value of Derivatives
                
                
                —
                
                
                
                —
                
                
                
                564.0
                
                
                
                10.3
                %
                
                
                (49.1
                )
                
                
                (1.3
                )%Convertible
      notes buyback gain
                
                
                —
                
                
                
                —
                
                
                
                203.5
                
                
                
                3.7
                %
                
                
                22.9
                
                
                
                0.6
                %Interest
      expense
                
                
                (6.6
                )
                
                
                (0.2
                )%
                
                
                (160.5
                )
                
                
                (2.9
                )%
                
                
                (213.6
                )
                
                
                (5.7
                )%Interest
      income.
                
                
                62.6
                
                
                
                2.3
                %
                
                
                42.6
                
                
                
                0.8
                %
                
                
                12.0
                
                
                
                0.3
                %Foreign
      exchange gain/(loss)
                
                
                (112.8
                )
                
                
                (4.2
                )%
                
                
                (127.3
                )
                
                
                (2.4
                )%
                
                
                10.1
                
                
                
                0.3
                %Investment
      loss
                
                
                —
                
                
                
                —
                
                
                
                (28.6
                )
                
                
                (0.5
                )%
                
                
                (2.3
                )
                
                
                (0.1
                )%Other
      income
                
                
                5.2
                
                
                
                0.2
                %
                
                
                3.6
                
                
                
                0.1
                %
                
                
                7.8
                
                
                
                0.2
                %Income/(Loss)
      before income taxes
                
                
                394.8
                
                
                
                14.7
                %
                
                
                503.0
                
                
                
                9.2
                %
                
                
                (120.7
                )
                
                
                (3.2
                )%Income
      tax benefit/ (expenses)
                
                
                5.6
                
                
                
                0.2
                %
                
                
                (23.9
                )
                
                
                (0.4
                )%
                
                
                (8.0
                )
                
                
                (0.2
                )%Net
      income/(loss)
                
                
                400.4
                
                
                
                14.9
                %
                
                
                479.1
                
                
                
                8.8
                %
                
                
                (128.7
                )
                
                
                (3.4
                )%Preferred
      shares accretion
                
                
                (0.5
                )
                
                
                (0.02
                )%
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Allocation
      of net income to participating preferred shareholders
                
                
                (1.7
                )
                
                
                (0.1
                )%
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Net
      income/(loss)  available to ordinary
    shareholders.
                
                
                398.2
                
                
                
                14.8
                %
                
                
                479.1
                
                
                
                8.8
                %
                
                
                (128.7
                )
                
                
                (3.4
                )%Operating
      Data:Products
      sold (in million units)
                
                
                54.8
                
                
                
                —
                
                
                
                111.2
                
                
                
                —
                
                
                
                167.4
                
                
                
                —Products
      sold (in MW)
                
                
                132.9
                
                
                
                —
                
                
                
                277.4
                
                
                
                —
                
                
                
                508.8
                
                
                
                —Average
      selling price per watt
                
                
                22.5
                
                
                
                —
                
                
                
                22.1
                
                
                
                —
                
                
                
                9.0
                
                
                
                —
  53
 Year
Ended December 31, 2009 compared to Year Ended December 31,
2008
  Total
revenues.  Our total
revenues decreased significantly from RMB 5,458.3 million in 2008 to RMB 3,779.2
million in 2009.  The decrease was due primarily to the decrease in
average selling price per watt from RMB 22.1 per watt in 2008 to RMB 9.0 per
watt in 2009, which was due to the market conditions as well as a significant
drop in the cost of silicon wafers, our key raw material.  The annual
shipment, on the other hand, increased significantly from 277MW to 509MW, which
was primarily due to the increase in our manufacturing capability and strong
market demand for our products.
  Our total
revenues from sales in China decreased from RMB 4,162.0 million in 2008 to RMB
2,789.8 million in 2009, which was in line with the decrease in revenue as
described above.  Same as previous years, we sold majority of our
photovoltaic cells to photovoltaic module manufacturers in China.  As
a result of our ongoing efforts in diversifying our customer base and reaching
out to customers outside of China,  our revenues from sales in China,
as a percentage of our total revenues, decreased from 76.3% in 2008 to 73.8% in
2009.  Correspondingly, our sales outside China, with Germany being
the largest market, increased both in dollar amounts and as a percentage of our
total revenues.
  Cost of
Revenues.  Our cost of revenues decreased significantly from
RMB 4,466.3 million in 2008 to RMB 3,299.3 million in 2009.  The
decrease in our cost of revenue was due primarily to the decrease in the average
cost of silicon wafers in 2009 over 2008.
  Gross Profit and Gross
Margin.  As a
result of the foregoing, our gross profit decreased from RMB
992.0  million in 2008 to RMB 479.9 million in 2009.  Due to
fluctuations in the price of silicon wafers, which is the primary raw material
in our production of solar cells, as well as a decrease in the average selling
price of solar cells, our gross margin decreased from 18.2% in 2008 to 12.7% in
2009.
  Total Operating
Expenses.  Our total operating expenses increased from RMB
300.0 million in 2008 to RMB 388.4 million in 2009.  The increase in
our total operating expenses was due primarily to significant increases in our
selling, general and administrative expenses associated with our increased
production, increased efforts to grow overseas markets, as well as an increase
in our research and development expenses.  Total operating expenses as
a percentage of our total revenue increased from 5.5% in 2008 to 10.3% in
2009.
  ·
                Selling,General and
      Administrative
      Expenses.Our selling, general and administrative
      expenses increased from RMB 271.5 million in 2008 to RMB 343.3
      million in 2009, and as the percentage of our total revenues also
      increased from 5.0% in 2008 to 9.1% in 2009.  The increase in
      our selling, general and administrative expenses was due primarily to
      increases in our selling expenses and marketing expenses associated with
      our increased sales volume, an increased amount of salary and benefits
      paid to our sales, marketing and administrative personnel as a result of
      increased headcount, as well as share-based compensation expenses of RMB
      96.2 million relating to our stock options granted to certain
      employees.  The above share based compensation expenses were net
      of forfeiture reversal amounts of RMB 59.6 million and RMB 49.6 million
      for the years ended December 31, 2008 and 2009,
    respectively.
  54
 ·
                Research and Development
      Expenses.Our research and development expenses
      increased from RMB 28.5 million in 2008 to RMB 45.1 million in 2009 and
      increased as a percentage of our total revenues from 0.5% in 2008 to 1.2%
      in 2009.  The increase in our research and development expenses
      was due primarily to greater research and development activities
      undertaken by the Company.  Our research and development has
      primarily focused on improving and optimizing our solar manufacturing
      process based on certain proprietary know-how.
 Change in fair value of
derivatives.  Our changes in fair value of derivatives
decreased from a gain of RMB 564.0 million in 2008 to a loss of RMB 49.1 million
in 2009.  The charge reflects fair value changes associated with our
derivative assets and liabilities for the year ended December 31, 2008 and 2009,
respectively, where the Company recognized a loss from the change in fair value
of derivatives resulting from the appreciation in the Company’s stock price in
2009.
  Convertible notes buyback
gain.  Convertible notes buyback gain decreased from RMB 203.5
million in 2008 to RMB 22.9 million  in 2009.  The gain was
occurred because we bought back portion of our convertible notes at prices below
par in 2008 and 2009 respectively.
  Interest (Income) Expense,
net.  We incurred net interest expense of RMB 117.9 million and
RMB 201.6 million in 2008 and 2009 respectively.  Our net interest
expense was primarily related to our interest paid on the Senior
Notes.  The interest expense recognized for interest payable to Senior
Notes holders was RMB 75.4 million and RMB 88.7 million for the year ended
December 31, 2008 and 2009 respectively.  The interest expense
recognized for accretion to the redemption value of the Senior Notes was RMB
81.8 million and RMB 104.2 million for the year ended December 31, 2008 and 2009
respectively.  Other interest expenses were RMB 3.3 million and RMB
20.7 million for the year ended December 31, 2008 and 2009
respectively.  The increase in other interest expenses was mainly due
to the increase in bank borrowings in 2009.  The interest income
incurred in 2008 and 2009 were RMB 42.6 million and 12.0 million
respectively.
  Other Income
(Expense).  Our other income increased from RMB 3.6 million in
2008 to RMB 7.8 million in 2009.  The increase in our other income was
due primarily to an increase in the payments received from the depositary of our
ADSs at the Bank of New York.
  Foreign Exchange Gain
(Loss).  We incurred foreign exchange losses of RMB 127.3
million in 2008 and a gain of RMB 10.1 million in 2009.  The exchange
losses were incurred in 2008 because a significant portion of our monetary
assets and liabilities are denominated in U.S. dollars and Euros, which were
depreciated against the Renminbi in 2008.
  Tax Expense.  We
incurred tax expenses of RMB 23.9 million and RMB 8.0 million in 2008 and 2009
respectively.  The decrease in tax expense was due to less taxable
income in 2009 as a result of less revenue generated which more than offset the
increase in our effective tax rates.
  Net Income
(loss).  As a result of the cumulative effect of the above
factors, we generated net income of RMB 479.1 million in 2008 and incurred loss
of RMB 128.7 million in 2009.
  55
  Year
Ended December 31, 2008 compared to Year Ended December 31,
2007
  Total
revenues.  Our total
revenues increased significantly from RMB 2,693.7 million in 2008 to RMB 5,458.3
million in 2008.  This increase was due primarily to an increase in
our manufacturing capability and corresponding increase in sales volume of our
products, driven by strong market demand for our products and offsetting a
decline in the average selling price of our products, the decrease in global
demand for solar products following the global financial crisis, and the
decrease in demand for solar products resulting from Spain's announcement that
it will cap its subsidy for solar power at 500 MW for 2009.  In
addition, our revenues were bolstered by our increased third party cell
processing activities.  We sold an aggregate of 277 MW of solar
products in 2008 (consisting of 220.2 MW of solar cells we produced, 40.7 MW of
solar cells we processed for other third parties and 16.5 MW of solar modules we
engaged third parties to assemble for our customers) as compared to 133 MW of
solar products in 2007.
  Our total
revenues from sales in China increased from RMB 2,310.5 million in 2007 to RMB
4,162.0 million in 2008, as we sell most of our photovoltaic cells to
photovoltaic module manufacturers in China.  As a result of our
ongoing efforts in diversifying our customer base and reaching out to customers
outside of China, however, our revenues from sales in China, as a percentage of
our total revenues, decreased from 98.4% in 2006 and 85.8% in 2007 to 76.3% in
2008.  Correspondingly, our sales outside China, with Spain and Japan
being the two largest markets, increased both in dollar amounts and as a
percentage of our total revenues.
  Cost of
Revenues.  Our cost of revenues increased significantly from
RMB 2,092.8 million in 2007 to RMB 4,466.3million in 2008.  The
increase in our cost of revenue was due primarily to the increased quantity of
silicon wafers needed and the increase in the average cost of silicon wafers in
2008 over 2007 despite the eventual decrease in the average cost of silicon
wafers towards the end of 2008.
  Gross Profit and Gross
Margin.  As a result of the foregoing, our gross profit
increased from RMB 600.9 million in 2007 to RMB 992.0 million in
2008.  Due to fluctuations in the price of silicon wafers, which is
the key raw material in our production of solar cells, as well as a decrease in
the average selling price of solar cells, an inventory provision of RMB 78.0
million recorded in the fourth quarter of 2008, our gross margin decreased from
22.3% in 2007 to 18.2% in 2008.
  Total Operating
Expenses.  Our total operating expenses increased from RMB
154.5 million in 2007 to RMB 300.0 million in 2008.  The increase in
our total operating expenses was due primarily to significant increases in our
selling, general and administrative expenses associated with our increased
production, increased efforts to grow in the overseas market, as well as an
increase in our research and development expenses.  Total operating
expenses as a percentage of our total revenue decreased from 5.7% in 2007 to
5.5% in 2008 as we improved our operating efficiency with an increased
production capacity.
  ·
                Selling, General and
      Administrative Expenses.  Our selling, general and
      administrative expenses increased from RMB 150.3 million in 2007 to RMB
      271.5 million in 2008, but decreased as a percentage of our total revenues
      from 5.5% in 2007 to 5.0% in 2008.  The increase in our selling,
      general and administrative expenses was due primarily to increases in our
      selling expenses, advertising expenses and warranty accrual associated
      with our increased product sales, an increased amount of salary and
      benefits paid to our sales and marketing personnel as a result of
      increased headcount, as well as share-based compensation expenses of RMB
      113.2 million relating to our stock options granted to certain employees
      and consultants.  The above share based compensation expenses
      are net of  forfeiture reversal amounts of nil, RMB 4.8 million,
      and RMB 59.6 million for the period from the years ended December 31,
      2006, 2007 and 2008, respectively.
 ·
              Research and Development
      Expenses.  Our research and development expenses
      increased from RMB 4.2 million in 2007 to RMB 28.5 million in 2008 and
      increased as a percentage of our total revenues from 0.2% in 2007 to 0.5%
      in 2008.  The increase in our research and development expenses
      was due primarily to increases in material costs related to our increased
      research and development activities.  Our research and
      development has primarily focused on: improving and optimizing our solar
      manufacturing process based on certain proprietary
    know-how.
   56
  Impairment on available-for-sale
securities.  Our impairment on available-for-sale securities
increased from nil in 2007 to RMB 686.3 million in 2008.  The
impairment was provided for our investment in the Note issued by Lehman Treasury
purchased in 2008.  For additional information, see Note 4 of Notes to
consolidated financial statements.
  Change in fair value of
derivatives.  Our changes in fair value of derivatives
increased from nil in 2007 to RMB 564.0 million in 2008.  The charge
reflects fair value changes associated with our derivative assets and
liabilities for the year ended December 31, 2008.
  Convertible notes buyback
gain.  Convertible notes buyback gain increased from RMB nil in
2007 to RMB 203.5 million in 2008.  The gain was occurred because we
bought back portion of our convertible notes at prices below par in
2008.
  Interest (Income) Expense,
net.  We generated net interest income of RMB 56.0 million in
2007 and incurred net interest expense of RMB 117.9 million in
2008.  Our net interest expense in 2008 was primarily interest paid on
the Senior Notes.  The interest expense recognized for interest
payable to Senior Notes holders was RMB 75.4 million for the year ended December
31, 2008.  The interest expense recognized for accretion to the
redemption value of the Senior Notes was RMB 81.8 million for the year ended
December 31, 2008.  Other interest expenses were RMB 3.3 million in
2008. The interest income incurred in 2007 and 2008 were RMB62.6 million and
RMB42.6 million, respectively.
  Other Income
(Expense).  Our other income decreased from RMB 5.2 million in
2007 to RMB 3.6 million in 2008.  The decrease in our other income was
due primarily to a decrease in the payments received from the depositary of our
ADSs at the Bank of New York.
  Foreign Exchange Gain
(Loss).  We incurred foreign exchange losses of RMB 112.8
million in 2007 and RMB 127.4 million in 2008.  The exchange losses
were incurred because a significant portion of our monetary assets and
liabilities are denominated in U.S. dollars and Euros, which continued to
depreciate against the Renminbi in 2008.
  Tax Benefit
(Expense).  We incurred tax expenses of RMB 23.9 million in
2008, as compared to tax benefits of RMB 5.6 million generated in
2007.  The increase in tax expense was due to an increase in effective
tax rates due to 2007 was the last year JA Hebei was entitled to tax
exemption.
  Net Income.  As a
result of the cumulative effect of the above factors, our net income increased
from RMB 400.4 million in 2007 to RMB 479.1 million in 2008.
 
 B.
              LIQUIDITY
      AND CAPITAL RESOURCES
 
 Cash
Flows and Working Capital
  We have
financed our operations primarily through equity contributions by our
shareholders through our initial and follow-on public offerings, the 2008
Offering of the Senior Notes, short-term and long-term bank borrowings and cash
flow from operations.  As of December 31, 2007, December 31, 2008, and
December 31, 2009, we had RMB 1.15 billion, RMB 1.58 billion and RMB 1.91
billion, in cash and cash equivalents and restricted cash,
respectively.  Our cash and cash equivalents consist primarily of cash
on hand, demand deposits and money market funds.  Restricted cash
represents amounts temporarily held by banks, which are not available for the
company's use, as security for issuance of letters of credit.  As of
December 31, 2007, December 31, 2008 and December 31, 2009, we had RMB 200
million, RMB 490.0 million and RMB 10 million, in outstanding short-term bank
borrowings, respectively.  As of December 31, 2007,
December 31, 2008 and December 31, 2009, we had RMB nil, RMB nil and RMB
680 million, in long-term bank borrowings.  In addition, the unused
lines of credit were RMB 730 million as of December 31, 2009.  These
facilities contain no specific renewal terms and require no
collateral.
  57
  Working
capital and access to financing for purchase of silicon raw materials are
critical to growing and sustaining our business.  We have significant
working capital commitments because suppliers of silicon wafers and polysilicon
require us to make prepayments in advance of shipments.  Our
prepayments to suppliers increased from  RMB 1.8 billion as of
December 31, 2007 to RMB 2.6 billion  as of December 31, 2008
primarily due to our desire to secure adequate wafer supplies for our expanded
manufacturing capacity in 2008 but decreased slightly from RMB 2.6 billion as of
December 31, 2008 to RMB 2.3 billion as of December 31, 2009 as a combined
result of utilization of prepayments previously made as well as additional
prepayments made to secure adequate wafer supplies for our expanded
manufacturing capacity in 2009.
  We
believe that current cash and cash equivalents and anticipated cash flow from
operations will be sufficient to meet our anticipated cash needs, including our
cash needs for working capital and capital expenditures, for at least the next
twelve months.  We may, however, require additional cash to repay
existing debt obligations or to re-finance our existing debts or due to changing
business conditions or other future developments.  If our existing
cash is insufficient to meet our requirements, we may seek to sell additional
equity securities, debt securities or borrow from lending
institutions.  The current global liquidity and credit crisis since
the second half of 2008 has been having a significant negative impact on the
financing abilities of businesses worldwide, including that of our
company.  If we are not able to generate sufficient cash flow to meet
such obligations, we may need to refinance or restructure our debt, sell assets,
reduce or delay capital investments, or seek additional equity or debt
financing.  We cannot assure you that financing will be available in
the amounts we need or on terms acceptable to us, if at all.  The sale
of additional equity securities, including convertible debt securities, would
dilute our shareholders.  The incurrence of debt would result in
increased interest rate risk, divert cash for working capital and capital
expenditures to service debt obligations and could result in operating and
financial covenants that restrict our operations and our ability to pay
dividends to our shareholders. A shortage of such funds could in turn impose
limitations on our ability to plan for, or react effectively to, changing market
conditions or to expand through organic and acquisitive growth, thereby reducing
our competitiveness.
  The
following table sets forth a summary of our cash flows for the periods
indicated:
  Year
      ended December 31,2007
                
                
                2008
                
                
                2009(in
      millions)RMB
                
                
                RMB
                
                
                RMBNet
      cash (used in)/provided by operating activities
                
                
                (1,146.5
                )
                
                
                (1,289.2
                )
                
                
                1,129.1Net
      cash used in investing activities
                
                
                (1,641.6
                )
                
                
                (419.4
                )
                
                
                (557.2
                )Net
      cash provided by/(used in) financing activities
                
                
                3,519.6
                
                
                
                2,610.3
                
                
                
                (242.8
                )Effect
      of exchange rate changes on cash and cash equivalents
                
                
                (91.3
                )
                
                
                (94.9
                )
                
                
                (4.7
                )Net
      increase in cash and cash equivalents
                
                
                640.2
                
                
                
                806.8
                
                
                
                324.4Cash
      and cash equivalents at the beginning of the year
                
                
                95.8
                
                
                
                736.0
                
                
                
                1,542.8Cash
      and cash equivalents at the end of the year
                
                
                736.0
                
                
                
                1,542.8
                
                
                
                1,867.2
  58
 Operating
Activities.  Net cash
used in operating activities for the years ended December 31, 2007 and 2008
totaled RMB 1,146.5  million and RMB 1,289.2 million,
respectively.  Net cash provided by operating activities for the year
ended December 31, 2009 totaled RMB 1,129.1 million.  Net cash
provided by operating activities for the year ended December 31, 2009 were
primarily affected by decreases in advances to related party
suppliers  of RMB 261.4 million, increase in accounts payable of RMB
249.9 million, increases in inventory (net) of RMB 49.2 million, increase in
notes  receivables of RMB 119.8 million, the change in value of
Embedded Derivatives and the capped call option of RMB 49.1 million; gains from
the senior convertible notes buyback of RMB 22.9  million, disposal of
trading security of RMB 353.6  million and depreciation and
amortization of RMB178.8 million. The total
cashflows provided by operating activities for the year ended December 31, 2009
disclosed in the press release dated February 11, 2010, did not include cash
received from disposal of trading securities of RMB 353.6
million. Net
cash used in operating activities for the year ended December 31, 2008 were
primarily affected by increases in advances to third party suppliers (net) of
RMB 759.3 million, increases in inventory (net) of RMB 434.7 million, increase
in accounts receivables from third party customers (net) of RMB 303.2 million,
the change in value of Embedded Derivatives and the capped call option of RMB
564.0 million; gains from the senior convertible notes buyback of RMB 203.5
million, acquisition of trading security of RMB 353.6 million and depreciation
and amortization of RMB 88.2 million. Net cash used in operating activities for
the year ended December 31, 2007 were primarily affected by increases in
advances to third-party suppliers of RMB 1.4 billion and decreases in accounts
receivable from third-party customers of RMB 18.9 million, an increase in
accounts payable of RMB 9.0 million, exchange loss of RMB 90.7 million,
share-based compensation expenses of RMB 91.6 million and depreciation and
amortization of RMB 34.1 million.
  Investing
Activities.  Net cash used in investing activities
for  the years ended December 31, 2007, 2008 and 2009 amounted to
RMB  1,641.6 million, RMB  419.4 million and RMB 557.2
million, respectively, primarily as a result of purchases of property and
equipment and changes in restricted cash balances in each of the
periods.
  Financing
Activities.  Net cash provided by financing activities for the
years ended December 31, 2007 and 2008 were RMB 3,519.6 million and RMB 2,610.3
million, respectively.  Net cash used in financing activities for the
year ended December 31, 2009 were RMB 242.8 million.  Net cash used in
financing activities for the year ended December 31, 2009 consisted
of  repurchase of convertible notes of RMB 459.6 million, repayment of
bank borrowings of RMB 520.0 million and proceeds from bank borrowings of RMB
720.0 million.  Net cash provided by financing activities for the year
ended December 31, 2008 consisted of RMB 2.7 billion from our 2008 Offering of
the Senior Notes.  Net cash provided by financing activities for the
year ended December 31, 2007 consisted of RMB 3,341.0 million from net proceeds
from our initial public offering in February 2007 and our follow-on offering in
October 2007.  Our bank borrowings outstanding as of December 31,
2009 bore average interest rates of 3.69% in 2009.  These borrowings
generally have terms of six months to three years and expire at various
times.  These loans were borrowed from various financial
institutions.  All of these credit facilities were restricted to
working capital usage.  These facilities contain no specific renewal
terms, but we have historically been able to obtain extensions of some of the
facilities shortly before they mature.  We plan to repay these bank
borrowings with cash generated by our operating activities in the event we are
unable to obtain extensions of these facilities or alternative funding in the
future.
  Dividends from
Subsidiaries.  Except for certain administrative, R&D and
after-sales activities conducted through our wholly-owned subsidiary in the
United States, JA USA, we conduct substantially all of our operating activities
inside the PRC through our various PRC subsidiaries.  As such, we do
not rely heavily on dividends remitted to us by our PRC subsidiaries to sustain
our worldwide operations; and restrictions under PRC law on the remittance of
dividends outside the PRC have not had a material adverse effect on our
liquidity or capital resources.  See "Item 3. Key Information — D.
Risk Factors — Risks Related to Doing Business in China — Our operating
subsidiaries in China are subject to legal limitations in paying dividends to
us."
  Capital
Expenditures
  We
made capital expenditures of RMB 421.8 million, RMB 812.5 million and RMB 610.6
million in the years ended December 31, 2007, 2008 and 2009,
respectively.  Our capital expenditures have historically been used
primarily to purchase property and equipment to construct and expand our solar
cell manufacturing lines.
  59
  We
expect that purchase of property and equipment for our planned expansion in
manufacturing capacity will continue to constitute a significant portion of our
capital expenditure.  As of December 31, 2009, we had contracted for
capital expenditures on machinery and equipment of RMB 433.6
million.  We estimate that our capital expenditures in 2010 will be
approximately RMB 1,700.0 million, which will be used primarily for the
expansion of our Yangzhou manufacturing and R&D facilities as well as wafer
production facilities and R&D facilities for JHY Semiconductor
..  We plan to fund the balance of our 2010 capital expenditure
substantially with cash from operations and additional borrowings from third
parties.
 
 C.
              RESEARCH
      AND DEVELOPMENT, PATENTS AND LICENSES,
ETC.
 
 We
believe that we have an experienced and committed research and development
team.  Upon our formation, we acquired proprietary technical know-how
related to the commercial production process of solar cells from Australia PV
Science & Engineering Co. as part of its capital contribution to us within
an implied value of RMB 9.0 million.
  Since
our commencement of production in April 2006, we have significantly improved our
solar cell fabricating process technologies, including improvements in each of
the following processing steps.  These technological improvements have
increased cell conversion efficiencies in the various types of silicon wafers
that we produce and have improved the production yields of our manufacturing
lines.
  ·
                Texturing.  We
      have introduced a new process formula to the texturing
      process.  As a result, the nucleation of pyramids has been
      improved and the repetition of texturing quality in our manufacturing
      lines has been more reliable;
 ·
                Diffusion.  We
      have modified our diffusion process and introduced a new processing
      technology to reduce the defects and surface damage created during the
      process, which, in turn, has resulted in an improvement to the lifetime of
      the processed wafers; and
 ·
                Drying and
      Firing.  We have designed new drying and firing
      conditions for the metal pastes.  The new conditions allow solar
      cells to have a good back surface field, ohmic contacts and low
      "bow."  The low "bow" may significantly reduce wafer breakage
      during automatic soldering when manufacturing modules.
 We
intend to continue to focus our research and development efforts on improving
and developing processing technologies for production of solar cells aimed at
increasing solar cell conversion efficiency and other qualities as well as
reducing production costs, including one or more of the following projects and
topics:
  ·
                "Selective Emitter"
      Structure.  We intend to develop a novel diffusion
      approach to form a "selective emitter" structure on the front surface of
      the cells, which will simplify the manufacturing process sequence and make
      it suitable for commercialization.  This technique is expected
      to lead to improved cell efficiency in excess of 20% for monocrystalline
      silicon wafers.
 ·
                Ultra-thin Wafer Industrial
      Manufacturing.  To refine our techniques used in the
      processing of ultra-thin wafers, we plan to study the stress and defect
      rates of wafers in each stage of the manufacturing process in order to
      control wafer breakage.
 ·
                QualityControl
      Techniques.  We intend to develop enhanced techniques to
      be applied in the quality control of our products and manufacturing lines,
      including characterization of product performance, in-line diagnostics,
      and methods to control production yield, product durability and
      reliability.
 ·
                MulticrystallineScreen-printing Silicon Solar
      Cells.  We intend to research different approaches to
      improve the electronic quality of the multicrystalline silicon substrate
      and to enhance the efficiency of multicrystalline screen-printing silicon
      solar cells.
  60
 Our
research and development expenditures were RMB 4.2 million, RMB 28.5 million and
RMB 45.1 million in 2007, 2008 and 2009, respectively.
 
 D.
              TREND
      INFORMATION
 
 Other
than as disclosed elsewhere in this annual report, we are not aware of any
trends, uncertainties, demands, commitments or events since January 1, 2008 that
are reasonably likely to have a material adverse effect on our net revenues,
income, profitability, liquidity or capital resources, or that caused the
disclosed financial information to be not necessarily indicative of future
operating results or financial conditions.
 
 E.
              OFF-BALANCE
      SHEET ARRANGEMENTS
 
 Except
for operating leases, we did not have any material off-balance sheet
arrangements, including guarantees, outstanding derivative financial instruments
or interest rate swap transactions for the year ended December 31,
2009.  See "Item 5. Operating and Financial Review and Prospects — F.
Tabular Disclosure of Contractual Obligations" for a description of our
operating leases.
 
 F.
              TABULAR
      DISCLOSURE OF CONTRACTUAL OBLIGATIONS
 
 The
following table sets forth our contractual obligations and commercial
commitments as of December 31, 2009:
  Payments
      due by periodTotal
                
                
                Less than
                    1
      year
                
                
                1-3
                    years
                
                
                3-5
                    years
                
                
                More than
                    5
      years(amounts
      in RMB thousands)Bank
      loan obligations (including interest averaging 3.69%)
                
                
                750,257
                
                
                
                35,096
                
                
                
                715,161
                
                
                
                —
                
                
                
                —Operating
      lease obligations
                
                
                46,326
                
                
                
                17,336
                
                
                
                27,480
                
                
                
                1,510
                
                
                
                —Non-cancelable
      purchase orders
                
                
                433,625
                
                
                
                433,464
                
                
                
                161
                
                
                
                —
                
                
                
                —Purchase
      commitments under take-or-pay agreements
                
                
                704,100
                
                
                
                375,690
                
                
                
                328,410
                
                
                
                —
                
                
                
                —Purchase
      commitments under other agreements(1)
                
                
                6,668,001
                
                
                
                1,459,864
                
                
                
                3,961,093
                
                
                
                1,132,418
                
                
                
                114,626Senior
      Notes (including interest cost)
                
                
                1,802,694
                
                
                
                70,087
                
                
                
                140,366
                
                
                
                1,592,241
                
                
                
                —Other
      long-term liabilities reflected on the company’s balance
    sheet
                
                
                5,930
                
                
                
                —
                
                
                
                
                
                
                
                
                
                
                
                5,930Total
                
                
                10,410,933
                
                
                
                2,391,537
                
                
                
                5,172,671
                
                
                
                2,726,169
                
                
                
                120,556
  (1)
      include only purchase commitments with fixed or minimum price
      provisions.  In addition, the company has also entered into
      other supply agreements with variable price provisions, under which the
      purchase price is based on market prices with price adjustment
      terms.
  61
 Bank Loan
obligations Our bank
loan debt obligations relate to bank borrowings borrowed from various financial
institutions in the PRC with an average interest rate of 3.69% per annum (plus
loan service fee of 0.86%).  The borrowings have six to 36 months
terms and expire at various times throughout 2010-2012.
  Operating
lease obligations
  For
the periods covered by these consolidated financial statements, JA Solar leased
certain assets, including offices, dormitory and production facilities, from the
Jinglong Group, under a non-cancelable operating lease expiring in June 30,
2006, with an option to renew.  During the same time, JA Solar also
leased a piece of land under a non-cancelable operating lease from a third party
expiring on May 31, 2019.
  On
July 1, 2006, JA Solar renewed its operating lease with the Jinglong
Group.  The renewed operating lease with the Jinglong Group covers the
previously leased assets from the Jinglong Group, as well as the land initially
leased from the third party, the rights of which was subsequently acquired by
the Jinglong Group.  The new non-cancelable operating lease with the
Jinglong Group expires in June 2010 with an annual rental of RMB 1.8 million,
which approximates market rents.  JA Solar executed a lease
termination agreement for the land with the third party on June 30,
2006.  JA Solar also holds an operating lease with the Jinglong Group
for an automobile.  This non-cancelable operating lease expired in
December 2007 and was renewed until December 2010.
  In
June 2007, JA Solar entered into another operating lease with the Jinglong Group
to expand its facilities to host new manufacturing lines
installed.  The new non-cancelable operating lease with the Jinglong
Group expires in December 2011 with an annual rental of RMB 1.2 million, which
approximates market rents.
  In
July 2008, JA Solar entered into its operating lease with the Jinglong
Group.  The renewed operating lease with the Jinglong Group replaced
the two aforementioned operating leases and has an annual rental of RMB 12
million.  This non-cancelable operating lease expires in June
2012.  In November 2008, JA Solar entered into another operating lease
with the Jinglong Group.  The new non-cancelable operating lease with
the Jinglong Group expires in December 2012 with an annual rental of RMB 3.8
million.  In December 2008, JA Solar entered into an operating lease
with a related party.  The new non-cancelable operating lease with the
related party expires in December 2012 with an annual rental of RMB 0.8
million.
  In
July 2009, JA Solar entered into an operating lease with the Jinglong
Group.  The renewed operating lease replaced the aforementioned
operating lease and has an annual rental of RMB 12,000.  This
non-cancelable operating lease expires in June 2012.
  Non-cancelable
purchase obligations
  As
of December 31, 2009, we had contracted for capital expenditures on machinery
and equipment of RMB 433.6 million.
  62
  Purchase
commitments under agreements
  In
order to better manage our unit costs and to secure adequate and timely supply
of polysilicon and silicon wafers during the recent periods of shortages of
polysilicon and silicon wafer supplies, the company entered into a number of
multi-year supply agreements from 2006 through 2009 in amounts that were
expected to meet our anticipated production needs.  As a condition to
our receiving the raw materials under those agreements, and in line with
industry practice, we were required to, and have made advances to suppliers for
all, or a portion, of the total contract price to our suppliers, which are then
offset against future purchases.
  Set
out below are our fixed obligations under these multi-year contracts including
"take or pay" arrangements.
  "Take or Pay" Supply
Agreements
  The
company's multi-year supply agreements with some suppliers are structured as
fixed price and quantity "take or pay" arrangements which allow the supplier to
invoice the company for the full stated purchase price of polysilicon or silicon
wafers the company is obligated to purchase each year, whether or not the
company actually purchases the contractual volume.
  Other Multi-Year Supply
Agreements
  In
addition to the "take or pay" arrangements above, the company has also entered
into other multi-year supply agreements to purchase fixed volumes of polysilicon
or silicon wafers from certain suppliers.  Under these agreements, the
purchase price is to be periodically adjusted based on relevant energy price
index.  The purchase price is stated in certain of these agreements
for period less than six months with price adjustment terms.
  Impact of Amendments
Subsequent to December 31, 2009
  Subsequent
to December 31, 2009, JA Solar has amended the multi-year supply agreements for
deliveries from 2010 to 2015 with GCL. The
amendments (i) replaced the product to be delivered from wafers to the
equivalent quantity of polysilicon, (ii) specified that the supply price is to
be negotiated based on market prices, (iii) lengthened the delivery schedule and
(iv) revised the prepayment deduction schedule.If we fail to meet
our obligations under the amended agreements and are unable to further
renegotiate the terms of our multi-year supply agreements, we may be forced to
forfeit certain prepayment amounts and be subject to claims or other disputes
which could materially and adversely affect our results of operations, and
financial position.
 See
"Item 3. Key Information — D. Risk Factors — Risks Related to Our Supply
Chain."
  Senior
Notes: The Senior Notes bear interest at the rate of 4.5% per annum and
will be due in May 2013.  The company did not buy back any Senior
Notes after December 31, 2009 and up to the date of the issuance of this
report.
  Other long-term
liabilities reflected on the company's balance sheet: Other long-term
liabilities reflected on the company's balance sheet relate to product warranty
costs we accrued for module sales.
 
 G.
              SAFE
      HARBOR
 
 This
annual report includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.  All statements,
other than statements of historical facts, included in this annual report that
address activities, events or developments which we expect or anticipate will or
may occur in the future are hereby identified as forward-looking statements for
the purpose of the safe harbor provided by Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934.
  63
  Forward-looking
statements typically are identified by words or phrases such as "may," "will,"
"expect," "anticipate," "aim," "estimate," "intend," "plan," "believe,"
"potential," "continue," "is/are likely to" or other similar expressions or the
negative of these words or expressions.  We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends that we believe may affect our
financial condition, results of operations, business strategy and financial
needs.  These forward-looking statements include, among other things,
statements relating to:
  ·
                our
      expectations regarding the worldwide demand for electricity and the market
      for solar energy;
 ·
                our
      beliefs regarding the inability of traditional fossil fuel-based
      generation technologies to meet the demand for
  electricity;
 ·
                our
      beliefs regarding the importance of environmentally friendly power
      generation;
 ·
                our
      expectations regarding governmental incentives for the deployment of solar
      energy;
 ·
                our
      beliefs regarding the solar power industry revenue
  growth;
 ·
                our
      expectations with respect to advancements in our
    technologies;
 ·
                our
      beliefs regarding the low-cost advantage of solar cell production in
      China;
 ·
                our
      beliefs regarding the competitiveness of our solar power
      products;
 ·
                our
      expectations regarding the scaling of our solar power
      capacity;
 ·
                our
      expectations with respect to increased revenue growth and our ability to
      achieve profitability resulting from increases in our production
      volumes;
 ·
                our
      expectations with respect to our ability to secure raw materials in the
      future;
 ·
                our
      expectations with respect to our ability to develop relationships with
      customers in our target markets;
 ·
                our
      future business development, results of operations and financial
      condition; and
 ·
                competition
      from other manufacturers of solar power products and conventional energy
      suppliers.
 This
annual report also contains data related to the solar power market worldwide and
in China.  These market data include projections that are based on a
number of assumptions.  The solar power market may not grow at the
rates projected by the market data, or at all.  The failure of the
market to grow at the projected rates may have a material adverse effect on our
business and the market price of our ADSs.  In addition, the rapidly
changing nature of the solar power market subjects any projections or estimates
relating to the growth prospects or future condition of our market to
significant uncertainties.  If any one or more of the assumptions
underlying the market data turns out to be incorrect, actual results may be
materially different from the projections based on these
assumptions.  Therefore, you should not rely upon forward-looking
statements as predictions of future events.
  The
forward-looking statements made in this annual report on Form 20-F relate only
to events or information as of the date on which the statements are made in this
annual report on Form 20-F. Except as required by law, we undertake no
obligation to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise, after the date on
which the statements are made or to reflect the occurrence of unanticipated
events.  You should read this annual report on Form 20-F completely
and with the understanding that our actual future results may be materially
different from what we expect.
  64
  
 ITEM
      6.
              DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES
 
 
 A.
              DIRECTORS
      AND SENIOR MANAGEMENT
 
 Directors
and Executive Officers
  The
following table sets forth our directors and executive officers, their ages as
of the date of this annual report and the positions held by them.  The
business address for each of our directors and executive officers is No. 36,
Jiang Chang San Road, Zhabei, Shanghai, People's Republic of China.
  Name
                
                Age
                
                PositionBaofang
      Jin
                
                
                57
                
                Executive
      Chairman of the Board of DirectorsPeng
      Fang
                
                
                56
                
                Director
      and Chief Executive OfficerBingyan
      Ren
                
                
                63
                
                DirectorErying
      Jia
                
                
                55
                
                DirectorJian
      Xie
                
                
                32
                
                Director
      and Chief Operating OfficerHope
      Ni
                
                
                38
                
                Independent
      DirectorJiqing
      Huang
                
                
                73
                
                Independent
      DirectorYuwen
      Zhao
                
                
                71
                
                Independent
      DirectorAnthea
      Chung
                
                
                41
                
                Chief
      Financial OfficerBoping
      Li
                
                
                40
                
                Vice
      President of SalesYong
      Liu
                
                
                43
                
                Vice
      President of OperationsMing
      Yang
                
                
                36
                
                Vice
      President of Business Development and Corporate
    Communications
 Baofang Jin,
Executive Chairman of the Board of Directors.Mr. Jin has been
our chairman since May 2005.  Mr. Jin has been the chairman of our
Board of Directors and chief executive officer of Jinglong Group since
2003.  From April 1984 to January 1992, Mr. Jin was the general
manager of Ningjin County Agricultural Equipment Company.  Mr. Jin
currently also serves as a vice-chairman of the Chinese People's Political
Consultative Conference of Ningjin County.  Mr. Jin graduated from
Hebei Broadcast and Television University, China, with an associate's degree in
1996.
  Peng Fang,
Director and Chief Executive Officer.  Dr. Fang Peng was
appointed Chief Executive Officer in January 2010.  Dr. Fang joins JA
Solar with more than 20 years of executive management experience with leading
global technology companies in the solar and semiconductor industries in both
the U.S. and China.  Dr. Fang was president of Best Solar Co., Ltd.,
where he turned a start-up company into an internationally known solar module
company in just 18 months.  Dr. Fang was formerly president of Huahong
NEC, one of the largest semiconductor foundries in China.  Dr. Fang
has also held various technology and management positions at Applied Materials
and AMD in the U.S. Dr. Fang received his Ph.D and MSEE degrees from the
University of Minnesota.  He was also a postdoctoral research fellow
at the EECS Department of UC Berkeley.  Dr. Fang was chairman of the
IEEE Electron Devices Society, Santa Clara Valley Chapter.
  Bingyan Ren,
Director.Mr. Ren has been our director since May
2005.  He also serves as the vice- chairman of Jinglong
Group.  Prior to becoming our director, he was a professor of
semiconductor materials and photovoltaic materials at the Hebei University of
Technology from 1972 to May 2005.  Mr. Ren currently is a member of
the semiconductor material academic committee of China and a member of
semiconductor standardization technical committee of China.  He also
serves as a vice-director of semiconductor material research institute of Hebei
University of Technology and a consultant to Hebei Ningjin Monocrystalline
Silicon Industry Park.  Mr. Ren graduated from North Jiaotong
University, China, in July 1970.
  Erying Jia,
Director.Mr. Jia has been our director since September
2007.  He has also served as executive deputy general manager and
director of Jinglong Group since January 2006.  Prior to that, he
served at several administrative positions in Ningjin County, Hebei Province,
China.  He holds a bachelor's degree in public
administration.
  65
  Jian Xie,
Director
and Chief Operating Officer.Mr. Jian Xie was appointed as Chief
Operating Officer in January 2010.  He has been the director of board
since August 2009.  Since joining JA Solar in April 2006, Mr. Xie has
served in such capacities as the company's director of corporate finance,
director of investor relations, assistant to the chief executive officer and
secretary of the board of directors. Prior to joining JA Solar, Mr. Xie worked
in the investment banking department of Ping'an Securities Co., Ltd., and as an
associate in the investment department at Dogain Holdings Group Co., Ltd. Mr.
Xie received his master's degree in finance from Guanghua School of Management
at Beijing University in 2004.
  Hope Ni,
Independent Director.  Ms. Hope Ni was appointed as the
independent director in August 2009.Ms. Ni
has served as chairman of the board of directors for China Fundamental
Acquisition Corp. since March 2008.  She currently also serves on the
boards of KongZhong Corporation and ATA, Inc. Previously, Ms. Ni was chief
financial officer and director of Comtech Group Inc., a Nasdaq Select Global
Market-listed company that she joined in August 2004.  She was also
vice chairman of the board of directors of Comtech.  Prior to that,
Ms. Ni spent six years as a practicing attorney at Skadden, Arps, Slate, Meagher
& Flom LLP in New York and Hong Kong, Earlier in her career, Ms. Ni worked
at Merrill Lynch's investment banking division in New York.  Ms. Ni
received her J.D. degree from University of Pennsylvania Law School and her B.S.
degree in Applied Economics and Business Management from Cornell
University.
  Jiqing Huang,
Independent Director. Mr. Jiqing Huang was appointed as the independent
director in August 2009.Mr. Huang has extensive experience in the research and
manufacturing of monocrystalline silicon and related products.  He
currently serves as a committee member at the Academic Committee of
Semi-conductive Materials of the Nonferrous Metals Society of China From 2001 to
2007, Mr. Huang served as chief representative of the Beijing representative
office of Space Energy Corporation, where he pioneered the introduction of the
TDR-80 monocrystalline puller into China and subsequent modifications to improve
its efficiency.  Prior to his engagement at Space Energy Corporation,
Mr. Huang was director of manufacturing, chief engineer and deputy director of
Beijing 605 Factory, as well as general manager of Beijing Mingcheng Optical
& Electronic Material Co., Ltd. Mr. Huang graduated from Nanjing Institute
of Technology (now Southeast University) in 1962.
  Yuwen Zhao,
Independent Director. Mr. Yuwen Zhao has extensive experience in the
study of high efficiency solar cell and solar energy materials.  He is
a well-known international solar industry expert, currently serving as vice
chairman of the Chinese Renewable Energy Industries Association and is a
director of international solar energy industry associations such as PVSEC and
WCPEC.  Since 1978, Mr. Zhao has been vice chairman, chief engineer,
director of academy committee and chief scientist of Beijing Solar Energy
Institute.  He is also a member of the editorial board of Solar Energy
Journal.  Prior to his engagement at Beijing Solar Energy Institute,
Mr. Zhao was a researcher in the Institute of Mechanics in the Chinese Academy
of Sciences and 501 Institute of Ministry of Aerospace Industry.  He
is also the founder of Chinese National New Energy Engineering Research
Center.  Mr. Zhao graduated from Tianjin University in 1964 and
studied in Germany in 1990 and 1991.
  Anthea Chung,
Chief Financial Officer.Ms. Chung has been our chief
financial officer since January 2009.  Ms. Chung has more than 16
years of financial management experience at public and private companies,
including most recently the chief financial officer position at Solar Enertech
Corp., a public company that manufactures solar cells and solar modules in
Shanghai and Menlo Park, California.  She was also former vice
president and corporate controller at RAE Systems in San Jose, California, a
US-listed company manufacturing high-tech gas detection
equipment.  Ms. Chung began her career as an auditor and worked eight
years for PricewaterhouseCoopers.  Ms. Chung earned her bachelor of
science degree in accounting at Indiana University and is a certified public
accountant registered in California.
  66
  Boping Li,
Vice President of Sales.Mr. Boping Li was appointed vice president in
August 2009.  Mr. Li served as vice general manager, manager of
equipment department and other posts in JA Solar from March 2007 to October
2008.  Prior to joining JA Solar, Mr. Li worked as vice general
manager at Nanjing FAB Technology Co., Ltd., and from September 2005 to May
2006, he was manager of the equipment division of China Sunergy Co., Ltd.
(formerly CEEG (Nanjing) PV-Tech Co., Ltd (NPV)).  Before that, Mr. Li
served in several supervisor/project manager positions at Nanjing Huafei Colour
Display System Co., Ltd. from 1993 to 2005.  He began his career as an
equipment engineer at Nanjing Color Picture Tube Co., Ltd. in August
1992.  Mr. Li holds a master's degree in software engineering from
East China Normal University and a bachelor's degree in radio technology from
Zhejiang University.
 
 Yong Liu,
Vice President of Operations.  Mr. Yong Liu was appointed vice
president in August 2009.  Mr. Liu has been general manager in charge
of JA Solar's Yangzhou manufacturing site since he joined the company in July
2008.  Mr. Liu has more than 15 years of operation management
experience at semiconductor wafer and solar cell manufacturing
facilities.  Prior to joining JA Solar, he served as fab director at
Semiconductor Manufacturing International Corporation (SMIC), responsible for
running three 12-inch wafer foundry fabs, which were the most advanced wafer
fabs in China.  Mr. Liu had held various management positions in
R&D and manufacturing since joining SMIC in 2001.  Previously, Mr.
Liu worked as deputy production manager at Wacker Siltronic
Singapore.  Mr. Liu received his master's degree in solid state
chemistry and bachelor's degree in solid state physics from the University of
Science and Technology of China in 1992 and 1990, respectively.
  Ming Yang, Vice
President of Business Development and Corporate
Communications.  Mr. Yang has been our Vice President of
Business Development and Corporate Communications since January
2009.  He has more than six years of experience working as a Wall
Street buyside and sellside analyst, specializing in renewable energy and
semiconductor materials sectors.  Most recently, he was an analyst
covering the renewable energy sector at Coatue Management, a US$ 2 billion hedge
fund based in New York.  Before that, he was vice president at Piper
Jaffray for four years, as senior China research analyst covering solar energy
and semiconductor materials, based in Shanghai.  Mr. Yang earned his
master of business administration degree from Cornell University and a
bachelor's degree in electrical engineering and computer science from the
University of California at Berkeley.
  Employment
Agreements
  We
have entered into employment agreement with each of our executive
officers.  Under these agreements, we may terminate his or her
employment for cause at any time, without notice or remuneration, for certain
acts of the employee, including but not limited to a conviction or plea of
guilty to a felony or to an act of fraud, misappropriation or embezzlement,
negligence or dishonest act to the detriment of the company, or misconduct of
the employee and failure to perform his or her agreed-to duties after a
reasonable opportunity to cure the failure.  Furthermore, we may
terminate the employment without cause at any time, in which case we will pay
the employee a certain amount of compensation.  An executive officer
may terminate the employment at any time upon one to three months written
notice.
  Each
executive officer has agreed to hold, both during and subsequent to the term of
the agreement, our confidential information in strict confidence and not to
disclose such information to anyone except to our other employees who have a
need to know such information in connection with our business or except as
required in the performance of his or her duties in connection with the
employment.  The executive officer shall not use our confidential
information other than for our benefits.  The executive officers have
also agreed to assign to us all rights, titles and interests to or in any
inventions that they may conceive or develop during the period of employment,
including any copyrights, patents, mark work rights, trade secrets or other
intellectual property rights pertaining to such inventions.
  67
  Terms
of Directors and Officers
  The term
of each director is three years.  Our directors may be removed from
office by resolutions of the shareholders.  Under the employment
agreement generally entered into by us and our executive officers, the initial
term is three to four years.
 
 B.
              COMPENSATION
 
 Compensation
of Directors and Executive Officers
  For the
year ended December 31, 2009, we paid aggregate compensation of RMB 22.6 million
to our seven executive positions. In addition, for the year end of December 31,
2009, we granted an aggregate 933,000 ordinary share options with exercise price
that varies from US$1.99 to US$4.53 and expiration date in various time through
2019, and 2,242,000 restricted share units with the option to receive ordinary
shares, par value US$0.0001 per share, net of shares forfeited, to our directors
and executive officers. Other than ordinary share options and restricted share
units granted under our 2006 stock incentive plan, as well as fees paid to our
independent directors for board services rendered, we only paid compensation to
those directors who also served as executive officers.
 Code
of Ethics
  We
have adopted a code of ethics for chief executive and senior financial officers,
which we filed with the SEC as an exhibit to our annual report on Form 20-F for
the year ended December 31, 2006.  This home country practice of ours
was established by us by reference to similarly situated issuers and differs
from the Nasdaq Marketplace Rules that require listed companies to adopt one or
more codes of conduct applicable to all directors, officers and employees and
make those codes of conduct publicly available.  There are, however,
no specific requirements under Cayman Islands law requiring the adoption of
codes of conduct.
  Stock
Option Plans
  We
adopted our 2006 stock incentive plan on August 18, 2006, which provides
for the grant of incentive stock options, non-qualified stock options,
restricted stock and restricted stock units, referred to as
"awards."  The purpose of the plan is to provide additional incentive
to those officers, employees, directors, consultants and other service providers
whose contributions are essential to the growth and success of our business, in
order to strengthen the commitment of such persons to us and motivate such
persons to faithfully and diligently perform their responsibilities and attract
and retain competent and dedicated persons whose efforts will result in our
long-term growth and profitability.
  Plan
Administration.  Our 2006 stock incentive plan is administered
by our Board of Directors or a committee or subcommittee appointed by our Board
of Directors.  In each case, our Board of Directors or the committee
will determine the provisions and terms and conditions of each award grant,
including, but not limited to, the exercise price for the options, vesting
schedule, form of payment of exercise price and other applicable
terms.
  Award
Agreement.  Awards granted under our 2006 stock incentive plan
are evidenced by an award agreement that sets forth the terms and conditions for
each award grant, which include, among other things, the vesting schedule,
exercise price, type of option and expiration date of each award
grant.
  Eligibility.  We
may grant awards to an officer, director, employee, consultant, advisor or
another service provider of our company or any of our parent or subsidiary,
provided that directors of our company or any of our parent or subsidiary who
are not also employees of our company or any of our parent or subsidiary, and
consultants or advisors to our company or any of our parent or subsidiary may
not be granted incentive stock options.
  68
  Option Term.  The
term of each option granted under the 2006 Incentive Stock Option may not exceed
ten years from the date of grant.  If an incentive stock option is
granted to an eligible participant who owns more than 10% of the voting power of
all classes of our share capital, the term of such option shall not exceed five
years from the date of grant.
  Exercise Price.  In
the case of non-qualified stock option, the per share exercise price of shares
purchasable under an option shall be determined by the plan administrator in its
sole discretion at the time of grant.  In the case of incentive stock
option, the per share exercise price of shares purchasable under an option shall
not be less than 100% of the fair market value per share at the time of
grant.  However, if we grant an incentive stock option to an employee,
who at the time of that grant owns shares representing more than 10% of the
voting power of all classes of our share capital, the exercise price cannot be
less than 110% of the fair market value of our ordinary shares on the date of
that grant.
  Amendment and
Termination.  Our Board of Directors may at any time amend,
alter or discontinue the plan, provided that no amendment, alteration, or
discontinuation shall be made that would impair the rights of a participant
under any award theretofore granted without such participant's
consent.  Unless terminated earlier, our 2006 stock incentive plan
shall continue in effect for a term of ten years from the effective date of the
plan.
  Under
our 2006 stock incentive plan, we may grant options to purchase up to 10% of
share capital of the company.  On August 21, 2006, April 3, 2007,
September 17, 2007, we granted options to purchase 1,728,000, 2,400,000 and
4,410,000 ordinary shares to certain of our directors, employees and
consultants, respectively.  In November 2007 and during the year ended
December 31, 2008, we granted 99,000 and 6,132,000 ordinary options to new
employees, respectively.  During the year ended December 31, 2009, we
granted 1,013,000 ordinary options to new employees.  From January to
April 20, 2010, we granted 1,650,000 ordinary options to new
employees.
  Our
board has authorized a committee, currently consisting of Mr. Baofang Jin, our
executive chairman and chairman of board of directors and Mr. Jian Xie, our
chief operating officer and director, to approve option grants under our 2006
stock incentive plan.
  As
of April 20, 2010, options to purchase 4,010,700 ordinary shares remained
outstanding.  During January to April, 2010, the 400,100 unvested
options for employees were forfeited; 150,000 unvested options expired, and
153,200 vested options were exercised.
 
 C.
              BOARD
      PRACTICES
 
 Board
of Directors and Board Committees
  Our
Board of Directors currently consists of seven members, including two
independent directors who satisfy the "independence" requirements of the Nasdaq
Marketplace Rules and meet the criteria for "independence" under Rule 10A-3
under the Securities Exchange Act of 1934, as amended, or the Exchange
Act.  This home country practice of ours was established by our Board
of Directors by reference to similarly situated issuers and differs from the
Nasdaq Marketplace Rules that require the board to be comprised of a majority of
independent directors.
 There
are, however, no specific requirements under Cayman Islands law that the board
must be comprised of a majority of independent directors.  There are
no family relationships between our directors or executive
officers.
  We
do not have regularly scheduled meetings at which only independent directors are
present, or executive sessions.  This home country practice of ours
was established by our Board of Directors by reference to similarly situated
issuers and differs from the Nasdaq Marketplace Rules that require the company
to have regularly scheduled executive sessions at which only independent
directors are present.  There are, however, no specific requirements
under Cayman Islands law on executive sessions.
  69
  We
have established three committees under our Board of Directors: an audit
committee, a compensation committee and a nominating and corporate governance
committee.  We have adopted a charter for each of the three
committees.  Each committee's composition and functions are described
below.
  Audit
Committee.  Our audit
committee consists of Mr. Jiqing Huang, Ms. Hope Ni and Mr. Yuwen Zhao, and
is chaired by Ms. Hope Ni.  All of the members of the audit
committee satisfy the "independence" requirements of the Nasdaq Marketplace
Rules and meet the criteria for "independence" under Rule 10A-3 under the
Exchange Act.  The audit committee will oversee our accounting and
financial reporting processes and the audits of the financial statements of our
company.  The audit committee will be responsible for, among other
things:
  ·
                appointment,
      compensation, retention and oversight of the work of the independent
      registered public accounting firm;
 ·
                approving
      all auditing and non-auditing services permitted to be performed by the
      independent registered public accounting firm;
 ·
                meeting
      separately and periodically with management and the independent registered
      public accounting firm;
 ·
                oversight
      of annual audit and quarterly reviews, including reviewing with
      independent registered public accounting firm the annual audit
      plans;
 ·
                oversight
      of financial reporting process and internal controls, including reviewing
      the adequacy and effectiveness of our internal controls policies and
      procedures on a regular basis;
 ·
                establishing
      procedures for the receipt, retention and treatment of complaints received
      by us regarding accounting, internal accounting controls or auditing
      matters; and
 ·
                reviewing
      and implementing related person transaction policies and procedures for
      the committee's review and approval of proposed related person
      transactions, including all transactions required to be disclosed by
      Item 404(a) of Regulation S-K under the Securities
    Act.
 Compensation
Committee.  Our compensation
committee consists of Ms. Hope Ni, Mr. Yuwen Zhao, Mr.Baofang Jin and Mr. Jiqing
Huang, and is chaired by Mr. Jiqing Huang.  Ni Zhao and Huang satisfy
the "independence" requirements of the Nasdaq Marketplace Rules and meet the
criteria for "independence" under Rule 10A-3 under the Exchange
Act.  This home country practice of ours was established by our Board
of Directors and differs from the Nasdaq Marketplace Rules that require the
compensation committees of listed companies to be comprised solely of
independent directors.  There are, however, no specific requirements
under Cayman Islands law on the composition of compensation
committees.  The compensation committee assists the board in reviewing
and approving the compensation structure, including all forms of compensation,
relating to our directors and executive officers.  The compensation
committee is responsible for, among other things:
  ·
                reviewing
      at least annually our executive compensation plans;
 ·
                evaluating
      annually the performance of our chief executive officer and other
      executive officers;
 ·
                determining
      and recommending to the board the compensation package for our chief
      executive officer and other executive officers;
 ·
                evaluating
      annually the appropriate level of compensation for board and board
      committee service by non-employee directors;
  70
 ·
                reviewing
      and approving any severance or termination arrangements to be made with
      any of our executive officers; and
 ·
                reviewing
      at least annually our general compensation plans and other employee
      benefits plans.
 Nominating and
Corporate Governance Committee.  Our nominating
and corporate governance committee consists of Ms. Hope Ni, Mr. Jiqing Huang,
Mr. Yuwen Zhao and Mr. Baofang Jin, and is chaired by Baofang Jin Ni, Huang and
Zhao satisfy the "independence" requirements of the Nasdaq Marketplace Rules and
meet the criteria for "independence" under Rule 10A-3 under the Exchange
Act.  This home country practice of ours was established by our Board
of Directors and differs from the Nasdaq Marketplace Rules that require the
nominating committees of listed companies to be comprised solely of independent
directors.  There are, however, no specific requirements under Cayman
Islands law on the composition of nominating committees.  The
nominating and corporate governance committee assists our Board of Directors in
selecting individuals qualified to become our directors and in determining the
composition of the board and its committees.  The nominating and
corporate governance committee is responsible for, among other
things:
  ·
                establishing
      procedures for evaluating the suitability of potential director
      nominees;
 ·
                recommending
      to the board nominees for election by the stockholders or appointment by
      the board;
 ·
                reviewing
      annually with the board the current composition of the board with regards
      to characteristics such as knowledge, skills, experience, expertise and
      diversity required for the board as a whole;
 ·
                reviewing
      periodically the size of the board and recommending any appropriate
      changes;
 ·
              recommending
      to the board the size and composition of each standing committee of the
      board; and
 ·
              reviewing
      periodically and at least annually the corporate governance principles
      adopted by the board to assure that they are appropriate for us and comply
      with the requirements under the rules and regulations of the SEC and the
      Nasdaq Stock Market, Inc. where
applicable.
  Duties
of Directors
  Under
Cayman Islands law, our directors have a fiduciary duty to act honestly, in good
faith and with a view to our best interests.  Our directors also have
a duty to exercise the skill they actually possess and such care and diligence
that a reasonably prudent person would exercise in comparable
circumstances.  In fulfilling their duty of care to us, our directors
must ensure compliance with our memorandum and articles of association, as
amended from time to time.  A shareholder has the right to seek
damages if a duty owed by our directors is breached.
 The
functions and powers of our Board of Directors include, among
others:
  ·
                convening
      shareholders' annual general meetings and reporting its work to
      shareholders at such meetings;
 ·
                declaring
      dividends and distributions;
 ·
                appointing
      officers and determining the term of office of
officers;
 ·
                exercising
      the borrowing powers of our company and mortgaging the property of our
      company; and
 ·
                approving
      the transfer of shares of our company, including the registering of such
      shares in our share register.
 Term
of Office and Benefits
  Our
directors serve a term of three years and do not receive any special benefits
upon termination.
  71
  Interested
Transactions
  A
director may vote in respect of any contract or transaction in which he or she
is interested, provided that the nature of the interest of any directors in such
contract or transaction is disclosed by him or her at or prior to its
consideration and any vote in that matter.
 
 D.
              EMPLOYEES
 
 As
of December 31, 2007, 2008 and 2009, we had a total of 1,465, 4,213 and
5,131 employees, respectively.  The following table sets forth
the number of our employees categorized by our areas of operations and as a
percentage of our workforce as of December 31, 2009:
  Number of
                        employees
                      
                      
                      Percentage
                          of
      totalManufacturing
      and engineering
                      
                      
                      4,466
                      
                      
                      
                      87.04
                      %Quality
      assurance
                      
                      
                      252
                      
                      
                      
                      4.91
                      %General
      and administration
                      
                      
                      224
                      
                      
                      
                      4.37
                      %Purchasing
      and logistics
                      
                      
                      102
                      
                      
                      
                      1.99
                      %Research
      and development
                      
                      
                      44
                      
                      
                      
                      0.86
                      %Marketing
      and sales
                      
                      
                      39
                      
                      
                      
                      0.76
                      %Others
                      
                      
                      4
                      
                      
                      
                      0.08
                      %Total
                      
                      
                      5,131
                      
                      
                      
                      100.00
                      %
 From
time to time, we also employ part-time employees and independent contractors to
support our research and development, manufacturing and sales and marketing
activities.
  Our
success depends to a significant extent upon our ability to attract, retain and
motivate qualified personnel.  As of December 31, 2009, 530 of
our employees held bachelor's or higher degrees, and all of our manufacturing
line employees have post-high school technical degrees or high school
diplomas.  A number of our employees have overseas education and
industry experience.
  We
are required by applicable PRC regulations to contribute amounts equal to
20.0-22.0%, 4.0-12.0%, 2.0%, 0.5-1.0% and 0.5-0.8%, of our employees' aggregate
salary to a pension contribution plan, a medical insurance plan, an unemployment
insurance plan, a personal injury insurance plan and a maternity insurance plan
respectively, for our employees.
  Our
employees are not covered by any collective bargaining agreement.  We
believe that we have a good relationship with our employees.
 
 E.
              SHARE
      OWNERSHIP
 
 The
following table shows the beneficial ownership of our ordinary shares by our
directors and executive officers as of April 20, 2010:
  Name
                  
                  Shares(1)
                  
                  
                  Percent(2)Baofang
      Jin(3)
                  
                  
                  39,845,568
                  
                  
                  
                  23.54
                  %Bingyan
      Ren(4)
                  
                  
                  1,908,603
                  
                  
                  
                  1.13
                  %Erying
      Jia
                  
                  
                  *
                  
                  
                  
                  *Peng
      Fang
                  
                  
                  *
                  
                  
                  
                  *Jian
      Xie
                  
                  
                  *
                  
                  
                  
                  *Hope
      Ni
                  
                  
                  *
                  
                  
                  
                  *Jiqing
      Huang
                  
                  
                  *
                  
                  
                  
                  *Yuwen
      Zhao
                  
                  
                  *
                  
                  
                  
                  *Boping
      Li
                  
                  
                  *
                  
                  
                  
                  *Yong
      Liu
                  
                  
                  *
                  
                  
                  
                  *Anthea
      Chung
                  
                  
                  *
                  
                  
                  
                  *Ming
      Yang
                  
                  
                  *
                  
                  
                  
                  *All
      Directors and Executive Officers as a group39,949,568
                  
                  
                  
                  23.61
                  %
 
  *
              Upon
      exercise of all options and vesting of all restricted shares granted,
      would beneficially own less than 1.0% of our outstanding ordinary
      shares.
  72
  (1)
                Beneficial
      ownership is determined in accordance with Rule 13d-3 of the General Rules
      and Regulations under the Securities Exchange Act of 1934, as amended, and
      includes voting or investment power with respect to the
      securities.  The share numbers and percentages listed in the
      table reflect the share number and percentage held by each director,
      executive officer and principal shareholder on a fully-diluted
      basis.
 (2)
                For
      each person included in this table, percentage ownership is calculated by
      dividing the number of shares beneficially owned or being sold by such
      person by the sum of (i) 169,234,620, being the sum of the number of
      ordinary shares outstanding as of the date of this annual report, and (ii)
      the number of ordinary shares underlying share options held by such person
      or group that are exercisable within 60 days after the date of this annual
      report.
 (3)
                Including
      39,845,568 ordinary shares held by Jinglong BVI, of which Mr. Baofang Jin
      is the sole director and has a 32.96% economic interest.  Mr.
      Jin disclaims the beneficial ownership of 13,133,099 ordinary shares
      beneficially owned by the other shareholders of Jinglong
    BVI.
 (4)
              Including
      1,908,603 ordinary shares held by Jinglong BVI, 4.79% of which is owned by
      Mr. Bingyan Ren.
  As
of the date of this annual report, none of our existing shareholders has
different voting rights from other shareholders.
 
 ITEM
      7.
              MAJOR
      SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS
 
 
 A.
              MAJOR
      SHAREHOLDERS
 
 The
following table sets forth information with respect to the beneficial ownership
of our ordinary shares, as of April 20, 2010, by each person known to us to own
beneficially more than 5.0% of our ordinary shares.  As of the date of
this annual report, none of our existing shareholders has different voting
rights from other shareholders.
  Name
                  
                  Shares(1)
                  
                  
                  Percent(2)Jinglong
      Group Co., Ltd.(3)
                  
                  
                  39,845,568
                  
                  
                  
                  23.54
                  %Fidelity
      Management & Research Company
                  
                  
                  13,654,833
                  
                  
                  
                  8.07
                  %SAM
      Sustainable Asset Management AG
                  
                  
                  8,757,570
                  
                  
                  
                  5.17
                  %




73


(1)
                Beneficial
      ownership is determined in accordance with Rule 13d-3 of the General Rules
      and Regulations under the Securities Exchange Act of 1934, as amended, and
      includes voting or investment power with respect to the
      securities.  The share numbers and percentages listed in the
      table reflect the share number and percentage held by each director,
      executive officer and principal shareholder on a fully-diluted
      basis.
 (2)
                For
      each person included in this table, percentage ownership is calculated by
      dividing the number of shares beneficially owned or being sold by such
      person by the sum of (i) 169,234,620, being the sum of the number of
      ordinary shares outstanding as of the date of this annual report, and (ii)
      the number of ordinary shares underlying share options held by such person
      or group that are exercisable within 60 days after the date of this annual
      report.
 (3)
                Jinglong
      Group Co., Ltd., a British Virgin Islands Company, is owned by Mr. Baofang
      Jin (our Chairman, 32.96%), Mr. Huixian Wang (9.58%), Mr. Binguo Liu
      (9.58%), Mr. Jicun Yan (7.18%), Mr. Rongrui Liu (7.18%), Mr. Huiqiang Liu
      (7.18%), Mr. Ruiying Cao (7.18%), Mr. Guichun Xing (4.79%), Mr. Ning Wen
      (4.79%), Mr. Bingyan Ren (our director, 4.79%) and Mr. Ruchang Wen
      (4.79%).
 We
are not aware of any arrangement that may, at a subsequent date, result in a
change of control of our company.  As of the date of this annual
report, of the 169,234,620 issued and outstanding ordinary shares, 125,168,020
were held by 13 registered holders of American Depositary Receipts (or "ADR")
evidencing 125,168,020 ADSs, 12 of which holders of record are in the United
States.
 
 B.
              RELATED
      PARTY TRANSACTIONS
 
 Jinglong
Group is 100% owned by the shareholders of our largest shareholder, Jinglong
BVI, and thus, is a related party of ours.  Baofang Jin, our Chairman,
owns 32.96% equity interests in each of Jinglong Group and Jinglong BVI, and
Bingyan Ren, our director, owns 4.79% equity interests in each of Jinglong Group
and Jinglong BVI.
  Jinglong
Group is one of China's largest producers and suppliers of monocrystalline
silicon wafers with more than ten years' operating history in the silicon
processing business.
  We
have entered into various transactions with Jinglong Group and other related
parties.  Please refer to the audited financial statements attached to
this annual report for more details.
 
 C.
              INTERESTS
      OF EXPERTS AND COUNSEL
 
 Not
applicable.
 
 ITEM
      8.
              FINANCIAL
      INFORMATION
 
 
 A.
              CONSOLIDATED
      STATEMENTS AND OTHER FINANCIAL
INFORMATION
 
 See
F-pages following Item 19.
  74
  Legal
Proceedings
  Class
actions.
  In
December 2008, we learned that we were named as defendant in two putative
securities class actions filed in the Unite States District Court for the
Southern District of New York:  Ellenburg v. JA Solar Holdings Co.,
Ltd., et al., Civil Action No. 08 CV 10475 (filed on December 3, 2008)
and Zhang v. JA Solar Holdings
Co., Ltd., et al., Civil Action No. 08 CV 11366 (filed on December 31,
2008).  The complaints in the two actions, which are substantially
identical, also name as defendants Mr. Huaijin Yang, our former chief executive
officer, and Mr. Daniel Lui, our former chief financial officer and chief
strategy officer, and allege that the defendants committed securities fraud in
violation of Section 10(b) of the United States Securities and Exchange
Act.  On April 17, 2009, the court consolidated the two cases,
appointed a lead plaintiff, and ordered the lead plaintiff to file a
consolidated complaint.  The lead plaintiff filed the consolidated
complaint on June 1, 2009. We filed a motion to dismiss the consolidated
complaint on July 15, 2009. In response, lead plaintiff filed a second amended
complaint on August 21, 2009. We moved to dismiss the second amended complaint
on October 8, 2009. The lead plaintiff filed a response to our motion to dismiss
the second amended complaint on November 5, 2009, and we filed our reply on
November 25, 2009.  The court ordered an oral argument to be held on
April 9, 2010 to hear arguments regarding our motion to dismiss.  That
oral argument was adjourned to April 20, 2010 and then to April 26, 2010, again
at lead plaintiff’s request.  On April 26, 2010, the oral arguments
were heard and we are currently awaiting the ruling.   Although
we cannot predict the outcome of the litigation, we will defend ourselves
vigorously in this litigation and do not believe any loss is probable and
estimable.
  During
this processes, we may incur significant legal expenses and allocate management
time and attention to the legal actions.  Despite our expense and
efforts, however, no assurance can be provided that we will be able to prevail
against the plaintiffs in the class action.
  Lehman Entities insolvency
proceedings.
  In
addition, we are currently taking legal action against Lehman Entities seeking
the return of over 6.5 million shares of our ordinary shares previously loaned
by us to LBIE in May 2008.  Also, we are making our reasonable
efforts to preserve our rights in the Lehman Entities' insolvency proceedings in
relation to the Capped Call and the return of monies owed pursuant to the Lehman
Note issued by Lehman BV.
  During
these processes, we may incur significant legal expenses and allocate management
time and attention to the legal actions.  Despite our expense and
efforts, however, no assurance can be provided that we will be able to recover
any of the shares or be awarded any damages from the Lehman
entities.
  Dividend
Distribution Policy
  We
have never declared or paid any dividends on our ordinary shares.  We
do not anticipate paying any cash dividends in the foreseeable
future.  We currently intend to retain future earnings, if any, to
finance operations and to strengthen our business.
  Our
Board of Directors has complete discretion on whether to pay dividends, subject
to the approval of our shareholders.  Even if our Board of Directors
decides to pay dividends, the form, frequency and amount will depend upon our
future operations and earnings, capital requirements and surplus, general
financial conditions, contractual restrictions and other factors that the board
may deem relevant.  Cash dividends on our ADSs, if any, will be paid
in U.S. dollars.
  As
we are a holding company incorporated in the Cayman Islands, we primarily rely
on dividends paid to us by JA Hebei and JA Yangzhou, our wholly owned
subsidiaries in the PRC, for our cash requirements, including the funds
necessary to pay dividends and other cash distributions to our shareholders,
service any debt we may incur and pay our operating expenses.  PRC
regulations currently permit payment of dividends only out of accumulated
profits, if any, as determined in accordance with PRC accounting standards and
regulations.  Under current PRC laws and regulations, JA Hebei and JA
Yangzhou, as well as our other subsidiaries, is required to allocate at least
10% of its after-tax profits each year, if any, to fund a statutory reserve
until such reserve reaches 50% of that entity's registered capital, which
totaled RMB 98.0 million and 41.6 million for JA Hebei and JA Yangzhou in the
year ended December 31, 2008 and 2009, respectively.  Our other
subsidiaries have not set aside such reserves due to their loss
positions.  JA Hebei and JA Yangzhou's reserve funds are not
distributable as cash dividends.  In addition, at the discretion of
its Board of Directors, JA Hebei and JA Yangzhou may allocate a portion of its
after-tax profits to its staff welfare and bonus funds.  Further, if
JA Hebei and JA Yangzhou incurs debt in the future, the instruments governing
the debt may restrict its ability to pay dividends or make other distributions
to us.
  75
  
 B.
              SIGNIFICANT
      CHANGES
 
 None.
 
 ITEM
      9.
              THE
      OFFER AND LISTING
 
 
 A.
              OFFER
      AND LISTING DETAILS
 
 From
the initial listing of our ADSs on the Nasdaq Global Market on February 7, 2007
to February 7, 2008, the closing prices of our ADSs have ranged from US$16.30 to
US$75.43 per ADS.  Then from the day after the date of our 3-for-1 ADS
split (February 7, 2008) to the date of this annual report, the closing prices
of our ADSs have ranged from US$1.8 to US$25.75 per ADS.
  The
following table sets forth, for the periods indicated, the high and low closing
prices of our ADSs on the NASDAQ Global Market.
  Closing Price Per ADSHigh
                      
                      
                      Low(US$)
                      
                      
                      (US$)Before
      our 3-for-1 ADS Split on February 7, 20082007
                      February
      8, 2007 through December 31, 2007
                      
                      
                      75.43
                      
                      
                      
                      40.982008
                      January
      1, 2008 to February 7,
      2008
                      
                      
                      75.07
                      
                      
                      
                      46.45After
      our 3-for-1 ADS Split on February 7, 20082008
                      February
      8, 2008 to March 31,
      2008
                      
                      
                      20.34
                      
                      
                      
                      12.392008
                      April
      1, 2008 through June 30,
      2008
                      
                      
                      25.75
                      
                      
                      
                      16.852008
                      July
      1, 2008 through September 30,
      2008
                      
                      
                      17.97
                      
                      
                      
                      10.242008
                      October
      1, 2008 through December 31, 2008
                      
                      
                      11.84
                      
                      
                      
                      1.802009
                      January1,
      2009 through March 31,
      2009
                      
                      
                      5.09
                      
                      
                      
                      1.902009
                      April
      1, 2009 through June 30,
      2009
                      
                      
                      6.24
                      
                      
                      
                      2.912009
                      July
      1, 2009 through September 30,
      2009
                      
                      
                      5.34
                      
                      
                      
                      3.372009
                      October
      1, 2009 through December 31, 2009
                      
                      
                      6.23
                      
                      
                      
                      3.672009
                      November
                      
                      
                      4.17
                      
                      
                      
                      3.692009
                      December
                      
                      
                      6.23
                      
                      
                      
                      4.022010
                      January
                      
                      
                      6.80
                      
                      
                      
                      4.302010
                      February
                      
                      
                      5.48
                      
                      
                      
                      4.342010
                      March
                      
                      
                      4.48
                      
                      
                      
                      5.952010
                      April
      (through April
      24)
                      
                      
                      6.43
                      
                      
                      
                      5.48


76
 
  Source:
Bloomberg
  See
also "Item 14 — Material Modifications to the Rights of the Security Holders and
Use of Proceeds — A. Material Modifications to the Rights of Securities Holders"
and "Notes to Consolidated Financial Statements – 20.  Senior
Convertible Notes."
 
 B.
              PLAN
      OF DISTRIBUTION
 
 Not
applicable.
 
 C.
              MARKETS
 
 Our
ADSs, each representing one of our ordinary shares, par value US$0.0001 per
share, have been listed on the NASDAQ Global Market under the symbol "JASO", and
commenced trading on February 8, 2007.  Prior to that time, there
was no public market for our ADSs or ordinary shares.
  In
May 2008, we closed an offering of the Senior Notes.
 
 D.
              SELLING
      SHAREHOLDERS
 
 Not
applicable.
 
 E.
              DILUTION
 
 Not
applicable.
 
 F.
              EXPENSES
      OF THE ISSUE
 
 Not
applicable.
 
 ITEM
      10.
              ADDITIONAL
      INFORMATION
 
 
 A.
              SHARE
      CAPITAL
 
 Not
applicable.
  77
  
 B.
              MEMORANDUM
      AND ARTICLES OF ASSOCIATION
 
 The
following are summaries of material terms and provisions of our second amended
and restated memorandum and articles of association in the section entitled
"Description of Share Capital" contained in our registration statement on Form
F-1 (File No. 333-140002), as amended, filed with the SEC on January 16,
2007, as well as the Companies Law insofar as they relate to the material terms
of our ordinary shares..  As of February 7, 2008, the company's ADS
ratio changed from one to three (one ADS representing three ordinary shares) to
one to one (one ADS representing one ordinary share).  This summary is
not complete, and you should read the forms of our memorandum and articles of
association.  For additional information on our second amended and
restated memorandum and articles of association, please visit our corporate
website www.jasolar.com.
  General
  We
are a Cayman Islands exempted company and our affairs are governed by our second
amended and restated memorandum and articles of association and the Companies
Law (2007 Revision) of the Cayman Islands, which is referred to below as the
Companies Law.  A Cayman Islands exempted company is a company that
conducts its business outside of the Cayman Islands, is exempted from certain
requirements of the Companies Law, including a filing of an annual return of its
shareholders with the Registrar of Companies, does not have to make its register
of shareholders open to inspection and may obtain an undertaking against the
imposition of any future taxation.
  The
holders of ADSs will not be treated as our shareholders and will be required to
surrender their ADSs for cancellation and withdrawal from the depositary
facility in which the ordinary shares are held in order to exercise
shareholders' rights in respect of the ordinary shares.  The
depositary will agree, so far as it is practical, to vote or cause to be voted
the amount of ordinary shares represented by ADSs in accordance with the
non-discretionary written instructions of the holder of such ADSs.
  Meetings
  Subject
to our second amended and restated articles of association, an annual general
meeting and any extraordinary general meeting will be called by not less than
ten clear days' notice in writing.  Notice of every general meeting
will be given to all of our shareholders.
  A
meeting may be called by shorter notice than that mentioned above, but, subject
to our articles of association, it will be deemed to have been duly called, if
it is so agreed (1) in the case of a meeting called as an annual general
meeting by all of our shareholders (or their proxies) entitled to attend and
vote at the meeting; or (2) in the case of any other meeting, by a majority
in number of our shareholders having a right to attend and vote at the meeting,
being a majority together holding not less than 95.0% in nominal value of the
ordinary shares giving that right.
  No
business other than the appointment of a chairman of the meeting may be
transacted at any general meeting unless a quorum is present at the commencement
of business.  However, the absence of a quorum will not preclude the
appointment of a chairman of the meeting.  If present, the chairman of
our Board of Directors shall be the chairman presiding at any shareholders'
meetings.
  Two
of our members present in person or by proxy or corporate representative
representing not less than one third in nominal value of our total issued voting
shares shall be a quorum.  A corporation being a shareholder shall be
deemed for the purpose of our articles of association to be present in person if
represented by its duly authorized representative.  Such duly
authorized representative shall be entitled to exercise the same powers on
behalf of the corporation which he or she represents as that corporation could
exercise if it were our individual shareholder.
  78
  The
quorum for a separate general meeting of the holders of a separate class of
shares is described in "Modification of Rights" below.
  Voting
Rights Attaching to the Shares
  Subject
to any rights or restrictions attached to any shares, at any general meeting on
a show of hands every shareholder who is present in person (or, in the case of a
shareholder being a corporation, by its duly authorized representative) or by
proxy shall have one vote and on a poll every shareholder present in person (or,
in the case of a shareholder being a corporation, by its duly appointed
representative) or by proxy shall have one vote for each share which such
shareholder is the holder. Voting at any meeting of the shareholders is by show
of hands unless a poll is demanded.  A poll may be demanded by the
chairman or at least three shareholders present in person or by proxy holding at
least 10.0% in par value of the shares giving a right to attend and vote at the
meeting.
  Any
ordinary resolution to be passed by our shareholders requires the affirmative
vote of a simple majority of the votes cast at a meeting of our shareholders,
while a special resolution requires the affirmative vote of no less than
two-thirds of the votes cast at a meeting of our
shareholders.  Holders of our ordinary shares may by ordinary
resolution, among other things, elect directors, and make alterations of
capital.  See "Item 10. Additional Information — B. Memorandum and
Articles of Association — Alteration of Capital."  A special
resolution is required for matters such as a change of name.  See
"Item 10. Additional Information — B. Memorandum and Articles of Association —
Modification of Rights."
  No
shareholder shall be entitled to vote or be reckoned in a quorum, in respect of
any share, unless such shareholder is registered as our shareholder at the
applicable record date for that meeting.
  If
a recognized clearing house (or its nominee(s)) is our shareholder, it may
authorize such person or persons as it thinks fit to act as its
representative(s) at any meeting or at any meeting of any class of shareholders
provided that, if more than one person is so authorized, the authorization shall
specify the number and class of shares in respect of which each such person is
so authorized.  A person authorized pursuant to this provision is
entitled to exercise the same powers on behalf of the recognized clearing house
(or its nominee(s)) as if such person was the registered holder of our shares
held by that clearing house (or its nominee(s)) including the right to vote
individually on a show of hands.
  While
there is nothing under the laws of the Cayman Islands which specifically
prohibits or restricts the creation of cumulative voting rights for the election
of our directors, unlike the requirement under Delaware General Corporation Law
where cumulative voting for the election of directors is permitted only if
expressly authorized in the certificate of incorporation, it is not a concept
that is accepted as a common practice in the Cayman Islands, and we have made no
provisions in our memorandum and articles of association to allow cumulative
voting for such elections.
  Protection
of Minority Shareholders
  The
Grand Court of the Cayman Islands may, on the application of shareholders
holding not less than one fifth of our shares in issue, appoint an inspector to
examine our affairs and report thereon in a manner as the Grand Court shall
direct.
  Any
shareholder may petition the Grand Court of the Cayman Islands which may make a
winding up order, if the court is of the opinion that it is just and equitable
that we should be wound up.
  79
  Claims
against us by our shareholders must, as a general rule, be based on the general
laws of contract or tort applicable in the Cayman Islands or their individual
rights as shareholders as established by our memorandum and articles of
association.
  The
Cayman Islands courts ordinarily would be expected to follow English case law
precedents which permit a minority shareholder to commence a representative
action against, or derivative actions in our name to challenge (1) an act
which is ultra vires or illegal, (2) an act which constitutes a fraud
against the minority and the wrongdoers are themselves in control of us, and
(3) an irregularity in the passing of a resolution which requires a
qualified (or special) majority.
  Pre-emption
Rights
  There
are no pre-emption rights applicable to the issuance of new shares under either
Cayman Islands law or our memorandum and articles of association.
  Liquidation
Rights
  Subject
to any special rights, privileges or restrictions as to the distribution of
available surplus assets on liquidation for the time being attached to any class
or classes of shares, if we shall be wound up the liquidator may, with the
sanction of a special resolution and any other sanction required by the
Companies Law, divide among our shareholders in kind the whole or any part of
our assets (whether they shall consist of property of the same kind or not) and
may, for that purpose, value any assets as the liquidator deems fair upon any
asset and determine how the division shall be carried out as between our
shareholders or different classes of shareholders. The liquidator may, with the
like sanction, vest any part of such assets in trustees upon such trusts for the
benefit of our shareholders as the liquidator, with the like sanction, shall
think fit, but so that no contributory shall be compelled to accept any shares
or other property upon which there is a liability.  If we shall be
wound up, and the assets available for distribution among our shareholders as
such shall be insufficient to repay the whole of the paid-up capital, such
assets shall be distributed so that, as nearly as may be, the losses shall be
borne by our shareholders in proportion to the capital paid up, or which ought
to have been paid up, at the commencement of the winding up on the shares held
by them respectively.  And if winding up the assets available for
distribution among our shareholders shall be more than sufficient to repay the
whole of the capital paid up at the commencement of the winding up, the excess
shall be distributed amongst our shareholders in proportion to the capital paid
up at the commencement of the winding up on the shares held by them
respectively.
  Modification
of Rights
  Except
with respect to share capital (as described below) and the location of the
registered office, alterations to our memorandum and articles of association or
to our name may only be made by special resolution of no less than two-thirds of
votes cast at a meeting of our shareholders.
  Subject
to the Companies Law, all or any of the special rights attached to any class,
unless otherwise provided for by the terms of issue of the shares of that class,
may be varied, modified or abrogated with the sanction of a special resolution
passed at a separate general meeting of the holders of the shares of that
class.  The provisions of our articles of association relating to
general meetings shall apply mutatis mutandis to every such separate general
meeting, but so that the quorum for the purposes of any such separate general
meeting shall be a person or persons together holding, or represented by proxy,
on the date of the relevant meeting not less than one-third in nominal value of
the issued shares of that class, every holder of shares of the class shall be
entitled on a poll to one vote for every such share held by such holder and that
any holder of shares of that class present in person or by proxy may demand a
poll.
  80
  The
special rights conferred upon the holders of any class of shares shall not,
unless otherwise expressly provided in the rights attaching to or the terms of
issue of such shares, be deemed to be varied by the creation or issue of further
shares ranking pari passu therewith.
  Alteration
of Capital
  We
may from time to time by ordinary resolution:
  ·
                increase
      our share capital by such sum, to be divided into shares of such amounts,
      as the resolution shall prescribe;
 ·
                consolidate
      and divide all or any of our share capital into shares of larger amount
      than our existing shares;
 ·
                without
      prejudice to powers granted to us regarding issuing of shares, divide our
      shares into several classes and without prejudice to any special rights
      previously conferred on the holders of existing shares attach thereto
      respectively any preferential, deferred, qualified or special rights,
      privileges, conditions or such restrictions which in the absence of
      any such determination by us in general meeting, as our directors may
      determine;
 ·
                subdivide
      our shares or any of them into shares of smaller amount than that fixed by
      our memorandum of association and may by such resolution determine that,
      as between the holders of the shares resulting from such sub-division, one
      or more of the shares may have any such preferred, deferred or other
      rights or be subject to any such restrictions as compared with the other
      or others as we have power to attach to unissued or new shares;
      and
 ·
                cancel
      any shares which at the date of the passing of the resolution have not
      been taken or agreed to be taken by any person and diminish the amount of
      our share capital by the amount of the shares so
  cancelled.
 We
may, by special resolution, subject to any confirmation or consent required by
the Companies Law, reduce our share capital or any capital redemption reserve
fund in any manner authorized by law.
   Transfer
of Shares
  Subject
to any applicable restrictions set forth in our articles of association, any of
our shareholders may transfer all or any of his or her shares by an instrument
of transfer in the usual or common form or in any other form which our directors
may approve.
  Our
Board of Directors may, in its absolute discretion, decline to register any
transfer of any share without assigning any reasons therefor.
  If
our directors refuse to register a transfer they shall, within two months after
the date on which the instrument of transfer was lodged, send to each of the
transferor and the transferee notice of such refusal.
  The
registration of transfers may be suspended and the register closed at such times
and for such periods as our Board of Directors may from time to time determine,
provided, however, that the registration of transfers shall not be suspended nor
the register closed for more than 30 days in any year.
  Share
Repurchase
  We
are empowered by the Companies Law and our articles of association to purchase
our own shares, subject to certain restrictions.  Our directors may
only exercise this power on our behalf, subject to the Companies Law, our
memorandum and articles of association and to any applicable requirements
imposed from time to time by the SEC, the Nasdaq Global Market, or by any
recognized stock exchange on which our securities are listed.
  81
  Dividends
  Subject
to the Companies Law and our articles of association, in general meeting we may
declare dividends in any currency, but no dividends shall exceed the amount
recommended by our Board of Directors.  Dividends may be declared and
paid out of our profits, realized or unrealized, or from any reserve set aside
from profits which our directors determine is no longer
needed.  Dividends may also be declared and paid out of share premium
account or any other fund or account which can be authorized for this purpose in
accordance with the Companies Law.
  Unless
and to the extent that the rights attached to any shares or the terms of issue
thereof otherwise provide, with respect to any shares not fully paid throughout
the period in respect of which the dividend is paid, all dividends shall be
apportioned and paid pro rata according to the amounts paid up on the shares
during any portion or portions of the period in respect of which the dividend is
paid. For these purposes no amount paid up on a share in advance of calls shall
be treated as paid up on the share.
  Unless
and to the extent that the rights attached to any shares or the terms of issue
thereof otherwise provide, with respect to any shares not fully paid throughout
the period in respect of which the dividend is paid, all dividends shall be
apportioned and paid pro rata according to the amounts paid up on the shares
during any portion or portions of the period in respect of which the dividend is
paid. For these purposes no amount paid up on a share in advance of calls shall
be treated as paid up on the share.
  Our
Board of Directors may from time to time pay to our shareholders such interim
dividends as appear to our directors to be justified by our profits. Our
directors may also pay dividends semi-annually or at other intervals to be
selected by them at a fixed rate if they are of the opinion that the profits
available for distribution justify the payment. The board may also declare and
pay special dividends as they think fit.
  Our
Board of Directors may retain any dividends or other monies payable on or in
respect of a share upon which we have a lien, and may apply the same in or
towards satisfaction of the debts, liabilities or engagements in respect of
which the lien exists. Our Board of Directors may also deduct from any dividend
or other monies payable to any shareholder all sums of money, if any, presently
payable by him or her to us on account of calls, installments or
otherwise.
  No
dividend shall carry interest against us.
  Whenever
our Board of Directors or we in general meeting have resolved that a dividend be
paid or declared on our share capital, the Board of Directors may further
resolve: (a) that such dividend be satisfied wholly or in part in the form
of an allotment of shares credited as fully paid up on the basis that the shares
so allotted are to be of the same class as the class already held by the
allottee, provided that those of our shareholders entitled thereto will be
entitled to elect to receive such dividend, or part thereof, in cash in lieu of
such allotment; or (b) that those of our shareholders entitled to such
dividend will be entitled to elect to receive an allotment of shares credited as
fully paid up in lieu of the whole or such part of the dividend as our Board of
Directors may think fit on the basis that the shares so allotted are to be of
the same class as the class already held by the allottee. We may upon the
recommendation of our Board of Directors by ordinary resolution resolve in
respect of anyone particular dividend that notwithstanding the foregoing a
dividend may be satisfied wholly in the form of an allotment of shares credited
as fully paid without offering any right to our shareholders to elect to receive
such dividend in cash in lieu of such allotment.
  82
  Any
dividend, interest or other sum payable in cash to a holder of shares may be
paid by check or warrant sent through the post addressed to the registered
address of our shareholder entitled, or in the case of joint holders, to the
registered address of the person whose name stands first in our register of
shareholders in respect of the joint holding to such person and to such address
as the holder or joint holders may in writing direct. Every check or warrant so
sent shall be made payable to the order of the holder or, in the case of joint
holders, to the order of the holder whose name stands first on our register of
shareholders in respect of such shares, and shall be sent at his or their risk
and the payment of any such check or warrant by the bank on which it is drawn
shall operate as a good discharge to us in respect of the dividend and/or bonus
represented thereby, notwithstanding that it may subsequently appear that the
same has been stolen or that any endorsement there on has been
forged.
  Any
dividend unclaimed for six years from the date of declaration of such dividend
may be forfeited by the Board of Directors and shall revert to us.
  Our
Board of Directors may, with the sanction of the shareholders in general
meeting, direct that any dividend be satisfied wholly or in part by the
distribution of specific assets of any kind, and in particular of paid up
shares, debentures or warrants to subscribe securities of any other company, and
where any difficulty arises in regard to such distribution our directors may
settle it as they think expedient, and in particular may disregard fractional
entitlements, round the same up or down or provide that the same shall accrue to
our benefit, and may fix the value for distribution of such specific assets and
may determine that cash payments shall be made to any of our shareholders upon
the footing of the value so fixed in order to adjust the rights of all parties,
and may vest any such specific assets in trustees as may seem expedient to our
Board of Directors.
  Untraceable
Shareholders
  We
are entitled to sell any shares of our shareholder who is untraceable, provided
that:
  ·
                all
      checks or warrants, not being less than three in total number, for any
      sums payable in cash to the holder of such shares have remained uncashed
      for a period of 12 years;
 ·
                we
      have not during that time or before the expiry of the three-month period
      referred to in the last bullet under this section received any indication
      of the existence of the shareholder or person entitled to such shares by
      death, bankruptcy or operation of law; and
 ·
                upon
      expiration of the 12-year period, we have caused an advertisement to be
      published in newspapers, giving notice of its intention to sell these
      shares, and a period of three months or such shorter period has elapsed
      since the date of such advertisement.
 The
net proceeds of any such sale shall belong to us, and when we receive these net
proceeds we shall become indebted to the former shareholder for an amount equal
to such net proceeds.
  Board
of Directors
  We
are managed by a Board of Directors which currently consists of seven members.
Our articles of association provide that the Board of Directors shall consist of
not less than two directors.
  Our
shareholders may by ordinary resolution at any time remove any director before
the expiration of his period of office notwithstanding anything in our articles
of association or in any agreement between us and such director, and may by
ordinary resolution elect another person in his stead. Subject to our articles
of association, the directors will have power at any time and from time to time
to appoint any person to be a director, either as an addition to the existing
directors or to fill a casual vacancy, but so that the total number of directors
(exclusive of alternate directors) must not at any time exceed the maximum
number fixed in our articles of association.
  83
  There
are no share ownership qualifications for directors.
  Meetings
of our Board of Directors may be convened at any time deemed necessary by any
members of our Board of Directors.
 A
meeting of our Board of Directors will be competent to make lawful and binding
decisions if any two members of our Board of Directors are present or
represented. At any meeting of our directors, each director, be it by his or her
presence or by his or her alternate, is entitled to one vote. A director may
vote in respect of any contract or arrangement with us in which he is directly
or indirectly interested, provided, such director must declare the nature of his
interest at the earliest meeting of the board at which it is practicable for him
to do so, either specifically or by way of a general notice stating that, by
reason of the facts specified in the notice, he is to be regarded as interested
in any contracts of a specified description which we may subsequently
make.
  Questions
arising at a meeting of our Board of Directors are required to be decided by
simple majority votes of the members of our Board of Directors present or
represented at the meeting. In the case of a tie vote, the chairman of the
meeting shall have a second or deciding vote. Our Board of Directors may also
pass resolutions without a meeting by unanimous written consent.
  The
remuneration to be paid to the directors shall be such remuneration as the
directors shall determine. Under our articles of association, the directors
shall also be entitled to be paid their traveling, hotel and other expenses
reasonably incurred by them in, attending meetings of the directors, or any
committee of the directors, or general meetings of the company, or otherwise in
connection with the discharge of his duties as director.
  Issuance
of Additional Ordinary Shares or Preferred Shares
  Our
articles of association authorizes our Board of Directors to issue additional
ordinary shares from time to time as our Board of Directors shall determine, to
the extent of available authorized but unissued shares.
  Our
articles of association authorizes our Board of Directors from time to time the
issuance of one or more classes or series of ordinary or preferred shares and to
determine the terms and rights of that class or series to the extent permitted
by the Companies Law, including, amongst other things:
  ·
                the
      designation of such class or series;
 ·
                the
      number of shares of such class or series;
 ·
                the
      dividend rights, conversion rights, voting rights; and
 ·
                the
      rights and terms of redemption and liquidation
  preferences.
 Our
Board of Directors may issue such class or series of preferred shares without
action by our shareholders to the extent authorized but unissued. Accordingly,
the issuance of preferred shares may adversely affect the rights of the holders
of the ordinary shares. In addition, the issuance of preferred shares may be
used as an anti-takeover device without further action on the part of the
shareholders. We have no immediate plans to issue any preferred
shares.
  Issuance
of preferred shares may dilute the voting power of holders of ordinary shares.
Subject to applicable regulatory requirements, our Board of Directors may issue
additional ordinary shares without action by our shareholders to the extent of
available authorized but unissued shares. The issuance of additional ordinary
shares may be used as an anti-takeover device without further action on the part
of the shareholders. Such issuance may dilute the voting power of existing
holders of ordinary shares.
  84
  The
listing maintenance requirements of the Nasdaq Global Market, which apply so
long as our ADSs are quoted on that market, require shareholder approval of
certain issuances of our securities equal to or exceeding 20% of the then
outstanding voting power of all our securities or the then outstanding number of
our ordinary shares.
  Inspection
of Books and Records
  Holders
of our ordinary shares will have no general right under Cayman Islands law to
inspect or obtain copies of our list of shareholders or our corporate records.
However, we will provide our shareholders with annual audited financial
statements. For additional information, please visit our corporate website
www.jasolar.com.
  Differences
in Corporate Law
  The
Companies Law distinguishes between ordinary resident companies and exempted
companies, and we are an exempted company with limited liability under the
Companies Law. Any company that is registered in the Cayman Islands but conducts
business mainly outside of the Cayman Islands may apply to be registered as an
exempted company. The responsibilities of an exempted company are essentially
the same as for an ordinary company except for the exemptions and privileges
listed below:
  ·
                an
      exempted company does not have to file an annual return of its
      shareholders with the Registrar of Companies;
 ·
                an
      exempted company's register of members is not open to
      inspection;
 ·
                an
      exempted company does not have to hold an annual general
      meeting;
 ·
                an
      exempted company may issue no par value, negotiable or bearer
      shares;
 ·
                an
      exempted company may obtain an undertaking against the imposition of any
      future taxation (such undertakings are usually given for 20 years in the
      first instance);
 ·
                an
      exempted company may register by way of continuation in another
      jurisdiction and be deregistered in the Cayman Islands;
 ·
                an
      exempted company may register as a limited duration company;
      and
 ·
                an
      exempted company may register as a segregated portfolio
      company.
 The
Companies Law is modeled after similar laws in the United Kingdom but does not
follow recent changes in United Kingdom laws. In addition, the Companies Law
differs from laws applicable to U.S. corporations and their shareholders. Set
forth below is a summary of the significant provisions of the Companies Law
applicable to us.
  Duties
of Directors
  Under
Cayman Islands law, at common law, members of a Board of Directors owe a
fiduciary duty to the company to act in good faith in their dealings with or on
behalf of the company and exercise their powers and fulfill the duties of their
office honestly. This duty has four essential elements:
  ·
                a
      duty to act in good faith in the best interests of the
      company;
 ·
                a
      duty not to personally profit from opportunities that arise from the
      office of director;
 ·
                a
      duty to avoid conflicts of interest; and
 ·
                a
      duty to exercise powers for the purpose for which such powers were
      intended.
  85
 In
general, the Companies Law imposes various duties on officers of a company with
respect to certain matters of management and administration of the company. The
Companies Law contains provisions, which impose default fines on persons who
fail to satisfy those requirements. However, in many circumstances, an
individual is only liable if he knowingly is guilty of the default or knowingly
and willfully authorizes or permits the default.
  Interested
Directors
  There
are no provisions under Cayman Islands law that require a director who is
interested in a transaction entered into by a Cayman company to disclose his
interest nor will render such director liable to such company for any profit
realized pursuant to such transaction.
  Voting
Rights and Quorum Requirements
  Under
Cayman Islands law, the voting rights of shareholders are regulated by the
company's articles of association and, in certain circumstances, the Companies
Law. The articles of association will govern matters such as quorum for the
transaction of business, rights of shares, and majority votes required to
approve any action or resolution at a meeting of the shareholders or Board of
Directors. Under Cayman Islands law, certain matters must be approved by a
special resolution which is defined as two-thirds of the votes cast by
shareholders present at a meeting and entitled to vote; otherwise, unless the
articles of association otherwise provide, the majority is usually a simple
majority of votes cast.
  Mergers
and Similar Arrangements
  (i)           Schemes of
arrangement
  The
Companies Law contains statutory provisions that facilitate the reconstruction
and amalgamation of companies, provided that the arrangement in question is
approved by a majority in number of each class of shareholders and creditors
with whom the arrangement is to be made, and who must in addition represent
three fourths in value of each such class of shareholders or creditors, as the
case may be, that are present and voting either in-person or by proxy at a
meeting, or meetings convened for that purpose. The convening of the meetings
and subsequently the arrangement must be sanctioned by the Grand Court of the
Cayman Islands. While a dissenting shareholder would have the right to express
to the court the view that the transaction should not be approved, the court can
be expected to approve the scheme of arrangement if it satisfies itself
that:
  ·
                the
      company is not proposing to act illegally or ultra vires and the statutory
      provisions as to majority vote have been complied with;
 ·
                the
      shareholders have been fairly represented at the meeting in
      question;
 ·
                the
      arrangement is one that a businessman would reasonably approve;
      and
 ·
                the
      arrangement is not one that would more properly be sanctioned under some
      other provision of the Companies Law or that would amount to a "fraud on
      the minority."
 When
a takeover offer is made and accepted by holders of 90.0% of the shares within
four months, the offerer may, within a two-month period, require the holders of
the remaining shares to transfer such shares on the terms of the offer. An
objection may be made to the Grand Court of the Cayman Islands but is unlikely
to succeed unless there is evidence of fraud, bad faith or
collusion.
  If
the arrangement and reconstruction are thus approved, any dissenting
shareholders would have no rights comparable to appraisal rights, which would
otherwise ordinarily be available to dissenting shareholders of Delaware
corporations, providing rights to receive payment in cash for the judicially
determined value of the shares.
  86
  (ii)           Mergers and
consolidations
  Previously,
the Cayman Islands law does not provide for mergers as that expression is
understood under United States corporate law. However, pursuant to the Companies
(Amendment) Law, 2009 that came into force on 11 May 2009, in addition to the
existing schemes of arrangement provisions described above, a new, simpler and
more cost-effective mechanism for mergers and consolidations between Cayman
Islands companies and between Cayman companies and foreign companies is
introduced.
  The
procedure to effect a merger or consolidation is as follows:
  ·
                the
      directors of each constituent company must approve a written plan of
      merger or consolidation (the "Plan");
 ·
                the
      Plan must be authorized by each constituent company by (a) a shareholder
      resolution by majority in number representing 75% in value of the
      shareholders voting together as one class; and (b) if the shares to be
      issued to each shareholder in the consolidated or surviving company are to
      have the same rights and economic value as the shares held in the
      constituent company, a special resolution of the shareholders voting
      together as one class.  A proposed merger between a Cayman
      parent company and its Cayman subsidiary or subsidiaries will not require
      authorization by shareholder resolution;
 ·
                the
      consent of each holder of a fixed or floating security interest of a
      constituent company in a proposed merger or consolidation is required
      unless the court (upon the application of the constituent company that has
      issued the security) waives the requirement for
consent;
 ·
                the
      Plan must be signed by a director on behalf of each constituent company
      and filed with the Registrar of Companies together with the required
      supporting documents;
 ·
                a
      certificate of merger or consolidation is issued by the Registrar of
      Companies which is prima
      facie evidence of compliance with all statutory requirements in
      respect of the merger or consolidation.  All rights and property
      of each of the constituent companies will then vest in the surviving or
      consolidated company which will also be liable for all debts, contracts,
      obligations and liabilities of each constituent
      company.  Similarly, any existing claims, proceedings or rulings
      of each constituent company will automatically be continued against the
      surviving or consolidated company; and
 ·
                provision
      is made for a dissenting shareholder of a Cayman constituent company to be
      entitled to payment of the fair value of his shares upon dissenting to the
      merger or consolidation.  Where the parties cannot agree on the
      price to be paid to the dissenting shareholder, either party may file a
      petition to the court to determine fair value of the
      shares.  These rights are not available where an open market
      exists on a recognized stock exchange for the shares of the class held by
      the dissenting shareholder.
 Shareholder
Suits
  We
are not aware of any reported class action having been brought in a Cayman
Islands court. Derivative actions have been brought under Cayman Islands law but
were unsuccessful for technical reasons.  In principle, we will
normally be the proper plaintiff and a derivative action may not be brought by a
minority shareholder. However, based on English authorities, which would in all
likelihood be of persuasive authority in the Cayman Islands, exceptions to the
foregoing principle apply in circumstances in which:
  ·
                a
      company is acting or proposing to act illegally or beyond the scope of its
      authority;
 ·
                the
      act complained of, although not beyond the scope of its authority, could
      be effected duly if authorized by more than a simple majority vote which
      has not been obtained; and
 ·
              those
      who control the company are perpetrating a "fraud on the
      minority."
  87
  Under
Delaware General Corporation Law, a stockholder may bring a derivative action on
behalf of the corporation to enforce the rights of the corporation. Delaware law
expressly authorizes stockholder derivative suits on the condition that the
stockholder held the stock at the time of the transaction of which the
stockholder complains, or the stocks of such stockholder was thereafter devolved
upon him or her by operation of law. An individual may also commence a class
action suit on behalf of himself and other similarly situated stockholders where
the requirements for maintaining a class action under Delaware law have been
met. A plaintiff instituting a derivative suit is required to serve a demand on
the corporation before bringing suit, unless such demand would be
futile.
  Corporate
Governance
  Cayman
Islands laws do not restrict transactions with directors, requiring only that
directors exercise a duty of care and owe a fiduciary duty to the companies for
which they serve. Under our memorandum and articles of association, subject to
any separate requirement for audit committee approval under the applicable rules
of the Nasdaq Global Market, Inc. or unless disqualified by the chairman of the
relevant board meeting, so long as a director discloses the nature of his
interest in any contract or arrangement in which he is interested, such a
director may vote in respect of any contract or proposed contract or arrangement
in which such director is interested and may be counted in the quorum at such
meeting.
  Indemnification
  Cayman
Islands law does not limit the extent to which a company's articles of
association may provide for indemnification of officers and directors, except to
the extent any such provision may be held by the Cayman Islands courts to be
contrary to public policy, such as to provide indemnification against civil
fraud or the consequences of committing a crime. Our articles of association
provide for the indemnification of our directors, auditors and other officers
against all losses or liabilities incurred or sustained by him or her as a
director, auditor or other officer of our company in defending any proceedings,
whether civil or criminal, in which judgment is given in his or her favor, or in
which he or she is acquitted provided that this indemnity shall not extend to
any matter in respect of any fraud or dishonesty which may attach to any of said
persons; and with respect to any criminal action, he or she must have had no
reasonable cause to believe his or her conduct was unlawful.
  Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling us under the foregoing
provisions, we have been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
therefore is unenforceable.
  Shareholder
Proposals
  The
Companies Law does not provide shareholders any right to bring business before a
meeting or requisition a general meeting.
  Approval
of Corporate Matters by Written Consent
  The
Companies Law allows a special resolution to be passed in writing if signed by
all the shareholders and authorized by the articles of association. In
comparison, under Delaware General Corporation Law special meetings may be
called by the Board of Directors or any other person authorized to do so in the
governing documents but shareholders may be precluded from calling special
meetings.
  Calling
of Special Shareholders Meetings
  The
Companies Law does not have provisions governing the proceedings of shareholders
meetings which are usually provided in the articles of association.
  88
  Staggered
Board of Directors
  The
Companies Law does not contain statutory provisions that require staggered board
arrangements for a Cayman Islands company. Such provisions, however, may validly
be provided for in the articles of association.
  Issuance
of Preferred Stock
  The
Companies Law allows shares to be, issued with preferred, deferred or other
special rights, whether in regard to dividends, voting, return of share capital
or otherwise. Our articles of association provide that the directors may allot,
issue, grant options over or otherwise dispose of shares (including fractions of
a share) with or without preferred, deferred or other special rights or
restrictions, in one or more series, whether with regard to dividend rights,
dividend rates, conversion rights, voting rights, rights and terms of redemption
and liquidation preferences or otherwise and to such persons, at such times and
on such other terms as they think proper.
  Anti-takeover
Provisions
  The
Companies Law does not prevent companies from adopting a wide range of defensive
measures, such as staggered boards, blank check preferred stock, removal of
directors only for cause and provisions that restrict the rights of shareholders
to call meetings and submit shareholder proposals.
  Registration
Rights
  Set
forth below is a description of the registration rights we granted to our
Series A preference shareholders pursuant to our Shareholders Agreement
dated August 21, 2006.
  Demand Registration
Rights.    At any time after six months following the
closing of this offering, but before the fifth anniversary of a qualified public
offering, holders of at least 50% of registrable securities have the right to
demand that we file a registration statement covering the offer and sale of
their securities. We, however, are not obligated to effect a demand registration
if we have already twice, within the 12 month period preceding the date of such
demand, effected a registration under the Securities Act or in which the holders
had an opportunity to participate through exercising their piggyback
registration rights, other than a registration from which the registrable
securities of the holders have been excluded.
  Piggyback Registration
Rights.    If we propose to file a registration
statement for a public offering of our securities other than relating to the
exercise of demand registration rights, pursuant to an F-3 registration
statement, or relating to any employee benefit plan, corporate reorganization,
exchange offer or offering of securities to our existing shareholders, then we
must offer holders of registrable securities an opportunity to include in the
registration all or any part of their registrable securities.
  Form F-3 Registration
Rights.    When we are eligible for use of
Form F-3, holders of a majority of all registrable securities then
outstanding have the right to request that we file a registration statement on
Form F-3. We may defer filing of a registration statement on Form F-3 for
up to 120 days if we provide the requesting holders a certificate signed by our
chief executive officer stating that in the good faith judgment of the Board of
Directors that filing such a registration statement will be materially
detrimental to us and our shareholders. We, however, are not obligated to effect
a registration on Form F-3 if (i) Form F-3 is not available for such
offering by the holders; (ii) if the holders, together with the holders of
any other securities of the company entitled to inclusion in such registration,
propose to sell registrable securities and such other securities (if any) at an
aggregate price to the public of less than US$5 million; or (iii) we have
twice, within the 12 month period preceding the date of such request, already
effected a registration under the Securities Act other than a registration from
which the registrable securities of holders have been excluded (with respect to
all or any portion of the registrable securities of the holders requested to be
included in such registration).
  89
  Expenses of
Registration.    We will pay all registration
expenses incurred in connection with any registration. Each holder participating
in a registration will bear such holder's proportionate share of all selling
expenses or other amounts payable to underwriter(s) or brokers, in connection
with such offering by the holders. We will not pay any expenses of any
registration proceeding begun pursuant to the exercise of demand registration
rights if the registration request is subsequently withdrawn at the request of
the holders of a majority of the registrable securities to be registered, unless
the holders of a majority of the registrable securities then outstanding agree
that such registration constitutes the use by the holders of one demand
registration. However, holders will not be required to pay any expenses and such
registration will not constitute the use of a demand registration if at the time
of such withdrawal, the holders have learned of a material adverse change in the
condition, business or prospects of the company not known to the holders at the
time of their request for such registration and have withdrawn their request for
registration with reasonable promptness after learning of such material adverse
change.
 
 C.
              MATERIAL
      CONTRACTS
 
 We
have not entered into any material contracts other than in the ordinary course
of business and other than those described in Item 4 "Information on the
company" or elsewhere in this annual report on Form 20-F.
 
 D.
              EXCHANGE
      CONTROLS
 
 Foreign
currency exchange regulation in China is primarily governed by the following
rules:
  ·
                Foreign
      Currency Administration Rules (1996), as amended, or the Exchange Rules;
      and
 ·
              Administration
      Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or
      the Administration Rules.
  Under
the Exchange Rules, the Renminbi is only convertible to the extent of current
account items, including the distribution of dividends, interest payments, trade
and service-related foreign exchange transactions. Conversion of Renminbi for
capital account items, such as direct investment, loan, security investment and
repatriation of investment, however, is still subject to the approval of the PRC
SAFE or its local counterpart.
  Under
the Administration Rules, FIEs may only buy, sell and/or remit foreign
currencies at those banks authorized to conduct foreign exchange business after
providing valid commercial documents and, in the case of capital account item
transactions, obtaining approval from the SAFE or its local
counterpart.
 
 E.
              TAXATION
 
 Cayman
Islands Taxation
  The
following discussion of certain material Cayman Islands income tax consequences
of an investment in our ordinary shares or ADSs is based upon laws and relevant
interpretations thereof in effect as of the date of this annual report, all of
which are subject to change. This summary does not deal with all possible tax
consequences relating to an investment in our ordinary shares or ADSs, such as
the tax consequences under state, local and other tax laws. To the extent that
the discussion relates to matters of Cayman Islands tax law, it relies on the
service of Conyers Dill & Pearman, special Cayman Islands counsel to
us.
  The
Cayman Islands currently levies no taxes on individuals or corporations based
upon profits, income, gains or appreciation and there is no taxation in the
nature of inheritance tax or estate duty. There are no other taxes likely to be
material to us levied by the Government of the Cayman Islands except for stamp
duties which may be applicable on instruments executed in, or after execution
brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not
a party to any double tax treaties. There are no exchange control regulations or
currency restrictions in the Cayman Islands.
  90
  The
Cayman Islands currently has no income, corporate or capital gains tax, estate
duty, inheritance tax, gift tax or withholding tax applicable to us or to any
holder of ADSs or of ordinary shares. Accordingly, any payment of dividends or
any other distribution made on the ordinary shares will not be subject to
taxation in the Cayman Islands, no Cayman Islands withholding tax will be
required on such payments to any shareholder and gains derived from the sale of
ordinary shares or ADSs will not be subject to Cayman Islands capital gains
tax.
  The
company has obtained an undertaking from the Governor-in-Cabinet of the Cayman
Islands that, in accordance with section 6 of the Tax Concessions Law (Revised)
of the Cayman Islands, for a period of 20 years from July 18, 2006, no law
which is thereafter enacted in the Cayman Islands imposing any tax to be levied
on profits, income, gains or appreciations will apply to us or our operation
and, in addition, that no tax to be levied on profits, income, gains or
appreciations or which is in the nature of the estate duty or inheritance tax
will be payable (i) on or in respect of our shares, debentures, or other
obligations, or (ii) by way of withholding in whole or in part of a payment
of dividend or other distribution of income or capital by us.
  People's
Republic of China Taxation
  In
accordance with the previous FEIT Law and the related implementation rules which
have been repealed after 1 January 2008, FIEs established in the PRC are
generally subject to FEIT at a state tax rate of 30% plus a local tax rate of 3%
on PRC taxable income. Our operating subsidiary, JA Hebei, was established as a
FIE in the PRC and is thus subject to PRC enterprise income tax of 33%. The PRC
government has provided certain incentives to FIEs in order to encourage foreign
investments, including tax exemptions, tax reductions and other measures. Under
the old FEIT Law and the related implementation rules, FIEs are entitled to be
exempted from FEIT for a 2-year period starting from their first profit-making
year followed by a 50% reduction of FEIT payable for the subsequent three years,
provided that they fall into the category of production-oriented enterprises
with an operational period of more than 10 years in China, subject to approval
from and modification by local taxation authorities. Specifically, with respect
to income generated by assets acquired by JA Hebei through capital injection
made during the fiscal years 2005 and 2006, JA Hebei has received approval from
the relevant tax authorities for a two-year enterprise income tax exemption for
2006 and 2007, as well as a 50% enterprise income tax reduction for 2008, 2009
and 2010. With respect to income generated by assets newly acquired by JA Hebei
through capital injection made during 2007, JA Hebei has received approval from
the relevant tax authorities for a separate two-year enterprise income tax
exemption for 2007 and 2008, as well as a 50% enterprise income tax reduction
for 2009, 2010 and 2011, which, however, may be subject to PRC central
government's further policies, decisions or rulings.
  In
March 2007, the National People's Congress of China enacted a new CIT Law, which
became effective on January 1, 2008 and replaced the FEIT Law. The CIT Law
imposes a unified income tax rate of 25% on all domestic enterprises and FIEs
unless they qualify under certain limited exceptions. The CIT Law provides a
5-year transition period to FIEs, during which they are permitted to continue to
enjoy their existing preferential tax treatment until such treatment expires in
accordance with its current terms. In December 2007, the State Council
promulgated the Transition Period Implementation Rules.
  In
general, the CIT Law does not affect the preferential tax treatment enjoyed by
JA Hebei during the 5-year transition period. However, the CIT Law and the
Transition Period Implementation Rules did not clearly address the application
of the transitional preferential policies to assets acquired through new capital
injection made to a qualified entity after January 1, 2008, the date of
enforcement of the new CIT Law.  If future guidance is issued by the
State Taxation of Administration to clarify this issue and it is determined that
capital injection made after January 1, 2008 does not qualify for a separate
"two plus three" tax holiday, the tax rate of JA Hebei as well as the income tax
liability of JA Hebei could increase for 2008 and 2009.  In addition,
when our currently available tax benefits expire or otherwise become
unavailable, the effective income tax rate of JA Hebei will increase
significantly, and any increase of JA Hebei's income tax rate in the future
could have a material adverse effect on our financial condition and results of
operations.
  91
  Our
operating subsidiary, JA Fengxian and JA Yangzhou, were established as FIEs in
the PRC and were thus subject to a PRC enterprise income tax of 33% until 2007
and changed to the uniform rate of 25% in 2008.  JA Fengxian and JA
Yangzhou had cumulative losses as of December 31, 2009 and their tax holidays
were deemed to have commenced in 2008 and can be utilized until expiry pursuant
to the new CIT Law.
  Our
operating subsidiary, JA Zhabei, which is not a production-oriented enterprise,
is subject to the uniform rate of 25% from 2008 onwards and not entitled to the
tax holiday.
  JA
Lianyungang, JA Yangzhou R&D and JA Yangzhou PV, which were established
after 2008, are not entitled to the tax holiday, and are subject to the uniform
rate of 25%.
  The
CIT Law provides that enterprises established outside of China whose "de facto
management bodies" are located in China are considered "resident enterprises"
and are generally subject to the uniform 25% enterprise income tax rate as to
their worldwide income. Under the implementation regulations for the CIT Law
issued by the PRC State Council, "de facto management body" is defined as a body
that has material and overall management and control over the manufacturing and
business operations, personnel and human resources, finances and treasury, and
acquisition and disposition of properties and other assets of an
enterprise.
  Under
the CIT Law and implementation regulations issued by the State Council, PRC
income tax at the rate of 10% is applicable to dividends payable to investors
that are "non-resident enterprises," which do not have an establishment or place
of business in the PRC, or which have such establishment or place of business
but the relevant income is not effectively connected with the establishment or
place of business, to the extent such dividends have their sources within the
PRC. Similarly, any gain realized on the transfer of ADSs or shares by such
investors is also subject to 10% PRC income tax if such gain is regarded as
income derived from sources within the PRC. If we are considered a PRC "resident
enterprise," the dividends we pay with respect to our ordinary shares or ADSs
would be treated as income derived from sources within the PRC and be subject to
PRC withholding tax.  It is unclear, however, whether the gain you may
realize from the transfer of our ordinary shares or ADSs would be deemed as
China sourced income and thus subject to PRC withholding tax. It is also unclear
whether, if we are considered a PRC "resident enterprise," holders of our
ordinary shares or ADSs might be able to claim the benefit of income tax
treaties entered into between China and other countries. If JA Solar is
considered a PRC "resident enterprise," the controlled foreign subsidiaries
below JA Solar may be deemed as JA Solar's Controlled Foreign Companies, whose
income, under the new CIT Law, could be treated as distributed to JA Solar and
thus subject to tax in PRC.
  Material
U.S. Federal Tax Considerations
  The
following is a summary of the material United States federal tax considerations
relating to the acquisition, ownership, and disposition of our ADSs or ordinary
shares by U.S. Holders (as defined below) that will hold their ADSs or ordinary
shares as "capital assets" (generally, property held for investment) under the
United States Internal Revenue Code (the "Code"). This summary is based upon
existing United States federal tax law, which is subject to differing
interpretations or change, possibly with retroactive effect. This summary does
not discuss all aspects of United States federal taxation that may be important
to particular investors in light of their individual investment circumstances,
including investors subject to special tax rules (for example, financial
institutions, insurance companies, broker-dealers, partnerships and their
partners, and tax-exempt organizations (including private foundations), holders
who are not U.S. Holders, holders who own (directly, indirectly, or
constructively) 10% or more of our voting stock, investors that will hold ADSs
or ordinary shares as part of a straddle, hedge, conversion, constructive sale,
or other integrated transaction for United States federal income tax purposes,
or investors that have a functional currency other than the United States
dollar, all of whom may be subject to tax rules that differ significantly from
those summarized below. In addition, this summary does not discuss any
non-United States, state, or local tax considerations. Investors are urged to
consult their tax advisors regarding the United States federal, state, local,
and non-United States income and other tax considerations of an investment in
ADSs or ordinary shares.
  92
  General
  For
purposes of this summary, a "U.S. Holder" is a beneficial owner of ADSs or
ordinary shares that is, for United States federal income tax purposes,
(i) an individual who is a citizen or resident of the United States,
(ii) a corporation, or other entity taxable as a corporation for United
States federal income tax purposes, created in, or organized under the law of
the United States or any state thereof or the District of Columbia,
(iii) an estate the income of which is includible in gross income for
United States federal income tax purposes regardless of its source, or
(iv) a trust (A) the administration of which is subject to the primary
supervision of a United States court and which has one or more United States
persons who have the authority to control all substantial decisions of the trust
or (B) that has otherwise elected to be treated as a United States person
under the Code.
  If
a partnership is a beneficial owner of our ADSs or ordinary shares, the tax
treatment of a partner in the partnership will generally depend upon the status
of the partner and the activities of the partnership.
  For
United States federal income tax purposes, U.S. Holders of ADSs will be treated
as the beneficial owners of the underlying shares represented by the
ADSs.
  Threshold
PFIC Classification Matters. A non-United States corporation, such as the
company, will be classified as a "passive foreign investment company" (a
"PFIC"), for United States federal income tax purposes, if either (i) 75% or
more of its gross income consists of certain types of "passive" income or (ii)
50% or more of the value of its assets (determined on the basis of a quarterly
average) produce or are held for the production of passive income. For this
purpose, cash is categorized as a passive asset and the company's unbooked
intangibles are taken into account.
  Based on
the price of our ADSs, the value of our assets, and the composition of our
income and assets, we do not believe that we were a passive foreign investment
company, or PFIC, for United States federal income tax purposes for the taxable
year ended December 31, 2009.  Because the value of our assets for
purposes of the PFIC test will generally be determined by reference to the
market price of our ADSs or ordinary shares, fluctuations in the market price of
the ADSs and ordinary shares may cause us to become a PFIC.  While we
do not expect to become a PFIC in the current or future taxable years, no
assurance can be given because the determination of whether we are a PFIC is a
factual determination made annually and because there are uncertainties in the
application of the relevant rules.
 Dividends
  Any
cash distributions (including the amount of any PRC tax withheld) paid on ADSs
or ordinary shares out of our earnings and profits, as determined under United
States federal income tax principles, will generally be includible in the gross
income of a U.S. Holder as dividend income. Because we do not intend to
determine our earnings and profits on the basis of United States federal income
tax principles, any distribution paid will generally be treated as a "dividend"
for United States federal income tax purposes. For taxable years beginning
before January 1, 2011, a non-corporate recipient of dividend income generally
will be subject to tax on dividend income from a "qualified foreign corporation"
at a maximum United States federal tax rate of 15% rather than the marginal tax
rates generally applicable to ordinary income provided that certain holding
period requirements are met. A non-United States corporation (other than a
corporation that is classified as a PFIC for the taxable year in which the
dividend is paid or the preceding taxable year) generally will be considered to
be a qualified foreign corporation (i) if it is eligible for the benefits of a
comprehensive tax treaty with the United States which the Secretary of Treasury
of the United States determines is satisfactory for purposes of this provision
and which includes an exchange of information program, or (ii) with respect to
any dividend it pays on stock (or ADSs in respect of such stock) which is
readily tradable on an established securities market in the United States.
However, we do not believe that dividends that we pay our ordinary shares that
are not backed by ADSs currently meet the conditions required for the reduced
tax rates. Because the ADSs are traded on the Nasdaq Global Market, they are
considered readily tradable on an established securities market in the United
States. In the event that we are deemed to be a PRC "resident enterprise" under
PRC tax law, we may be eligible for the benefits of the United States-PRC income
tax treaty. See "Item 10. Additional Information — E. Taxation — Peoples'
Republic of China Taxation." If we are eligible for such benefits, dividends we
pay on our ordinary shares, regardless of whether such shares are represented by
the ADSs, would be eligible for the reduced rates of taxation. In addition, in
the event that we are deemed to be a PRC "resident enterprise" under PRC tax
law, you may be subject to PRC withholding taxes on dividends paid to you with
respect to the ADSs or ordinary shares. In that case, however, you may be able
to obtain a reduced rate of PRC withholding taxes under the United States-PRC
income tax treaty if certain requirements are met. Dividends received on the
ADSs or ordinary shares will not be eligible for the dividends received
deduction allowed to corporations.
  93
  Dividends
generally will be treated as income from foreign sources for United States
foreign tax credit purposes. A U.S. Holder may be eligible, subject to a number
of complex limitations, to claim a foreign tax credit in respect of any foreign
withholding taxes imposed on dividends received on ADSs or ordinary shares. A
U.S. Holder who does not elect to claim a foreign tax credit for foreign tax
withheld, may instead claim a deduction, for United States federal income tax
purposes, in respect of such withholdings, but only for a year in which such
holder elects to do so for all creditable foreign income taxes.
  Sale
or Other Disposition of ADSs or Ordinary Shares
  A
U.S. Holder will generally recognize capital gain or loss upon the sale or other
disposition of ADSs or ordinary shares in an amount equal to the difference
between the amount realized upon the disposition and the holder's adjusted tax
basis in such ADSs or ordinary shares. Any capital gain or loss will be
long-term if the ADSs or ordinary shares have been held for more than one year
and will generally be United States source gain or loss for United States
foreign tax credit purposes. However, in the event that gain from the
disposition of the ADSs or ordinary shares may be taxed in the PRC, such gain
may be treated as PRC source gain under the United States-PRC income tax treaty,
if we are eligible for such treaty. See "Item 10. Additional Information — E.
Taxation — Peoples' Republic of China Taxation." Each U.S. investor is urged to
consult its tax advisor regarding the tax consequences if a foreign withholding
tax is imposed on a disposition of the ADSs or ordinary shares, including the
availability of a foreign tax credit. The deductibility of a capital loss may be
subject to limitations.
  PFIC
Considerations
  If
we were to be classified as a PFIC in any taxable year, a U.S. Holder would be
subject to special rules generally intended to reduce or eliminate any benefits
from the deferral of United States federal income tax that a U.S. Holder could
derive from investing in a non-United States company that does not distribute
all of its earnings on a current basis. In such event, a U.S. Holder may be
subject to tax at ordinary income tax rates on (i) any gain recognized on the
sale of ADSs or ordinary shares and (ii) any "excess distribution" paid on ADSs
or ordinary shares (generally, a distribution in excess of 125% of the average
annual distributions paid by us during the shorter of the three preceding
taxable years or the U.S. holder's holding period for ADSs, or ordinary shares).
In addition, a U.S. Holder may be subject to an interest charge on such gain or
excess distribution. Finally, the 15% maximum rate on our dividends would not
apply if we are or become classified as a PFIC for the taxable year in which the
dividend is paid or the preceding taxable year. Each U.S. Holder is urged to
consult its own tax advisor regarding the potential tax consequences to such
holder if we are or become classified as a PFIC, as well as certain elections
that may be available to mitigate such consequences.
  94
  Material
Estate and Gift Tax Considerations
  ADSs
or ordinary shares owned by an individual U.S. Holder at the time of death will
be included in the individual U.S. Holder's gross estate for United States
federal estate tax purposes. In addition, a U.S. Holder may be subject to tax on
a transfer of the ADSs or ordinary shares by gift for United States federal gift
tax purposes.
  Recently
enacted legislation imposes new reporting requirements on certain U.S. investors
in connection with holding interests of a foreign company, including our ADSs
and ordinary shares, either directly or through a "foreign financial
institution".  This new legislation also imposes penalties if such
investor is required to submit such information to the Internal Revenue Service
and fails to do so.  In addition, U.S. Holders may be subject to
information reporting to the Internal Revenue Service with respect to dividends
on and proceeds from the sale or other disposition of our ADSs or ordinary
shares.  Dividend payments with respect to our ADSs or ordinary shares
and proceeds from the sale or other disposition of our ordinary shares are not
generally subject to U.S. backup withholding (provided that certain
certification requirements are satisfied).  U.S. Holders should
consult their tax advisors regarding the application of the United States
information reporting and backup rules to their particular
circumstances.
 
 F.
              DIVIDENDS
      AND PAYING AGENTS
 
 Not
applicable.
 
 G.
              STATEMENT
      BY EXPERTS
 
 Not
applicable.
 
 H.
              DOCUMENTS
      ON DISPLAY
 
 We
have filed this annual report, including exhibits, with the SEC. As allowed by
the SEC, in Item 19 of this annual report, we incorporate by reference certain
information we filed with the SEC. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered to be part of
this annual report.
  We
are subject to periodic reporting and other informational requirements of the
Exchange Act as applicable to foreign private issuers. Accordingly, we will be
required to file reports, including annual reports on Form 20-F, and other
information with the SEC. As a foreign private issuer, we are exempt from the
rules of the Exchange Act prescribing the furnishing and content of proxy
statements to shareholders. Our annual reports and other information so filed
can be inspected and copied at the public reference facility maintained by the
SEC at 100 F. Street, N.E., Washington, D.C. 20549. You can request copies of
these documents upon payment of a duplicating fee by writing to the SEC. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference facility. Our SEC filings will also be available to the public
on the SEC's Internet Web site at http://www.sec.gov.
 
 I.
              SUBSIDIARY
      INFORMATION
 
 Not
applicable.
 
 ITEM
      11.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Interest
Rate Risk
  Our
exposure to interest rate risk primarily relates to interest expenses incurred
by our short-term bank borrowings and Senior Notes, and interest income
generated by excess cash invested in demand deposits and liquid investments with
original maturities of three months or less. All of our short-term bank
borrowings and convertible notes accrue interest at fixed rates.
Interest-earning instruments carry a degree of interest rate risk. Although we
have not historically used and do not expect to use in the future, any
derivative financial instruments to manage our interest risk exposure, we
believe we do not have significant exposure to fluctuations in interest
rates.
  95
  Foreign
Exchange Risk
  Our
financial statements are expressed in Renminbi, which is our reporting and
functional currency. A significant portion of our revenues and expenses are
denominated in Renminbi. The Renminbi prices of some of our equipment that is
imported may be affected by fluctuations in the value of Renminbi against
foreign currencies.  In addition, we are exposed to the foreign
exchange risks in relation to our repayment of the Senior Notes upon their
maturity.  To the extent that we need to convert U.S. dollars we have
received from our initial public offering and our follow-on offering into RMB
for our operations, fluctuation in the exchange rate between the RMB and USD
would affect the RMB amount we receive from the conversion. In this particular
regard, for the year ended December 31, 2009, we incurred foreign exchange gain
totaling RMB 10.1 million. We cannot predict the impact of future exchange rate
fluctuations on our results of operations and may incur net foreign currency
losses in the future.
  Fluctuations
in currency exchange rates, particularly between USD/Euro and RMB, may continue
to have a significant effect on our net profit margins and would result in
foreign currency exchange gains and losses on our USD/Euro denominated assets
and liabilities. Any appreciation of RMB against USD/Euro could result in a
change to our statement of operations.  On the other hand, any
depreciation of RMB to USD/Euro could reduce the RMB equivalent amounts of our
financial results, the value of your investment in our company and the dividends
we may pay in the future, if any, all of which may have a material adverse
effect on the prices of our ADSs. In March 2009, we entered into foreign
currency forward contracts with a commercial bank to hedge part of our exposure
to foreign currency exchange risk for the forecasted sales denominated in
foreign currencies. We do not use foreign currency forward contracts to hedge
all of our foreign currency denominated transactions. As with all hedging
instruments, there are risks associated with the use of foreign currency forward
contracts. While the use of such foreign currency forward contracts provides us
with protection from certain fluctuations in foreign currency exchange, we
potentially forgo the benefits that might result from favorable fluctuations in
foreign currency exchange. Any default by the counterparties to these
transactions could adversely affect our financial condition and results of
operations. Furthermore, these financial hedging transactions may not provide
adequate protection against future foreign currency exchange rate fluctuations
and, consequently, such fluctuations could adversely affect our financial
condition and results of operations
  Credit
Risk
  We
are generally required to make prepayments to silicon wafer suppliers in advance
of shipments. We do not require collateral or other security against our
prepayments to our suppliers for raw materials and have made a provision of RMB
52.0 million for potential losses against these prepayments as of December 31,
2009. In the event of a failure by our suppliers to fulfill their contractual
obligations and to the extent that we are not able to recover our prepayments,
we would suffer losses. See "Item 3. Key Information — D. Risk Factors — Risks
Related to Our Supply Chain — Limited competition among suppliers has required
us in some instances to enter into long-term, firm commitment supply agreements,
including prepayment provisions that could result in excess or insufficient
inventory and financial loss placing us at a competitive
disadvantage."
  We
extend credit terms to certain customers after assessing a number of factors to
determine whether collections from the customers are probable.  We
maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our customers to make required payments. We make our estimates
of the collectibility of our accounts receivable by analyzing historical bad
debts, specific customer creditworthiness and current economic trends. We
recorded RMB 41.1 million for doubtful accounts as of December 31, 2009. If the
financial condition of our customers were to deteriorate such that their ability
to make payments was impaired, additional allowances could be
required.
  In
addition, as a result of the current global economic crisis, we are increasingly
exposed to credit risk in relation to our bank deposits.  Since the
fourth quarter of 2008, banks and other financial institutions, possibly
including ones we engage in business with, have come under strain during the
current global liquidity and credit crisis.  It is possible that these
banks and other financial institutions may be unable to weather the current
economic storm, resulting in a loss of our deposits which will have a material
adverse effect on our financial condition, results of operations and liquidity.
For example, in the fall of 2008, the Lehman Entities entered into insolvency
proceedings in various countries.  As a result, we were unable to
collect the amounts due on the Lehman Note even though the Lehman Note matured
in October 2008. We have made a full impairment amounting to RMB 686,320,000
against the Lehman Note.
  96
  In
line with its effects on banks, the current economic crisis has also affected
our customers.  The negative impact of the current economy on our
clients may affect their ability to pay us for our products and services that we
have delivered and/or completed based on our extension of credit to our
clients.  If our clients fail to pay us for our products and services,
our financial condition, results of operations and liquidity may be adversely
affected.
  
 ITEM
      12.
              DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY
SECURITIES
 
 
 A.
              DEBT
      SECURITIES
 
 Not
applicable.
 
 B.
              WARRANTS
      AND RIGHTS
 
 Not
applicable.
 
 C.
              OTHER
      SECURITIES
 
 Not
applicable.
 
 D.
              AMERICAN
      DEPOSITARY SHARES
 
 Fees
paid by our ADS holders
  The
Bank of New York, the depositary of our ADS program, collects its fees for
delivery and surrender of ADSs directly from investors depositing shares or
surrendering ADSs for the purpose of withdrawal or from intermediaries acting
for them. The depositary collects fees for making distributions to investors by
deducting those fees from the amounts distributed or by selling a portion of
distributable property to pay the fees. The depositary may collect its annual
fee for depositary services by deducting from cash distributions or by directly
billing investors or by charging the book-entry system accounts of participants
acting for them.
  The
table below sets forth all fees and charges, which may change from time to time,
that a holder of our ADSs may have to pay to the depositary bank of our ADS
program, either directly or indirectly:
  Persons
      depositing or withdrawing shares must pay:
                
                For:US$5.00
      (or less) per 100 ADSs (or portion of 100 ADSs)
                
                ■
                Issuance of ADSs, including issuances resulting
      from a distribution of shares or rights or other
      property■
                Cancellation of ADSs for the purpose of
      withdrawal, including if the deposit agreement
      terminatesUS$0.02
      (or less) per ADS
                
                ■
                Any cash distribution to ADS
      holdersA
      fee equivalent to the fee that would be payable if securities distributed
      to you had been shares and the shares had been deposited for issuance of
      ADSs
                
                ■
                Distribution of securities distributed to holders
      of deposited securities which are distributed by the depositary to ADS
      holders
       97
  US$0.02
      (or less) per ADSs per calendar year
                
                ■
                Depositary servicesRegistration
      or transfer fees
                
                ■
                Transfer and registration of shares on our share
      register to or from the name of the depositary or its agent when you
      deposit or withdraw sharesPersons
      depositing or withdrawing shares must pay:
                
                For:Expenses
      of the depositary
                
                ■
                Cable, telex and facsimile transmissions (when
      expressly provided in the deposit agreement)■
                converting foreign currency to U.S.
      dollarsTaxes
      and other governmental charges the depositary or the custodian have to pay
      on any ADS or share underlying an ADS, for example, stock transfer taxes,
      stamp duty or withholding taxes
                
                ■
                As necessaryAny
      charges incurred by the depositary or its agents for servicing the
      deposited securities
                
                ■
                As
necessary
   Fees
and Payments from the Depositary to Us
  Our
depositary has agreed to reimburse us for certain expenses we incur that are
related to the administration and maintenance of the ADS program. There are
limits on the amount of expenses for which the depositary will reimburse us, but
the amount of reimbursement available to us is not related to the amounts of
fees the depositary collects from investors. In 2009, the depositary reimbursed
us US$1.6 million for expenses related to the administration and maintenance of
the facility in 2009.
  PART II
 
 ITEM
      13.
              DEFAULTS,
      DIVIDEND ARREARAGES AND
DELINQUENCIES
 
 None.
 
 ITEM
      14.
              MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS
 
 On
February 7, 2008, our Board of Directors approved a change in the ratio of 1 ADS
to 3 ordinary shares of the company to 1 ADS to 1 ordinary share of the company.
Each shareholder of record at the close of business on February 6, 2008 received
two additional ADSs for every ADS held on the record date.  There was
no change to the rights and preferences of the underlying ordinary shares. No
action was required on the part of any ADS holder to effect the ratio
change.
  Upon
the conversion of any of the Senior Notes into ADSs, there may be a dilutive
effect caused by the conversion of the Senior Notes.  Although a
Capped Call was entered into to mitigate these dilutive effects, the Capped Call
is currently under dispute and may not be enforced.  Additional
information on the potential dilutive effects of the conversion of the Senior
Notes is incorporated into this annual report by reference to the Form F-3ASR
initially filed with the SEC on May 12, 2008, the Prospectus Supplement for the
Senior Notes initially filed with the SEC on May 15, 2008, the Prospectus
Supplement for the 13,125,520 ADSs previously loaned by us to LBIE and Credit
Suisse International in connection with the 2008  initially filed with
the SEC on May 15, 2008, and the materials attached to the Form 6-K initially
filed with the SEC on May 20, 2008.
  98
  As
of the date of this annual report, of the 169,224,620 issued and outstanding
ordinary shares, 125,168,020 were held by 13 registered holders of ADRs
evidencing 125,168,020 ADSs, 12 of which holders of record are in the United
States. The depositary of our ADSs is Bank of New York.
 
 ITEM
      15.
              CONTROLS
      AND PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
  As
of December 31, 2009, the end of the period covered by this annual report on
Form 20-F, management performed, under the supervision and with the
participation of our chief executive officer and chief financial officer, an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act. Disclosure controls and procedures are those controls and
procedures designed to provide reasonable assurance that the information
required to be disclosed in our Exchange Act filings is (1) recorded,
processed, summarized and reported within the time periods specified in SEC's
rules and forms, and (2) accumulated and communicated to management,
including our chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required disclosure. Based on
that evaluation, our chief executive officer and chief financial officer
concluded that, as of December 31, 2009, our disclosure controls and procedures
were effective at a reasonable assurance level.
  Management's
Report on Internal Control over Financial Reporting
  Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act). Internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. GAAP. Internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and or our Board of Directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the interim or annual consolidated financial
statements.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with policies or procedures may deteriorate.
  As
required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as
promulgated by the Securities and Exchange Commission, management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2009 using criteria established in Internal Control-Integrated
Framework  issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
 
 Based on
this assessment, management concluded that our internal control over financial
reporting was effective as of December 31, 2009 based on the criteria
established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
 The
report of PricewaterhouseCoopers Zhong Tian CPAs Limited Company, our
independent registered public accounting firm, on the effectiveness of our
internal control over financial reporting appears on page F-1 in this annual
report.
  99
  Changes
in Internal Control Over Financial Reporting
  We
maintain a system of internal control over financial reporting that is designed
to provide reasonable assurance that our books and records accurately reflect
our transactions and that our established policies and procedures are
followed.
  Additionally,
in fiscal 2009, we implemented a new enterprise resource planning ("ERP") system
and OA system, which resulted in a material update to our system of internal
control over financial reporting. Issues encountered subsequent to
implementation caused us to further revise our internal control process and
procedures in order to correct and supplement our processing capabilities within
the new system in that quarter. Throughout the ERP system stabilization period
we will continue to improve and enhance our system of internal control over
financial reporting.
 
 ITEM
      16.
              RESERVED
  ITEM
      16A.
              AUDIT
      COMMITTEE FINANCIAL EXPERT
  Our
Board of Directors has determined that Ms. Hope Ni qualifies as an audit
committee financial expert in accordance with the terms of Item 16A of Form
20-F. Ms. Ni satisfies the "independence" requirements of the NASDAQ Marketplace
Rules and meets the criteria for "independence" under Rule 10A-3 under the
Exchange Act. For Ms. Ni's biographical information, see "Item 6. Directors,
Senior Management and Employees – A. Directors and Senior Management. –
Directors and Executive Officers".
  ITEM
      16B.
              CODE
      OF ETHICS
 
 We
have adopted a code of ethics for chief executive and senior financial officers,
which we filed with the SEC as an exhibit to our annual report on Form 20-F for
the year ended December 31, 2006. This home country practice of ours was
established by us by reference to similarly situated issuers and differs from
the Nasdaq Marketplace Rules that require listed companies to adopt one or more
codes of conduct applicable to all directors, officers and employees and make
those codes of conduct publicly available. There are, however, no specific
requirements under Cayman Islands law requiring the adoption of codes of
conduct.
  ITEM
      16C.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
 
 The
following table sets forth the aggregate audit fees, audit-related fees, tax
fees of our principal accountants and all other fees billed for products and
services provided by our principal accountants for each of the fiscal years
2006, 2007, 2008 and 2009:
  Audit
      Fees(1)
                    
                    Audit-Related Fees(2)2006
                    RMB
      8.24 million
                    
                    RMB
      0.88 million2007
                    RMB
      11.4 million
                    
                    RMB
      3.98 million2008
                    RMB
      7.3 million
                    
                    RMB
      2.1 million2009
                    RMB
      7.3 million
                    
                    RMB
      0.6 million
   (1)
                "Audit
      fees" means the aggregate fees billed by our principal auditor for
      professional services rendered for the audit of our financial
      statements.
 (2)
              "Audit-related
      fees" means the aggregate fees billed by our principal auditor for
      assurance and related services that are reasonably related to the
      performance of the audit of our financial statements and are not reported
      under "Audit fees". Services comprising the fees disclosed under the
      category of "Audit-related fees" involve principally the performance of
      services relating to our initial and follow-on public offerings,
      convertible note offering, issuance of comfort letters and rendering of
      listing advice.
  100
  Before
our principal accountants were engaged by our company or our subsidiaries to
render audit or non-audit services, the engagement has been approved by our
audit committee. Our audit committee will review and approve our independent
auditor's annual engagement letter, including the proposed fees, as well as all
audit and permitted non-audit engagements and relationships between the company
and such independent auditors.
 ITEM
      16D.
                EXEMPTIONS
      FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES
 Not
applicable
 .
 ITEM
      16E.
                PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS
 In
2009, we conducted open market repurchases of our Senior Notes and we
re-purchased $93.301 million aggregate principal amount of the Senior Notes for
a total consideration of $67.3 million. We have not made any repurchase of the
Senior Notes in the open market from January to April 2010.  We may
from time to time seek to make additional repurchases of our Senior
Notes.  Such repurchases, if any, will depend on prevailing market
conditions, our liquidity requirements and other factors.
  101
 
 Period
                    
                    (a)
      Total Number of Shares Purchased
                    
                    
                    (b)
      Average Price Paid Per Share
                    
                    
                    (c)
      Total Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs
                    
                    
                    (d)
      Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be
      Purchased Under the Plans or ProgramsAugust
      1-31
                    
                    
                    400,000
                    
                    
                    
                    3.83
                    
                    
                    
                    400,000
                    
                    
                    
                    0September
      1-30
                    
                    
                    237,700
                    
                    
                    
                    3.60
                    
                    
                    
                    237,700
                    
                    
                    
                    0Total
                    
                    
                    637,700
                    
                    
                    
                    3.74
                    
                    
                    
                    637,700
                    
                    
                    
                    0
 ITEM
      16F.
                CHANGE
      IN REGISTRANT'S CERTIFYING
ACCOUNTANT
  Not
applicable.
 ITEM
      16G.
                CORPORATE
      GOVERNANCE
 
 Nasdaq
Marketplace Rules provide that foreign private issuers may follow home country
practice in lieu of the corporate governance requirements of The NASDAQ Stock
Market LLC, subject to certain exceptions and requirements to the extent that
such exemptions would be contrary to U.S. federal securities laws and
regulations.  The significant differences between our corporate
governance practices and those followed by U.S. companies under the Nasdaq
Marketplace Rules are summarized as follows:
  ·
                We
      follow home country practice that permits our Board of Directors to have
      less than a majority of independent directors.
 ·
                We
      follow home country practice that does not restrict a company's
      transactions with directors, requiring only that directors exercise a duty
      of care and owe a fiduciary duty to the companies for which they serve.
      Under our memorandum and articles of association, subject to any separate
      requirement for audit committee approval under the applicable rules of the
      Nasdaq Marketplace Rules or unless disqualified by the chairman of the
      relevant board meeting, so long as a director discloses the nature of his
      interest in any contract or arrangement in which he is interested, such a
      director may vote in respect of any contract or proposed contract or
      arrangement in which such director is interested and may be counted in the
      quorum at such meeting.
 ·
                We
      follow home country practice which does not require us to have a three
      member audit committee or to fill all three seats on the audit
      committee.
 ·
                We
      follow home country practice which does not specifically require us to
      have one or more codes of conduct applicable to all directors, officers
      and employees and make those codes of conduct publicly available. There
      are no specific requirements under Cayman Islands law requiring the
      adoption of codes of conduct.
 PART III
 
 ITEM
      17.
              FINANCIAL
      STATEMENTS
 
 Not
applicable.
  102
  
 ITEM
      18.
              FINANCIAL
      STATEMENTS
 
 See
F-pages following Item 19
 PageReport
      of the Independent Registered Public Accounting Firm
                F-1Consolidated
      Balance Sheets as of December 31, 2008 and 2009
                F-2Consolidated
      Statements of Operations for the years ended December 31, 2007, 2008
      and 2009
                F-4Statements
      of Shareholders’ Equity and Comprehensive Income/(Loss) for the years
      ended December 31, 2007, 2008 and 2009
                F-5Consolidated
      Statements of Cash Flows for the years ended December 31, 2007, 2008
      and 2009
                F-8Notes
      to Consolidated Financial Statements
                F-10
  103
 ITEM
      19.
                    EXHIBITS
  1.1**
                    Second
      Amended and Restated Memorandum and Articles of Association of the
      Registrant (incorporated by reference to Exhibit 3.1 from our registration
      statement on Form F-1 (File No. 333-140002), as amended, initially filed
      with the Security and Exchange Commission on January 16,
      2007.)2.1**
                    Form
      of Indenture (incorporated by reference to Exhibit 4.4 from our
      registration statement on Form F-3ASR, initially filed with the SEC on May
      12, 2008.)2.2**
                    Form
      of First Supplemental Indenture between The Bank of New York as trustee
      and JA Solar (incorporated by reference to Exhibit 4.1 on Form 6-K
      initially filed with the SEC on May 20, 2008).4.1**
                    Silicon
      Wafer Supply Agreement between JingAo Solar Co., Ltd. and Jiangsu
      Zhongneng Polysilicon Technology Development Co., Ltd. dated as of April
      7, 2008 (incorporated by reference to Exhibit 4.14 from our Form 20-F,
      initially filed with the Security and Exchange Commission on May 9,
      2008.)4.2**
                    The
      Polysilicon Supply Contract between JA Solar Technology Yangzhou Co., Ltd.
      and Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd., dated
      August 17, 2008 (incorporated by reference to Exhibit 4.14 from our Form
      20-F, initially filed with the Security and Exchange Commission on June
      25, 2009.)4.3*
                    Supplemental
      Agreement of Exhibit 4.1 and 4.2 among Jiangsu Zhongneng Polysilicon
      Technology Development Co., Ltd., JingAo Solar Co., Ltd. and JA Solar
      Technology Yangzhou Co., Ltd., dated January 21, 2010. (*Confidential
      treatment has been requested for certain portions omitted from this
      exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
      as amended. Confidential portions of this Exhibit have been separately
      filed with the Securities and Exchange Commission.)4.4**
                    Form
      of Employment and Confidentiality Agreement between the Registrant and
      each Executive Officer of the Registrant (incorporated by reference to
      Exhibit 10.2 from our registration statement on Form F-1 (File No.
      333-140002), as amended, initially filed with the Security and Exchange
      Commission on January 16, 2007.)8.1*
                    List
      of Subsidiaries11.1**
                    Code
      of Business Conduct and Ethics (incorporated by reference to Exhibit 11.1
      from our 2006 annual report on Form 20-F (File No. 001-33290) initially
      filed with the Security and Exchange Commission on June 1,
      2007.)12.1*
                    Certification
      by the Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the
      Act and Section 302 of the Sarbanes-Oxley Act of 200212.2*
                    Certification
      by the Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the
      Act and Section 302 of the Sarbanes-Oxley Act of 200213.1*
                    Certification
      by the Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the
      Act, Section 1350 of Chapter 63 of the United States Code and Section 906
      of the Sarbanes-Oxley Act of 200213.2*
                    Certification
      by the Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the
      Act, Section 1350 of Chapter 63 of the United States Code and Section 906
      of the Sarbanes-Oxley Act of 200216.1*
                    Consent
      of Independent Registered Public Accounting Firm
 
 *
                      Filed
      as part of this annual report**
                      Incorporated
      by reference
 
  104
 SIGNATURE
  The
registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.
  JA
      Solar Holdings Co., Ltd.By:
                      /s/ Anthea
      ChungName:  Anthea
      ChungTitle:  Chief
      Financial Officer
  Date:
May 3, 2010
  105
 
  Report of
Independent Registered Public Accounting Firm
   To the Board of
Directors and Shareholders of JA Solar Holdings Co., Ltd.:
  In our opinion,
the accompanying consolidated balance sheets and the related consolidated
statements of operations, of shareholders’ equity and of cash flows present
fairly, in all material respects, the financial position of JA Solar Holdings
Co., Ltd. and its subsidiaries at December 31, 2009 and 2008, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2009 in conformity with accounting principles generally
accepted in the United States of America.  Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2009, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's management is
responsible for these financial statements, for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in Management's Report on
Internal Control over Financial Reporting.  Our responsibility is to
express opinions on these financial statements and on the Company's internal
control over financial reporting based on our integrated audits.  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement and whether effective
internal control over financial reporting was maintained in all material
respects.  Our audits of the financial statements included examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk.  Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
  A company’s
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial
statements.
  Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
   /s/
PricewaterhouseCoopers Zhong Tian CPAs Limited Company
 Shanghai, the
People’s Republic of China
 May 3,
2010
  F-1
 JA
SOLAR HOLDINGS CO., LTD.
 CONSOLIDATED
BALANCE SHEETS
  (In
thousands, except share and per share data)
  December
      31,
                        
                        
                        December
      31,Note
                        
                        
                        2008
                        
                        
                        2009RMB
                        
                        
                        RMBASSETSCurrent
      assets:Cash
      and cash equivalents
                        
                        
                        3
                        
                        
                        
                        1,542,784
                        
                        
                        
                        1,867,248Restricted
      cash
                        
                        
                        3
                        
                        
                        
                        33,061
                        
                        
                        
                        43,612Short-term
      investments
                        
                        
                        4
                        
                        
                        
                        421,865
                        
                        
                        
                        -Notes
      receivable
                        
                        
                        5
                        
                        
                        
                        -
                        
                        
                        
                        119,824Accounts
      receivable from third party customers, net
                        
                        
                        5
                        
                        
                        
                        332,042
                        
                        
                        
                        339,524Accounts
      receivable from related party customers, net
                        
                        
                        22
                        (b)
                        
                        
                        23,009
                        
                        
                        
                        -Inventories,
      net
                        
                        
                        6
                        
                        
                        
                        591,989
                        
                        
                        
                        641,140Advances
      to third party suppliers, net
                        
                        
                        7
                        
                        
                        
                        264,497
                        
                        
                        
                        372,394Advances
      to related party suppliers, net
                        
                        
                        7,
      22
                        (b)
                        
                        
                        415,950
                        
                        
                        
                        50,889Other
      current assets
                        
                        
                        8
                        
                        
                        
                        191,081
                        
                        
                        
                        202,221Deferred
      tax assets
                        
                        
                        11
                        
                        
                        
                        14,146
                        
                        
                        
                        24,443Total
      current assets
                        
                        
                        
                        
                        
                        
                        3,830,424
                        
                        
                        
                        3,661,295Property
      and equipment, net
                        
                        
                        9
                        
                        
                        
                        1,369,807
                        
                        
                        
                        1,724,442Intangible
      asset, net
                        
                        
                        10
                        
                        
                        
                        11,805
                        
                        
                        
                        11,957Deferred
      tax asset
                        
                        
                        11
                        
                        
                        
                        14,400
                        
                        
                        
                        25,775Advances
      to third party suppliers, net
                        
                        
                        7
                        
                        
                        
                        1,929,857
                        
                        
                        
                        1,716,699Advances
      to related party suppliers, net
                        
                        
                        7,
      22
                        (b)
                        
                        
                        15,055
                        
                        
                        
                        118,722Prepayment
      for land use rights
                        
                        
                        12
                        
                        
                        
                        44,399
                        
                        
                        
                        49,517Derivative
      assets
                        
                        
                        14,19
                        
                        
                        
                        4,485
                        
                        
                        
                        10,521Deferred
      issuance cost
                        
                        
                        14
                        
                        
                        
                        58,952
                        
                        
                        
                        36,070Total
      assets
                        
                        
                        
                        
                        
                        
                        7,279,184
                        
                        
                        
                        7,354,998
  F-2
  JA
SOLAR HOLDINGS CO., LTD.
 CONSOLIDATED
BALANCE SHEETS (Continued)
  (In
thousands, except share and per share data)
  December
      31,
                        
                        
                        December
      31,Note
                        
                        
                        2008
                        
                        
                        2009RMB
                        
                        
                        RMBLIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilities:Short-term
      bank borrowings
                        
                        
                        13
                        
                        
                        
                        490,000
                        
                        
                        
                        10,000Accounts
      payable to third parties
                        
                        
                        
                        
                        
                        
                        117,982
                        
                        
                        
                        315,803Accounts
      payable to related parties
                        
                        
                        22
                        (a)
                        
                        
                        -
                        
                        
                        
                        52,060Tax
      payables
                        
                        
                        
                        
                        
                        
                        5,168
                        
                        
                        
                        3,992Advances
      from third party customers
                        
                        
                        
                        
                        
                        
                        65,051
                        
                        
                        
                        53,860Other
      payables to third parties
                        
                        
                        15
                        
                        
                        
                        132,792
                        
                        
                        
                        80,591Share-based
      compensation liability
                        
                        
                        18
                        
                        
                        
                        -
                        
                        
                        
                        16,264Payroll
      and welfare payable
                        
                        
                        
                        
                        
                        
                        14,199
                        
                        
                        
                        59,208Accrued
      expenses
                        
                        
                        16
                        
                        
                        
                        22,766
                        
                        
                        
                        21,113Interest
      payable
                        
                        
                        
                        
                        
                        
                        13,458
                        
                        
                        
                        10,129Amounts
      due to related parties
                        
                        
                        22
                        (a)
                        
                        
                        9,407
                        
                        
                        
                        6,208Total
      current liabilities
                        
                        
                        
                        
                        
                        
                        870,823
                        
                        
                        
                        629,228Accrued
      warranty cost
                        
                        
                        17
                        
                        
                        
                        5,185
                        
                        
                        
                        5,931Long-term
      payables
                        
                        
                        
                        
                        
                        
                        -
                        
                        
                        
                        16,383Long-term
      bank borrowings
                        
                        
                        13
                        
                        
                        
                        -
                        
                        
                        
                        680,000Convertible
      notes
                        
                        
                        14
                        
                        
                        
                        1,532,600
                        
                        
                        
                        1,171,438Embedded
      derivatives
                        
                        
                        14
                        
                        
                        
                        115,676
                        
                        
                        
                        136,632Total
      liabilities
                        
                        
                        
                        
                        
                        
                        2,524,284
                        
                        
                        
                        2,639,612Commitments
      and Contingencies
                        
                        
                        23
                        
                        
                        
                        -
                        
                        
                        
                        -Shareholders'
      equity:Ordinary
      shares(US$0.0001 par value; 493,480,000 shares authorized,
      167,982,020 and 169,018,420 shares issued and outstanding as of
      December 31, 2008 and December 31, 2009)
                        
                        
                        27
                        
                        
                        
                        133
                        
                        
                        
                        134Additional
      paid-in capital
                        
                        
                        
                        
                        
                        
                        3,787,262
                        
                        
                        
                        3,884,037Statutory
      reserves
                        
                        
                        20
                        
                        
                        
                        169,576
                        
                        
                        
                        211,202Retained
      earnings
                        
                        
                        
                        
                        
                        
                        798,312
                        
                        
                        
                        628,025Accumulated
      other comprehensive loss
                        
                        
                        
                        
                        
                        
                        (383
                        )
                        
                        
                        (8,012
                        )Total
      shareholders' equity
                        
                        
                        
                        
                        
                        
                        4,754,900
                        
                        
                        
                        4,715,386Total
      liabilities and shareholders' equity
                        
                        
                        
                        
                        
                        
                        7,279,184
                        
                        
                        
                        7,354,998
  The
accompanying notes are an integral part of these consolidated financial
statements.
  F-3
  JA
SOLAR HOLDINGS CO., LTD.
 Consolidated
Statements of operations
 (In
thousands, except share and per share data)
  For
      the year ended
                                                                          
                                                                          
                                                                          For
      the year ended
                                                                          
                                                                          
                                                                          For
      the year endedNote
                                                                          
                                                                          
                                                                          December
      31, 2007
                                                                          
                                                                          
                                                                          December
      31, 2008
                                                                          
                                                                          
                                                                          December
      31, 2009RMB
                                                                          
                                                                          
                                                                          RMB
                                                                          
                                                                          
                                                                          RMBRevenuesSolar
      products to third parties
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          2,532,417
                                                                          
                                                                          
                                                                          
                                                                          4,794,041
                                                                          
                                                                          
                                                                          
                                                                          3,367,080Solar
      products to related parties
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          62,206
                                                                          
                                                                          
                                                                          
                                                                          508,010
                                                                          
                                                                          
                                                                          
                                                                          5,206Solar
      cells processing
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          99,077
                                                                          
                                                                          
                                                                          
                                                                          156,259
                                                                          
                                                                          
                                                                          
                                                                          406,892Total
      revenues
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          2,693,700
                                                                          
                                                                          
                                                                          
                                                                          5,458,310
                                                                          
                                                                          
                                                                          
                                                                          3,779,178Cost
      of revenuesSolar
      products to third parties
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (2,017,014
                                                                          )
                                                                          
                                                                          
                                                                          (3,993,765
                                                                          )
                                                                          
                                                                          
                                                                          (3,074,611
                                                                          )Solar
      products to related parties
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (49,546
                                                                          )
                                                                          
                                                                          
                                                                          (420,424
                                                                          )
                                                                          
                                                                          
                                                                          (4,397
                                                                          )Solar
      cells processing
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (26,232
                                                                          )
                                                                          
                                                                          
                                                                          (52,086
                                                                          )
                                                                          
                                                                          
                                                                          (220,284
                                                                          )Total
      cost of revenues
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (2,092,792
                                                                          )
                                                                          
                                                                          
                                                                          (4,466,275
                                                                          )
                                                                          
                                                                          
                                                                          (3,299,292
                                                                          )Gross
      profit
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          600,908
                                                                          
                                                                          
                                                                          
                                                                          992,035
                                                                          
                                                                          
                                                                          
                                                                          479,886Selling,
      general and administrative expenses
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (150,319
                                                                          )
                                                                          
                                                                          
                                                                          (271,494
                                                                          )
                                                                          
                                                                          
                                                                          (343,284
                                                                          )Research
      and development expenses
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (4,200
                                                                          )
                                                                          
                                                                          
                                                                          (28,509
                                                                          )
                                                                          
                                                                          
                                                                          (45,101
                                                                          )Total
      operating expenses
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (154,519
                                                                          )
                                                                          
                                                                          
                                                                          (300,003
                                                                          )
                                                                          
                                                                          
                                                                          (388,385
                                                                          )Income from
      operations
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          446,389
                                                                          
                                                                          
                                                                          
                                                                          692,032
                                                                          
                                                                          
                                                                          
                                                                          91,501Impairment
      on available-for-sale securities
                                                                          
                                                                          
                                                                          4
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (686,320
                                                                          )
                                                                          
                                                                          
                                                                          -Change
      in fair value of derivatives
                                                                          
                                                                          
                                                                          14, 24
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          564,006
                                                                          
                                                                          
                                                                          
                                                                          (49,071
                                                                          )Convertible
      notes buyback gain
                                                                          
                                                                          
                                                                          14
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          203,514
                                                                          
                                                                          
                                                                          
                                                                          22,904Interest
      expense
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (6,595
                                                                          )
                                                                          
                                                                          
                                                                          (160,542
                                                                          )
                                                                          
                                                                          
                                                                          (213,627
                                                                          )Interest
      income
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          62,580
                                                                          
                                                                          
                                                                          
                                                                          42,648
                                                                          
                                                                          
                                                                          
                                                                          11,965Foreign
      exchange (loss)/gain
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (112,800
                                                                          )
                                                                          
                                                                          
                                                                          (127,356
                                                                          )
                                                                          
                                                                          
                                                                          10,147Investment
      loss
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (28,594
                                                                          )
                                                                          
                                                                          
                                                                          (2,277
                                                                          )Other
      income
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          5,225
                                                                          
                                                                          
                                                                          
                                                                          3,560
                                                                          
                                                                          
                                                                          
                                                                          7,796Income/(loss)
      before income taxes
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          394,799
                                                                          
                                                                          
                                                                          
                                                                          502,948
                                                                          
                                                                          
                                                                          
                                                                          (120,662
                                                                          )Income
      tax benefit/ (expense)
                                                                          
                                                                          
                                                                          11
                                                                          
                                                                          
                                                                          
                                                                          5,569
                                                                          
                                                                          
                                                                          
                                                                          (23,882
                                                                          )
                                                                          
                                                                          
                                                                          (7,999
                                                                          )Net
      income/(loss)
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          400,368
                                                                          
                                                                          
                                                                          
                                                                          479,066
                                                                          
                                                                          
                                                                          
                                                                          (128,661
                                                                          )Preferred
      shares accretion
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (515
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -Allocation
      of net income to participating preferred shareholders
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          (1,648
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -Net
      income/(loss) available to ordinary shareholders
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          398,205
                                                                          
                                                                          
                                                                          
                                                                          479,066
                                                                          
                                                                          
                                                                          
                                                                          (128,661
                                                                          )Net
      income/(loss) per share:Basic
                                                                          
                                                                          
                                                                          21
                                                                          
                                                                          
                                                                          
                                                                          2.96
                                                                          
                                                                          
                                                                          
                                                                          3.06
                                                                          
                                                                          
                                                                          
                                                                          (0.80
                                                                          )Diluted
                                                                          
                                                                          
                                                                          21
                                                                          
                                                                          
                                                                          
                                                                          2.93
                                                                          
                                                                          
                                                                          
                                                                          (2.31
                                                                          )
                                                                          
                                                                          
                                                                          (0.80
                                                                          )Weighted
      average number of shares outstanding:Basic
                                                                          
                                                                          
                                                                          21
                                                                          
                                                                          
                                                                          
                                                                          134,525,226
                                                                          
                                                                          
                                                                          
                                                                          156,380,060
                                                                          
                                                                          
                                                                          
                                                                          161,643,312Diluted
                                                                          
                                                                          
                                                                          21
                                                                          
                                                                          
                                                                          
                                                                          136,721,772
                                                                          
                                                                          
                                                                          
                                                                          168,785,243
                                                                          
                                                                          
                                                                          
                                                                          161,643,312
  The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
  
 JA
      SOLAR HOLDINGS CO., LTD.
                    CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE
      INCOME/(LOSS)
                    (In
      thousands, except share and per share
data)
  Ordinary
      sharesShares
                          
                          
                          Amount
                          
                          
                          Additional
      paid-in capital
                          
                          
                          Statutory
      reserves
                          
                          
                          Retained
      earnings
                          
                          
                          Accumulated
      other comprehensive loss
                          
                          
                          Total
      shareholders' equity
                          
                          
                          Total
      Comprehensive Income/(loss)RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMBBalance
      at December 31, 2006
                          
                          
                          80,000,000
                          
                          
                          
                          66
                          
                          
                          
                          106,716
                          
                          
                          
                          14,588
                          
                          
                          
                          74,381
                          
                          
                          
                          -
                          
                          
                          
                          195,751
                          
                          
                          
                          128,414Issuance
      of ordinary shares pursuant to initial public offerings
                          
                          
                          51,750,000
                          
                          
                          
                          40
                          
                          
                          
                          1,850,337
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,850,377
                          
                          
                          
                          -Accretion
      of preferred shares
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (515
                          )
                          
                          
                          -
                          
                          
                          
                          (515
                          )
                          
                          
                          -Conversion
      of preferred shares into ordinary shares upon the completion of initial
      public offering
                          
                          
                          6,520,000
                          
                          
                          
                          5
                          
                          
                          
                          109,900
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          109,905
                          
                          
                          
                          -Issuance
      of ordinary shares pursuant to follow on offerings
                          
                          
                          14,848,500
                          
                          
                          
                          11
                          
                          
                          
                          1,481,696
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,481,707
                          
                          
                          
                          -Shares
      based compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          91,637
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          91,637
                          
                          
                          
                          -Exercise
      of stock options
                          
                          
                          940,000
                          
                          
                          
                          1
                          
                          
                          
                          14,908
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          14,909
                          
                          
                          
                          -Statutory
      reserves
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          57,031
                          
                          
                          
                          (57,031
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      Income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          400,368
                          
                          
                          
                          -
                          
                          
                          
                          400,368
                          
                          
                          
                          400,368Other
      comprehensive loss for available-for-sale securities
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (7,641
                          )
                          
                          
                          (7,641
                          )
                          
                          
                          (7,641
                          )Balance
      at December 31, 2007
                          
                          
                          154,058,500
                          
                          
                          
                          123
                          
                          
                          
                          3,655,194
                          
                          
                          
                          71,619
                          
                          
                          
                          417,203
                          
                          
                          
                          (7,641
                          )
                          
                          
                          4,136,498
                          
                          
                          
                          392,727
  F-5
  JA
SOLAR HOLDINGS CO., LTD.
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME/(LOSS)
(Continued)
 (In
thousands, except share and per share data)
  Ordinary
      sharesShares
                          
                          
                          Amount
                          
                          
                          Additional
      paid-in capital
                          
                          
                          Statutory
      reserves
                          
                          
                          Retained
      earnings
                          
                          
                          Accumulated
      other comprehensive loss
                          
                          
                          Total
      shareholders' equity
                          
                          
                          Total
      Comprehensive Income/(loss)RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMB
                          
                          
                          RMBShares
      based compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          113,192
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          113,192
                          
                          
                          
                          -Exercise
      of stock options
                          
                          
                          798,000
                          
                          
                          
                          1
                          
                          
                          
                          18,876
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          18,877
                          
                          
                          
                          -Issuance
      of ordinary shares pursuant to ADS
                            Lending
      Agreement
                          
                          
                          13,125,520
                          
                          
                          
                          9
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          9
                          
                          
                          
                          -Statutory
      reserves
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          97,957
                          
                          
                          
                          (97,957
                          )
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      Income
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          479,066
                          
                          
                          
                          -
                          
                          
                          
                          479,066
                          
                          
                          
                          479,066Other
      comprehensive
                            loss
      for foreign
                            currency
      translation
                            adjustment
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (383
                          )
                          
                          
                          (383
                          )
                          
                          
                          (383
                          )Other
      comprehensive income
                            for
      available-for-sale securities
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          7,641
                          
                          
                          
                          7,641
                          
                          
                          
                          7,641Balance
      at December 31, 2008
                          
                          
                          167,982,020
                          
                          
                          
                          133
                          
                          
                          
                          3,787,262
                          
                          
                          
                          169,576
                          
                          
                          
                          798,312
                          
                          
                          
                          (383
                          )
                          
                          
                          4,754,900
                          
                          
                          
                          486,324
  F-6
  JA
SOLAR HOLDINGS CO., LTD.
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME/(LOSS)
(Continued)
 (In
thousands, except share and per share data)
 Ordinary
      sharesShares
                          
                          Amount
                          
                          Additional
      paid-in capital
                          
                          Statutory
      reserves
                          
                          Retained
      earnings
                          
                          Accumulated
      other comprehensive loss
                          
                          Total
      shareholders' equity
                          
                          Total
      Comprehensive Income/(loss)RMB
                          
                          RMB
                          
                          RMB
                          
                          RMB
                          
                          RMB
                          
                          RMB
                          
                          RMBShares
      based compensation
                          -
                          
                          -
                          
                          79,935
                          
                          -
                          
                          -
                          
                          -
                          
                          79,935
                          
                          -Exercise
      of stock options
                          1,036,400
                          
                          1
                          
                          16,840
                          
                          -
                          
                          -
                          
                          -
                          
                          16,841
                          
                          -Statutory
      reserves
                          -
                          
                          -
                          
                          -
                          
                          41,626
                          
                          (41,626)
                          
                          -
                          
                          -
                          
                          -Net
      loss
                          -
                          
                          -
                          
                          -
                          
                          -
                          
                          (128,661)
                          
                          -
                          
                          (128,661)
                          
                          (128,661)Other
      comprehensive
                            loss
      for foreign
                            currency
      translation
                            adjustment
                          -
                          
                          -
                          
                          -
                          
                          -
                          
                          -
                          
                          (6,798)
                          
                          (6,798)
                          
                          (6,798)Other
      comprehensive loss for forward
                            contract
      (Note 19)
                          -
                          
                          -
                          
                          -
                          
                          -
                          
                          -
                          
                          (831)
                          
                          (831)
                          
                          (831)Balance
      at December 31, 2009
                          169,018,420
                          
                          134
                          
                          3,884,037
                          
                          211,202
                          
                          628,025
                          
                          (8,012)
                          
                          4,715,386
                          
                          (136,290)
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-7
 JA
      SOLAR HOLDINGS CO., LTD.
                          CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                          (In
      thousands)
  For
      the year ended December 31, 2007
                      
                      
                      For
      the year ended December 31, 2008
                      
                      
                      For
      the year ended December 31, 2009RMB
                      
                      
                      RMB
                      
                      
                      RMBCash
      flows from operating activities:Net
      income/(loss)
                      
                      
                      400,368
                      
                      
                      
                      479,066
                      
                      
                      
                      (128,661
                      )Adjustments
      to reconcile net income/(loss)
      to net cash provided by/(used in) operating activities:Share
      based compensation expense
                      
                      
                      91,637
                      
                      
                      
                      113,192
                      
                      
                      
                      79,935Depreciation
      and amortization
                      
                      
                      34,115
                      
                      
                      
                      88,191
                      
                      
                      
                      178,765Allowance
      for doubtful accounts
                      
                      
                      -
                      
                      
                      
                      24,708
                      
                      
                      
                      20,892Inventory
      provisions
                      
                      
                      -
                      
                      
                      
                      77,980
                      
                      
                      
                      44,229Allowance
      for advance to third party suppliers
                      
                      
                      -
                      
                      
                      
                      18,592
                      
                      
                      
                      33,368Amortization
      of deferred issuance cost and accretion of convertible
    notes
                      
                      
                      -
                      
                      
                      
                      88,389
                      
                      
                      
                      110,076Change
      in fair value of derivatives
                      
                      
                      -
                      
                      
                      
                      (564,006
                      )
                      
                      
                      49,071Exchange
      loss/(gain)
                      
                      
                      90,672
                      
                      
                      
                      57,161
                      
                      
                      
                      (2,043
                      )Investment
      loss from short-term securities
                      
                      
                      -
                      
                      
                      
                      39,043
                      
                      
                      
                      2,277Loss
      from disposal of fixed assets
                      
                      
                      -
                      
                      
                      
                      362
                      
                      
                      
                      782Impairment
      on property plant and equipment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      18,010Deferred
      income taxes
                      
                      
                      (5,570
                      )
                      
                      
                      (22,977
                      )
                      
                      
                      (21,672
                      )Gain
      from convertible notes buyback
                      
                      
                      -
                      
                      
                      
                      (203,514
                      )
                      
                      
                      (22,904
                      )Impairment
      on available-for-sale securities
                      
                      
                      -
                      
                      
                      
                      686,320
                      
                      
                      
                      -Changes
      in operating assets and liabilities:(Acquisition)/disposal
      of trading securities
                      
                      
                      -
                      
                      
                      
                      (353,588
                      )
                      
                      
                      353,588Increase
      in inventories
                      
                      
                      (2,659
                      )
                      
                      
                      (512,635
                      )
                      
                      
                      (93,379
                      )Increase
      in notes receivables
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (119,824
                      )Decrease/(increase)
      in accounts receivables from third party customers
                      
                      
                      18,900
                      
                      
                      
                      (327,930
                      )
                      
                      
                      (23,895
                      )(Increase)/decrease
      in accounts receivables from related party customers
                      
                      
                      (24,731
                      )
                      
                      
                      1,722
                      
                      
                      
                      23,009(Increase)/decrease
      in advance to related party suppliers
                      
                      
                      (350,040
                      )
                      
                      
                      (41,133
                      )
                      
                      
                      261,394(Increase)/decrease
      in advance to third party suppliers
                      
                      
                      (1,433,446
                      )
                      
                      
                      (777,891
                      )
                      
                      
                      71,893Increase
      in prepayment for land use rights
                      
                      
                      -
                      
                      
                      
                      (44,399
                      )
                      
                      
                      (6,222
                      )Increase
      in other current assets
                      
                      
                      (41,371
                      )
                      
                      
                      (148,766
                      )
                      
                      
                      (23,144
                      )Increase
      in accounts payable
                      
                      
                      8,967
                      
                      
                      
                      107,863
                      
                      
                      
                      249,881(Decrease)/increase
      in tax payable
                      
                      
                      (3,298
                      )
                      
                      
                      4,826
                      
                      
                      
                      10,035Increase/(decrease)
      in other payables
                      
                      
                      5,194
                      
                      
                      
                      (3,040
                      )
                      
                      
                      4,640Increase
      in payroll and welfare payable
                      
                      
                      3,688
                      
                      
                      
                      7,834
                      
                      
                      
                      45,009Increase/(decrease)
      in accrued expenses
                      
                      
                      11,347
                      
                      
                      
                      7,486
                      
                      
                      
                      (1,652
                      )Increase
      in accrued warranty cost
                      
                      
                      929
                      
                      
                      
                      4,256
                      
                      
                      
                      746Decrease
      in amounts due to related parties
                      
                      
                      (38
                      )
                      
                      
                      (104,483
                      )
                      
                      
                      (3,123
                      )Increase/(decrease)
      in interest payable
                      
                      
                      -
                      
                      
                      
                      13,458
                      
                      
                      
                      (3,328
                      )Increase/(decrease)
      in advance from third party customers
                      
                      
                      48,956
                      
                      
                      
                      (5,235
                      )
                      
                      
                      (11,268
                      )Increase
      in share-based compensation liability
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      16,264Increase
      in other long-term liability
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      16,383Net
      cash (used in)/provided by operating activities
                      
                      
                      (1,146,380
                      )
                      
                      
                      (1,289,148
                      )
                      
                      
                      1,129,132
  F-8
 JA
SOLAR HOLDINGS CO., LTD.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
 (In
thousands)
 For
      the year ended December 31, 2007
                          
                          
                          For
      the year ended December 31, 2008
                          
                          
                          For
      the year ended December 31, 2009RMB
                          
                          
                          RMB
                          
                          
                          RMBCash
      flows from investing activities:Purchase
      of property and equipment
                          
                          
                          (421,233
                          )
                          
                          
                          (806,058
                          )
                          
                          
                          (610,600
                          )Cash
      received from disposal of property and equipment
                          
                          
                          -
                          
                          
                          
                          46
                          
                          
                          
                          275Purchase
      of intangible assets
                          
                          
                          (616
                          )
                          
                          
                          (6,462
                          )
                          
                          
                          (2,277
                          )Acquisition
      of short-term investments
                          
                          
                          (810,762
                          )
                          
                          
                          (2,156,187
                          )
                          
                          
                          -(Increase)/decrease
      in restricted cash
                          
                          
                          (409,058
                          )
                          
                          
                          375,997
                          
                          
                          
                          (10,551
                          )Proceeds
      from sale of short-term investments
                          
                          
                          -
                          
                          
                          
                          2,173,241
                          
                          
                          
                          66,000Net
      cash used in investing activities
                          
                          
                          (1,641,669
                          )
                          
                          
                          (419,423
                          )
                          
                          
                          (557,153
                          )Cash
      flows from financing activities:Proceeds
      from public offerings of shares
                          
                          
                          3,341,002
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      proceeds from convertible notes offerings
                          
                          
                          -
                          
                          
                          
                          2,709,538
                          
                          
                          
                          -Proceeds
      from short-term bank borrowings
                          
                          
                          250,000
                          
                          
                          
                          490,000
                          
                          
                          
                          40,000Proceeds
      from long-term bank borrowings
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          680,000Payment
      of capped call up-front premiums
                          
                          
                          -
                          
                          
                          
                          (226,087
                          )
                          
                          
                          -Repurchase
      of convertible notes
                          
                          
                          -
                          
                          
                          
                          (182,019
                          )
                          
                          
                          (459,601
                          )Repayment
      of short-term borrowings
                          
                          
                          (200,000
                          )
                          
                          
                          (200,000
                          )
                          
                          
                          (520,000
                          )Proceeds
      from exercise of stock options
                          
                          
                          128,583
                          
                          
                          
                          18,876
                          
                          
                          
                          16,841Net
      cash provided by/(used in) financing activities
                          
                          
                          3,519,585
                          
                          
                          
                          2,610,308
                          
                          
                          
                          (242,760
                          )Effect
      of exchange rate changes on cash and cash equivalents
                          
                          
                          (91,319
                          )
                          
                          
                          (94,928
                          )
                          
                          
                          (4,755
                          )Net
      increase in cash and cash equivalents
                          
                          
                          640,217
                          
                          
                          
                          806,809
                          
                          
                          
                          324,464Cash
      and cash equivalents at the beginning of the year
                          
                          
                          95,758
                          
                          
                          
                          735,975
                          
                          
                          
                          1,542,784Cash
      and cash equivalents at the end of the year
                          
                          
                          735,975
                          
                          
                          
                          1,542,784
                          
                          
                          
                          1,867,248Supplemental
      disclosure of cash flow information:Cash
      paid for interest (net of amounts capitalized)
                          
                          
                          10,207
                          
                          
                          
                          59,669
                          
                          
                          
                          98,259Cash
      paid for income tax
                          
                          
                          -
                          
                          
                          
                          41,696
                          
                          
                          
                          30,028Supplemental
      schedule of non-cash investing and financing activities:Purchases
      of property and equipment included in other payables
                          
                          
                          8,129
                          
                          
                          
                          127,120
                          
                          
                          
                          69,444
  The
accompanying notes are an integral part of these consolidated financial
statements.
  F-9
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 
 1.
                  ORGANIZATION
      AND PRINCIPAL ACTIVITIES
  The
accompanying consolidated financial statements include the financial statements
of JA Solar Holdings Co., Ltd. (the "Company"), and its subsidiaries,
collectively referred to as the "Group".
  JA
Solar Holdings Co., Ltd. was incorporated in the Cayman Islands on July 6, 2006.
In February 2007, the Company’s ADS became listed on the NASDAQ Global Market in
the United States. The Group is primarily engaged in the development, production
and marketing of high-performance photovoltaic ("PV") solar cells, which convert
sunlight into electricity, in the PRC.
  Majority
of the Group's business is conducted through the operating subsidiaries
established in the PRC, JingAo Solar Co., Ltd. ("JA Hebei"), Shanghai JA Solar
PV Technology Co., Ltd. ("JA Zhabei") and JA Solar Technology Yangzhou Co., Ltd.
(“JA Yangzhou”), in which the Company indirectly holds a 100%
interest.
  As
of December 31, 2009, the Company's subsidiaries include the following
entities:
  Date
      of Incorporation/Acquisition
                    Place
      of Incorporation
                    Percentage
      of  OwnershipJingAo
      Solar Co., Ltd. ("JA Hebei")
                    May
      18, 2005
                    PRC
                    100%JA
      Development Co., Ltd. ("JA BVI")
                    July
      6, 2006
                    BVI
                    100%Shanghai
      JA Solar Technology Co., Ltd. ("JA Fengxian")
                    November
      16, 2006
                    PRC
                    100%JA
      Solar USA Inc. ("JA USA")
                    April
      13, 2007
                    USA
                    100%Shanghai
      JA Solar PV Technology Co., Ltd. ("JA Zhabei")
                    June
      22, 2007
                    PRC
                    100%JA
      Solar Technology Yangzhou Co., Ltd. (“JA Yangzhou”)
                    November
      19, 2007
                    PRC
                    100%JA
      Solar Hong Kong Limited (“JA Hong Kong”)
                    December
      10, 2007
                    Hong
      Kong
                    100%Jing 
      Hai  Yang  Semiconductor  Materials  (Donghai) 
      Co., Ltd. (“JA Lianyungang”)
                    October
      11, 2008
                    PRC
                    100%JA
      Solar Yangzhou R&D Co., Ltd. (”JA
    Yangzhou R&D”)
                    March
      12, 2009
                    PRC
                    100%Jindosun
      Park.,Inc. (”JA Korea”)
                    June
      5, 2009
                    Korea
                    100%JA
      Luxembourg S.ò.r.l. (”JA Lux”)
                    June
      26, 2009
                    Luxembourg
                    100%JA
      Yangzhou PV Technology Co., Ltd. (”JA Yangzhou PV”)
                    November
      23, 2009
                    PRC
                    100%
  F-10
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  2.
                  Summary
      of significant accounting policies
  a)
                  Basis
      of presentation and consolidation
  The
accompanying consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United Stated of America
("U.S. GAAP"). The consolidated financial statements include the financial
statements of the Company and its wholly-owned subsidiaries (collectively, the
"Group" or the “Company”). All inter-company transactions and balances among the
Company and its subsidiaries have been eliminated upon
consolidation.
  b)
                  Use
      of estimates
  The
preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amount of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The Group bases its estimates on historical experience and various
other factors believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Significant
accounting estimates reflected in the Company’s consolidated financial
statements include allowance for doubtful receivables, provision for inventories
and advances to suppliers, the economic useful lives of property, plant and
equipment and intangible assets, asset impairments, certain accrued liabilities
including accruals for warranty costs, accounting for share-based compensation,
fair value measurements, legal contingencies, and income taxes and related tax
valuation allowance.
  c)
                  Fair
      value of financial
instruments
  We
estimated the fair value of our financial assets and liabilities in accordance
with ASC 820, Fair Value
Measurements and Disclosures. ASC 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (also
referred to as an exit price). ASC 820 establishes a hierarchy for inputs used
in measuring fair value that gives the highest priority to observable inputs and
the lowest priority to unobservable inputs. Valuation techniques used to measure
fair value shall maximize the use of observable inputs.
 
 When
available, the Company measures the fair value of financial instruments based on
quoted market prices in active markets, valuation techniques that use observable
market-based inputs or unobservable inputs that are corroborated by market data.
Pricing information the Company obtains from third parties is internally
validated for reasonableness prior to use in the consolidated financial
statements. When observable market prices are not readily available, the Company
generally estimates the fair value using valuation techniques that rely on
alternate market data or inputs that are generally less readily observable from
objective sources and are estimated based on pertinent information available at
the time of the applicable reporting periods. In certain cases, fair values are
not subject to precise quantification or verification and may fluctuate as
economic and market factors vary and the Company’s evaluation of those factors
changes. Although the Company uses its best judgment in estimating the fair
value of these financial instruments, there are inherent limitations in any
estimation technique. In these cases, a minor change in an assumption could
result in a significant change in its estimate of fair value, thereby increasing
or decreasing the amounts of the Company’s consolidated assets, liabilities,
stockholders’ equity (deficit) and net income or loss. Note 24, “Fair Value
Measurements”, for further details.
 
 d)
                  Cash,
      cash equivalents and restricted
cash
  The
Group considers all cash on hand and demand deposits as cash and considers all
highly liquid investments with an original maturity of three months or less as
cash equivalents. Restricted cash represents amounts held by banks, which are
not available for the Group’s use, as security for issuance of letters of
credit.
  F-11
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  e)
                  Short-term
      investments
  The
Company accounts for short-term investments in accordance with ASC 320, Investments-Debt and Equity
Securities. The Company classifies the short-term investments in debt and
equity securities as “held-to-maturity”, “trading” or “available-for-sale”,
whose classification determines the respective accounting methods stipulated by
the accounting standard for financial instruments. Investments that are bought
and held principally for the purpose of selling them in the near term are
classified as trading securities. Trading securities are reported at fair value
with unrealized gains and losses included in invesment income. The Company does
not have investments classified as held-to-maturity.
  Investments
designated as available-for-sale are reported at fair value, with unrealized
gains and losses, net of tax, recorded in accumulated other comprehensive income
(loss) in shareholders' equity. Realized gains or losses are charged to income
during the period in which the gain or loss is realized. If the Group determines
a decline in fair value is other-than-temporary, the cost basis of the
individual security is written down to fair value as a new cost basis and the
amount of the write-down is accounted for as a realized loss. The new cost basis
will not be changed for subsequent recoveries in fair value. Determination of
whether declines in value are other-than-temporary requires significant
judgment. Subsequent increases and decreases in the fair value of
available-for-sale securities will be included in comprehensive income through a
credit or charge to shareholders' equity except for an other-than-temporary
impairment, which will be charged to income.
  f)
                  Allowance
      for doubtful accounts
  Provisions
are made against accounts receivable for estimated losses resulting from the
inability of our customers to make payments. The Company periodically assessed
accounts receivable balances to determine whether an allowance for doubtful
accounts should be made based upon historical bad debts, specific customer
creditworthiness and current economic trends. Accounts receivable in the balance
sheets are stated net of such provision, if any.
  g)
                  Inventories
  Inventories
are stated at the lower of cost or market value. Cost of inventories is
determined by the weighted-average method. Provisions are made for excess, slow
moving and obsolete inventory as well as inventory whose carrying value is in
excess of net realizable value.  Certain factors could impact the
realizable value of inventory, so the Group continually evaluates the
recoverability based on assumptions about customer demand and market conditions.
The evaluation may take into consideration historical usage, expected demand,
anticipated sales price, new product development schedules, the effect new
products might have on the sale of existing products, product obsolescence,
customer concentrations, and other factors. The reserve or write-down is equal
to the difference between the cost of inventory and the estimated market value
based upon assumptions about future demand and market conditions.  If
actual market conditions are less favorable than those projected by management,
additional inventory reserves or write-downs may be required that could
negatively impact our gross margin and operating results. If actual market
conditions are more favorable, the Group may have higher gross margin when
products that have been previously reserved or written down are eventually
sold.
  h)
                  Short-term
      and long-term advances to suppliers
  The Group
provides short-term and long-term advances to secure its raw material needs,
which are then offset against future purchases. The Group does not require
collateral or other security against its advances to related or third party
suppliers. We continually assess the credit quality of our suppliers and the
factors that affect the credit risk. If there
is deterioration in the creditworthiness of our suppliers, we will seek to
recover our advances from the suppliers and provide for losses on advances which
are akin to receivables in selling, general and administrative expenses because
of their inability to return our advances. The Group
classified short-term and long-term advances to suppliers based on management’s
best estimate of the expected purchase in the next twelve-months as of the
balance sheet date and the Group's ability to make requisite purchases under
existing supply contracts. Future balances are recorded in long-term advances to
suppliers.
  F-12
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  i)
                  Prepayment
      for land use rights
  Land
use rights are carried at cost less accumulated amortization and impairment
losses.  Amortization is provided to write off the prepayment for land
use rights on a straight-line basis over the respective periods of the
rights.
  j)
                  Property
      and equipment, net
  Property
and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are provided on a straight-line basis over the
following estimated useful lives:
  Buildings
                  20
      yearsLeasehold
      improvements
                  Shorter
      of the lease term or useful livesMachinery
      and equipment
                  5-15
      yearsFurniture
      and fixtures
                  5
      yearsMotor
      vehicles
                  5
      yearsLand
                  Indefinite
  Construction
in progress primarily represents the construction of new production lines. Costs
incurred in the construction are capitalized and transferred to property and
equipment upon completion, at which time depreciation commences. Interest
expense incurred for qualifying assets are capitalized in accordance with ASC
835-20, Capitalization of
Interest.
  Expenditures
for repairs and maintenance are expensed as incurred. The gain or loss on
disposal of property and equipment, if any, is the difference between the net
sales proceeds and the carrying amount of the disposed assets, and is recognized
in the consolidated statement of operations upon disposal.
  k)
                  Operating
      leases
  Leases
where substantially all the rewards and risks of ownership of assets remain with
the leasing company are accounted for as operating leases. Payments made under
operating leases are charged to the consolidated statements of operations on a
straight line basis over the lease periods.
  l)
                  Intangible
      asset, net
  Intangible
assets comprised of technical know-how contributed by one of the Group's
shareholders upon formation of JA Hebei and purchased accounting and operational
softwares.
  Technical
know-how is carried at cost, less accumulated amortization. The technical
know-how consists of one component relating to the commercial production process
of photovoltaic solar cells. Amortization is calculated on a straight-line basis
over the estimated useful life of the technical know-how of eight
years.
  Purchased
software with a finite useful life is being amortized on a straight line basis
over its estimated useful life of five or ten years.
  m)
                    Impairment
      of long-lived assets
  The
Group evaluates its long-lived assets and finite-lived intangible asset for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Factors considered important
that could result in an impairment review include significant underperformance
relative to expected historical or projected future operating results,
significant changes in the manner of use of acquired assets and significant
negative industry or economic trends. Impairments are recognized based on the
difference between the fair value of the asset and its carrying value. Fair
value is generally measured based on either quoted market prices, if available,
or discounted cash flow analyses. Any write-downs would be treated as permanent
reductions in the carrying amounts of the assets and an operating loss would be
recognized.
  F-13
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 n)
                  Income
      taxes
  Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax assets bases and
operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is provided to reduce the carrying amount
of deferred tax assets if it is considered more likely than not that some
portion, or all, of the deferred tax assets will not be realized.
  o)
                  Revenue
      recognition
  (i)
                  Revenue
      recognition for solar cells and modules (hereafter "solar
      products")
  The
Group recognizes revenue from the sale of solar products at the time of
shipment, at which point title and risk of loss transfer. The Group sells its
solar products at agreed upon prices to its customers, which reflect prevailing
market prices.
  The
Group's considerations for recognizing revenue are based on the
following:
  •
                    Persuasive
      evidence that an arrangement (sales contract) exists between a willing
      customer and the Group that outlines the terms of the sale (including
      customer information, product specification, quantity of goods, purchase
      price and payment terms). Customers do not have a right of return. The
      Group does provide a warranty on its solar module
  products.
 •
                    Some
      shipping terms are EXW, at which point the Group delivers goods at its own
      place of business and all other transportation costs and risks are assumed
      by the customer. Some shipping terms are CIF destination point. At this
      point, once the acceptance from the customer is received, the customer
      takes title to the goods and is responsible for all risks and rewards of
      ownership. Some shipping terms are FOB shipping point from the Group's
      premises. At this point the customer takes title to the goods and is
      responsible for all risks and rewards of ownership.
 •
                    The
      Group's price to the customer is fixed and determinable as specifically
      outlined in the sales contract.
 •
                  For
      customers to whom credit terms are extended, the Group assesses a number
      of factors to determine whether collection from the customers is probable,
      including past transaction history with these customers and their
      credit-worthiness. All credit extended to customers is pre-approved by
      management. If the Group determines that collection is not reasonably
      assured, it defers the recognition of revenue until collection becomes
      reasonably assured, which is generally upon receipt of
      payment.
 
 (ii)
                  Revenue
      recognition for solar cells
processing
  The
Group provides solar cell processing service to customers with their own wafer
supplies. Under certain of these solar cell processing service arrangements, the
Group purchases raw materials from a customer and agrees to sell a specified
quantity of solar cells produced from such materials back to the same customer.
The Group records revenue from these processing transactions on a net basis,
recording revenue based on the amount received for solar cells sold less the
amount paid for the raw materials purchased from the customer. The revenue
recognized is recorded as solar cell processing revenue and the production costs
incurred related to providing the processing services are recorded as solar cell
processing costs within cost of revenue.
  F-14
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  p)
                  Cost
      of revenue
  Cost
of revenue includes production and indirect costs, as well as shipping (freight
in) and handling costs for products sold, provision for inventories and capacity
underutilization charges.
  q)
                  Share
      based compensation
  In
accordance with ASC 718, Compensation-Stock
Compensation, the Group measures the cost of employee services received
in exchange for share-based compensation at the grant date fair value of the
award.
  The
Group recognizes the share-based compensation costs, net of a forfeiture rate,
on a straight-line basis over the requisite service period for each separately
vesting portion of the award as if the award was, in-substance, multiple
awards.
  ASC
718 requires forfeitures to be estimated at the time of grant and revised in
subsequent periods if actual forfeitures differ from those
estimates.  For the stock options granted in the year ended December
31, 2007, 2008 and 2009 the Group used the forfeiture rate 0%.
  Cost
of goods acquired or services received from non-employees is measured based on
the fair value of the awards issued on the measurement date as defined in ASC
505. Awards granted to non-employees are remeasured at each reporting date using
the fair value as at each period end. Changes in fair values between the interim
reporting dates are attributed consistent with the method used in recognizing
the original share -based compensation costs.
  r)
                  Research
      and development
  Research
and development costs are expensed when incurred.
  s)
                  Advertising
      expenses
  Advertising
expenses are charged to the consolidated statement of operations in the period
incurred. Advertising expenses are not significant during any of the periods
covered by these consolidated financial statements..
  t)
                  Warranty
      cost
  Solar
modules produced by the Group are typically sold with either a two-year or
five-year guarantee for defects in materials and workmanship and a 10-year and
25-year warranty against declines of more than 10.0% and 20.0%, respectively, of
the initial minimum power generation capacity at the time of delivery. The Group
therefore maintains warranty reserves (recorded as accrued warranty costs) to
cover potential liabilities that could arise from these guarantees and
warranties. The potential liability is generally in the form of product
replacement or repair. The Group accrues 1.0% of its net revenues as warranty
costs at the time revenues are recognized and include that amount in its cost of
revenues. Due to
zero warranty claims to date, we accrue the estimated costs of warranties based
primarily on our own history, industry data and an assessment of our
competitors' accrual history. Through
its relationships with, and its management’s experience working at, other solar
power companies and on the basis of publicly available information regarding
other solar power companies’ accrued warranty costs, the Group believes that
accruing 1.0% of its net revenues attributable to module sales as warranty costs
is within the range of industry practice and is consistent with
industry-standard accelerated testing, which assists the Group in estimating the
long-term reliability of solar modules, estimates of failure rates from our
quality review and other assumptions that it believes to be reasonable under the
circumstances. However, although the Group conducts quality testing and
inspection of its solar module products, these products have not been and cannot
be tested in an environment simulating the up to 25-year warranty periods. The
Group has not experienced any material warranty claims to date in connection
with declines of the power generation capacity of its solar modules. Actual
warranty costs are accumulated and charged against the accrued warranty
liability. To the extent that the actual warranty costs differ from the
estimates, the Group will prospectively revise its accrual rate.
  F-15
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  u)
                  Foreign
      currencies translation
  The
functional and reporting currency of the Company and the majority of its
subsidiaries is Renminbi ("RMB"). Transactions denominated in other currencies
are translated into RMB at the rates of exchange prevailing when the
transactions occur. Monetary assets and liabilities denominated in other
currencies are translated into RMB at rates of exchange in effect at the balance
sheet dates. All exchanges gains and losses are included in the Consolidated
Statements of Operations as a separate line item after income from
operations.
  For
our subsidiaries whose functional currency is not the RMB, the asset and
liability accounts are translated into our reporting currency using exchange
rates in effect at the balance sheet dates and income and expense items are
translated using average exchange rates.
  v)
                  Segment
      reporting
  The
Group has adopted ASC 280, Segment Reporting, for its
segment reporting. The Group operates and manages its business as a single
segment.
  w)
                    Net
      income/ (loss) per share
  In
accordance with ASC 260, Earnings Per Share, basic
earnings per share is computed by dividing net income attributable to ordinary
shareholders by the weighted average number of ordinary shares outstanding
during the year using the two-class method. Under the two class method, net
income is allocated between ordinary shares and other participating securities
based on their respective participating rights. The Group's Series A redeemable
convertible preferred shares are participating securities. Diluted earnings per
share is calculated by dividing net income attributable to ordinary shareholders
as adjusted for the effect of dilutive ordinary equivalent shares, if any, by
the weighted average number of ordinary and dilutive ordinary equivalent shares
outstanding during the year. Ordinary equivalent shares consist of the ordinary
shares issuable upon the conversion of the convertible preferred shares (using
the if-converted method), senior convertible notes (using the if-converted
method) and ordinary shares issuable upon the exercise of outstanding share
options (using the treasury stock method).
  x)
                  Comprehensive
      income/(loss)
  The
Group has adopted ASC 220, Comprehensive Income. ASC 220
defines comprehensive income (loss) to include all changes in equity, including
adjustments to minimum pension liabilities, accumulated foreign currency
translation, and unrealized gains or losses on available-for-sale marketable
securities, except those resulting from investments by owners and distributions
to owners.
  y)   
      Derivative Financial Instruments - Embedded Foreign Currency
      Derivatives
  Certain
of the Company’s purchase and sales contracts are denominated in a currency
which is not the functional currency of either of the contracting parties.
Accordingly, the contracts contain embedded foreign currency forward contracts,
which were required to be bifurcated and accounted for at fair value in
accordance with ASC 815, derivatives and
hedging.  Embedded foreign currency derivatives are presented as
derivative assets or liabilities with the changes in fair value recorded in the
consolidated statement of operations.
  z)
                  Recent
      accounting pronouncements
  In
August 2009, the FASB issued Accounting Standards Update (ASU) 2009-05, Fair
Value Measurements and Disclosures (Topic 820) - Measuring Liabilities at Fair
Value. The fair value measurement of a liability assumes transfer to a market
participant on the measurement date, not a settlement of the liability with the
counterparty. ASU 2009-05 describes various valuation methods that can be
applied to estimating the fair values of liabilities, requires the use of
observable inputs and minimizes the use of unobservable valuation inputs. ASU
2009-05 is effective for the fourth quarter of 2009. The adoption of ASU 2009-05
did not have a material impact on our financial position, results of operations
or cash flows.
  F-16
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  In
October 2009, the FASB issued ASU 2009-15, Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other Financing.
ASU 2009-15 amends the accounting and reporting guidance for debt (and certain
preferred stock) with specific conversion features or other options. ASU 2009-15
is effective for fiscal years beginning on or after December 31, 2009, with
retrospective adjustment. The Company is currently evaluating the impact of the
adoption of ASU 2009-15 on measurement of its convertible debt.
  In
December 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) –
Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities. ASU 2009-17 changes how a reporting entity determines when an
entity that is insufficiently capitalized or is not controller through voting
(or similar rights) should be consolidated. ASU 2009-17 also requires a
reporting entity to provide additional disclosures about its involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement. ASU 2009-17 is effective at the start of a reporting entity’s
first fiscal year beginning after November 15, 2009, or January 1, 2010, for a
calendar year entity. Early adoption is not permitted. We do not expect that the
adoption of ASU 2009-17 will have a material impact on our financial position,
results of operations or cash flows.
  In
January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and
Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements.
This ASU requires new disclosures and clarifies certain existing disclosure
requirements about fair value measurements. ASU 2010-06 requires a reporting
entity to disclose significant transfers in and out of Level 1 and Level 2 fair
value measurements, to describe the reasons for the transfers and to present
separately information about purchases, sales, issuances and settlements for
fair value measurements using significant unobservable inputs. ASU 2010-06 is
effective for interim and annual reporting periods beginning after December 15,
2009, except for the disclosures about purchases, sales, issuances and
settlements in the roll forward of activity in Level 3 fair value measurements,
which is effective for interim and annual reporting periods beginning after
December 15, 2010; early adoption is permitted. We do not expect that the
adoption of ASU 2010-06 will have a material impact on our financial position,
results of operations or cash flows.
  In
February 2010, the FASB issued ASU 2010-09 to amend ASC 855, Subsequent Events.
ASC 855, which was originally issued by the FASB in May 2009, provides guidance
on events that occur after the balance sheet date but prior to the issuance of
the financial statements. ASC 855 distinguishes events requiring recognition in
the financial statements and those that may require disclosure in the financial
statements. As a result of ASU 2010-09, SEC registrants will not disclose the
date through which management evaluated subsequent events in the financial
statements, either in originally issued financial statements or reissued
financial statements. ASC 855 was effective for interim and annual periods
ending after June 15, 2009, and ASU 2010-09 is effective immediately. We have
evaluated subsequent events in accordance with ASU 2010-09.
  aa)
                  Reclassifications
  Certain
prior period balances have been reclassified to conform to the current period
presentation in the Company’s Consolidated Financial Statements and the
accompanying notes. Such reclassification had no effect on previously reported
results of operations or retained earnings (deficit).
  F-17
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  3.
                  Cash,
      cash equivalents and restricted
cash
  Cash
and cash equivalents consisted of the following:
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBCash
                        
                        
                        1,470,961
                        
                        
                        
                        1,851,881Cash
      equivalents
                        
                        
                        71,823
                        
                        
                        
                        15,367Total
      cash and cash equivalents
                        
                        
                        1,542,784
                        
                        
                        
                        1,867,248Restricted
      cash
                        
                        
                        33,061
                        
                        
                        
                        43,612
  4.
                  Short
      term investments
  Trading
securities
  As
of December 31, 2008, the Company had an investment in a currency fund with a
fair value of RMB 353,588. The Group has liquidated this investment in 2009. The
Company did not acquire or liquidate any other trading securities for the year
ended December 31, 2009.
  Available-for-sale
securities
  As
of December 31, 2008, available-for-sale securities consisted of the
following:
  Initial
      Cost
                        
                        
                        Unrealized
      gains
                        
                        
                        Unrealized
      losses
                        
                        
                        Impairment
      losses
                        
                        
                        Estimated
      fair valueRMB
                        
                        
                        RMB
                        
                        
                        RMB
                        
                        
                        RMB
                        
                        
                        RMBHARP
      index investment
                        
                        
                        68,649
                        
                        
                        
                        -
                        
                        
                        
                        (372
                        )
                        
                        
                        -
                        
                        
                        
                        68,277Commodity
      related investment
                        
                        
                        686,320
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (686,320
                        )
                        
                        
                        -Total
                        
                        
                        754,969
                        
                        
                        
                        -
                        
                        
                        
                        (372
                        )
                        
                        
                        (686,320
                        )
                        
                        
                        68,277
  As
of December 31, 2009, the Company did not have any available-for-sale
securities.
  The
Company has approximately US$100,000 worth of USD 3-Month LCMNER Index-Linked
Note (the "Note"), issued by Lehman Brothers Treasury Co. B.V. (“Lehman
Treasury”) incorporated in the Netherlands, guaranteed by Lehman. Lehman Europe
is the dealer of the Note. This note is linked to an index of Lehman Brothers
Commodity Alpha Trading Strategies I Excess Return (LCMNER). The maturity date
of the Note was October 9th, 2008, with 100% principal protection guaranteed by
Lehman Brothers Holdings Inc. The Note and the guarantee rank equally with all
unsecured obligations of the issuer and guarantor.  On September 19,
2008 the Amsterdam District Court granted Lehman Treasury a provisional
suspension of payments and subsequently declared Lehman Treasury bankrupt on
October 8, 2008. The Note was not repaid by Lehman Treasury and the Company has
made a full impairment amounted to RMB 686,320 against it.  The
Company has filed a claim with the administrators of Lehman Treasury for
recovery of the US$100,000 and is working with lawyers to monitor the status of
the bankruptcy. Any portion of its investment that the Company is able to
recover in the future will be recorded as Other Income.
  5.
                  Notes
      and Accounts Receivables
 As
of December 31, 2008 and 2009, the allowance for doubtful accounts recorded by
the Group was RMB 24,708 and RMB 41,121 respectively. Notes receivable represent
bank drafts that are non-interest bearing and due within three months. Such bank
drafts have been arranged with third-party financial institutions by certain
customers to settle their purchases from us. The carrying amount of notes
receivable approximate their fair values.
  F-18
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  6.
                  Inventories
  Inventories
consisted of the following:
  As
      of December 31,
                          
                          
                          As
      of December 31,2008
                          
                          
                          2009RMB
                          
                          
                          RMBRaw
      materials
                          
                          
                          221,817
                          
                          
                          
                          365,115Work-in-progress
                          
                          
                          16,749
                          
                          
                          
                          41,948Finished
      goods
                          
                          
                          353,423
                          
                          
                          
                          234,077Total
                          
                          
                          591,989
                          
                          
                          
                          641,140
 
 As
of December 31, 2008 and 2009, the provision for inventories recorded by the
Group in cost of revenue was RMB 77,980 and RMB 122,209
respectively.
  7.
                  Advances
      to suppliers
  In
order to better manage the Group’s unit costs and to secure adequate and timely
supply of polysilicon and silicon wafers during the periods of shortages of
polysilicon and silicon wafer supplies, the Group entered into a number of
multi-year supply agreements from 2006 through 2008 in amounts that were
expected to meet the Group’s anticipated production needs. As a condition to the
Group receiving the raw materials under those agreements, and in line with
industry practice, the Group was required to, and had made advances to suppliers
for all, or a portion, of the total contract price to the Group’s suppliers,
which are then offset against future purchases. Typically, the supply agreements
are subject to price negotiations with the suppliers based on market prices. The
Group has made advances to suppliers where the Group has committed to purchase
minimum quantities under some of the supply agreements.
  Advances
to suppliers to be offset against future purchases of which the Group expects to
take delivery of the inventory after the next twelve months are classified as
non-current assets in the Group’s consolidated balance sheet as at year end
dates.
  The
Group does not require collateral or other security against its advances to
related or third party suppliers. As a result, the Group’s claims for such
prepayments would rank only as an unsecured claim, which exposes the Group to
the credit risks of the suppliers. Also, the Group may not be able to recover
all unutilized advances to suppliers if the Group does not purchase the minimum
quantities or is unable to negotiate or renegotiate acceptable prepayment,
quantities, prices and delivery terms with these suppliers.
  As
of December 31, 2008 and 2009, outstanding prepayments made to individual
suppliers in excess of 10% of total prepayments to suppliers, net are as
follows:
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBSupplier
      A (third party)
                        
                        
                        952,671
                        
                        
                        
                        1,113,430Supplier
      B (third party)
                        
                        
                        640,999
                        
                        
                        
                        607,518Supplier
      C (related party)
                        
                        
                        431,005
                        
                        
                        
                        169,611
  F-19
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  As
of December 31, 2008 and 2009, the provision for potential losses against
supplier advances recorded by the Group in selling, general and administrative
expenses was RMB 18,592 and RMB 51,960 respectively.
  8.
                  Other
      current assets
  Other
current assets consisted of the following:
 As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBInput
      value-added tax recoverable
                        
                        
                        116,061
                        
                        
                        
                        138,187Value-added
      tax refund from export sales
                        
                        
                        61,471
                        
                        
                        
                        41,826Prepaid
      expenses
                        
                        
                        6,652
                        
                        
                        
                        13,300Others
                        
                        
                        6,897
                        
                        
                        
                        8,908191,081
                        
                        
                        
                        202,221
  9.
                  Property
      and equipment, net
  Property
and equipment consisted of the following:
  As
      of December 31,
                          
                          
                          As
      of December 31,2008
                          
                          
                          2009RMB
                          
                          
                          RMBBuildings
                          
                          
                          235,106
                          
                          
                          
                          235,960Furniture
      and fixtures
                          
                          
                          17,339
                          
                          
                          
                          27,901Motor
      vehicles
                          
                          
                          7,303
                          
                          
                          
                          8,770Machinery
      and equipment
                          
                          
                          928,709
                          
                          
                          
                          1,286,232Leasehold
      improvements
                          
                          
                          25,694
                          
                          
                          
                          35,133Land
                          
                          
                          -
                          
                          
                          
                          6,723Total
                          
                          
                          1,214,151
                          
                          
                          
                          1,600,719Less:
      accumulated depreciation
                          
                          
                          (129,931
                          )
                          
                          
                          (290,201
                          )Subtotal
                          
                          
                          1,084,220
                          
                          
                          
                          1,310,518Construction-in-progress
                          
                          
                          285,587
                          
                          
                          
                          413,924Property
      and equipment, net
                          
                          ­1,369,807
                          
                          
                          
                          1,724,442
  As
of December 31, 2009, the Group pledged its building with the net book value of
RMB 121,071 to secure a long term bank loan of RMB 100,000.
  For
the years ended December 31, 2007, 2008 and 2009, total interest capitalized was
RMB 3,735, RMB 4,630 and RMB 15,464, respectively.
  Depreciation
expense was RMB 32,962, RMB 86,847 and RMB 160,270 for the years ended December
31, 2007, 2008 and 2009, respectively.
  For the
year ended December 31, 2009, the Group wrote down the carrying value in the
amount of RMB 18,010 of certain machineries. The expense that was recognized
from these machineries which were idle or malfunctioned for a prolonged period
is as a result of accelerated depreciation from revising their remaining
estimated useful life.
  10.
                  Intangible
      assets, net
  Intangible
assets consisted of the following:
   F-20
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  Gross
                      
                      
                      Accumulated
      Amortization
                      
                      
                      NetRMB
                      
                      
                      RMB
                      
                      
                      RMBAs
      of December 31, 2008Technical
      know-how
                      
                      
                      9,000
                      
                      
                      
                      (4,125
                      )
                      
                      
                      4,875Purchased
      software
                      
                      
                      7,185
                      
                      
                      
                      (255
                      )
                      
                      
                      6,93016,185
                      
                      
                      
                      (4,380
                      )
                      
                      
                      11,805As
      of December 31, 2009Technical
      know-how
                      
                      
                      9,000
                      
                      
                      
                      (5,250
                      )
                      
                      
                      3,750Purchased
      software
                      
                      
                      9,462
                      
                      
                      
                      (1,255
                      )
                      
                      
                      8,20718,462
                      
                      
                      
                      (6,505
                      )
                      
                      
                      11,957
  Amortization
expense was RMB 1,153, RMB 1,344 and RMB 2,125 for the years ended December 31,
2007, 2008 and 2009, respectively, and is recorded in manufacturing overhead and
selling, general and administrative expenses.
  Amortization
expense of the existing technical know-how and purchased software for each of
the next five years will be approximately RMB 1,768.
  11.
                  Income
      taxes
  The
Company is a tax exempt company incorporated in the Cayman Islands. Under the
laws of Cayman Islands, the Company is not subject to tax on income or capital
gain. The Company’s subsidiary established in the British Virgin Islands is tax
exempt under the laws of British Virgin Islands, and accordingly, is not subject
to tax on income or capital gain.
  The
Group’s operating subsidiaries, JA Hebei, JA Fengxian, JA Zhabei and JA
Yangzhou, are wholly foreign-owned enterprises incorporated in the PRC and
subject to PRC Foreign Enterprise Income Tax (“FEIT”) Law before January 1,
2008. Pursuant to FEIT Law, foreign-invested enterprise (“FIEs”) are subject to
FEIT at a state tax rate of 30% plus a local tax rate of 3% on PRC taxable
income.  FIEs are also entitled to be exempted from FEIT for a 2-year
period starting from their first profit-making year followed by a 50% reduction
of FEIT payable for the subsequent three years, if they fall into the category
of production-oriented enterprises with an operational period of more than 10
years in China.  Specifically, with respect to income generated by
assets acquired by JA Hebei through capital injection made during the fiscal
years 2005 and 2006, JA Hebei has received approval from the relevant tax
authorities for a two-year enterprise income tax exemption for 2006 and 2007, as
well as a 50% enterprise income tax reduction for 2008, 2009 and
2010.  With respect to income generated by assets newly acquired by JA
Hebei through capital injection made during 2007, JA Hebei has received approval
from the relevant tax authorities for a separate two-year enterprise income tax
exemption for 2007 and 2008, as well as a 50% enterprise income tax reduction
for 2009, 2010 and 2011. No tax holiday was granted with respect to the income
generated by assets newly acquired by JA Hebei through capital injection made
during 2008.  JA Fengxian and JA Yangzhou all have cumulative losses
as of December 31, 2008 and their tax holidays were deemed to commence in 2008
and can be utilized until expiry pursuant to the new CIT law (refer to
below).  JA Zhabei, which is not a production-oriented enterprise, JA
Lianyungang, which was established in 2008, and JA Yangzhou R&D and JA
Yangzhou PV, which were established in 2009, are not entitled to the tax
holiday.
  On
March 16, 2007, the National People’s Congress of China enacted a new Corporate
Income Tax (“CIT”) law, under which FIEs and domestic companies would be subject
to CIT at a uniform rate of 25%. The new CIT law has become effective on January
1, 2008.  The grandfathering treatments for unutilized tax holiday are
provided for certain qualified FIEs.  For those FIEs which have
already commenced their qualified tax holidays before 2008, they can continue to
enjoy the remaining unutilized tax holidays until expiry.  For those
qualified old FIEs which have not commenced their tax holidays before 2008 due
to cumulative losses, their tax holidays will be deemed to commence in 2008 and
can be utilized until expiry. Currently, we do not believe the new CIT law will
affect the preferential tax treatments (i.e. the unutilized tax holiday) enjoyed
by us. The CIT law and the Transition Period Implementation Rules did not
clearly address the application of the transitional preferential policies to
assets acquired through new capital injection made to a qualified entity after
March 16, 2007, the date of enactment of the new CIT law.  If future
guidance is issued by the State Taxation of Administration to clarify this issue
and it is determined that capital injection made after March 16, 2007 does not
qualify for a separate “two plus three” tax holiday, the tax rate of JA Hebei as
well as the income tax liability of JA Hebei for 2008 could
increase.
  F-21
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 On
February 22, 2008, the Ministry of Finance (“MOF”) and the State Administration
of Taxation (“SAT”) jointly issued Cai Shui [2008] Circular 1 (“Circular 1”).
According to Article 4 of Circular 1, distributions of accumulated profits
earned by a FIE prior to January 1, 2008 to foreign investor(s) in 2008 or after
will be exempt from withholding tax (“WHT”) while distribution of the profit
earned by an FIE after January 1,2008 to its foreign investor(s) shall be
subject to WHT at a rate up to 10% (lower rate is available under the protection
of tax treaties). Since we intend to indefinitely reinvest our earnings to
further expand our businesses in mainland China, our foreign invested
enterprises do not intend to declare dividends to their immediate foreign
holding companies in the foreseeable future. As a result, if any dividends are
declared out of the cumulative retained earnings as of December 31, 2007, they
should be exempt from WHT. Undistributed earnings as of December 31, 2008 and
2009 are considered to be indefinitely reinvested, , and therefore, no deferred
tax liability was recognized. No dividend was declared out of the cumulative
retained earnings as of December 31, 2007, 2008 and 2009.
  No
income tax provision has been made for JA HK and JA Korea in any period, as the
Group did not have assessable profits subject to Hong Kong or Korea Profit Tax
for the years presented.
  The
tax benefit/(expense) comprises:
  For
      the year ended
                        
                        
                        For
      the year ended
                        
                        
                        For
      the year endedDecember 31, 2007
                        
                        
                        December 31, 2008
                        
                        
                        December 31, 2009Current
      tax
                        
                        
                        -
                        
                        
                        
                        (46,859
                        )
                        
                        
                        (29,671
                        )Deferred
      tax
                        
                        
                        5,569
                        
                        
                        
                        22,977
                        
                        
                        
                        21,6725,569
                        
                        
                        
                        (23,882
                        )
                        
                        
                        (7,999
                        )
  Components
of deferred tax assets consisted of the following:
  As
      of December 31,
                                          
                                          
                                          As
      of December 31,2008
                                          
                                          
                                          2009Deferred
      tax assets:
                                          
                                          RMB
                                          
                                          
                                          RMBTemporary
      differences:Pre-operating
      expenses
                                          
                                          
                                          5,508
                                          
                                          
                                          
                                          9,848Amortization
      of intangible assets
                                          
                                          
                                          300
                                          
                                          
                                          
                                          385Accrued
      warranty cost
                                          
                                          
                                          1,296
                                          
                                          
                                          
                                          1,483Accrued
      expenses
                                          
                                          
                                          892
                                          
                                          
                                          
                                          -Net
      loss carried forward
                                          
                                          
                                          3,997
                                          
                                          
                                          
                                          33,522Depreciation
      of property and equipment
                                          
                                          
                                          11,465
                                          
                                          
                                          
                                          22,322Inventory
      provision and idle capacity charges
                                          
                                          
                                          11,218
                                          
                                          
                                          
                                          14,630Impairment
      provision for doubtful debtors
                                          
                                          
                                          6,177
                                          
                                          
                                          
                                          9,602Impairment
      provision for prepayments
                                          
                                          
                                          2,324
                                          
                                          
                                          
                                          6,495Impairment
      provision for property, plant and equipment
                                          
                                          
                                          -
                                          
                                          
                                          
                                          2,135Capitalized
      interest
                                          
                                          
                                          (1,214
                                          )
                                          
                                          
                                          (1,214
                                          )Deferred
      tax assets
                                          
                                          
                                          41,963
                                          
                                          
                                          
                                          99,208Less:
      valuation allowance
                                          
                                          
                                          (13,417
                                          )
                                          
                                          
                                          (48,990
                                          )Deferred
      tax assets-net
                                          
                                          
                                          28,546
                                          
                                          
                                          
                                          50,218
 
 F-22
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 
 
 Deferred
      tax assets are analyzed as:Current
                        
                        
                        14,269
                        
                        
                        
                        24,607Non-Current
                        
                        
                        15,491
                        
                        
                        
                        26,82529,760
                        
                        
                        
                        51,432Deferred
      tax liability are analyzed as:Current
                        
                        
                        (123
                        )
                        
                        
                        (164
                        )Non-Current
                        
                        
                        (1,091
                        )
                        
                        
                        (1,050
                        )(1,214
                        )
                        
                        
                        (1,214
                        )28,546
                        
                        
                        
                        50,218
  The
Group has made some portion of valuation allowance against its net deferred tax
assets. The Group evaluates a variety of factors in determining the amount of
the valuation allowance, including that the Group exited the development stage,
its limited earnings history, the tax holiday period, the existence of taxable
temporary differences, and near-term earnings expectations. Future reversal of
the valuation allowance will be recognized upon the earlier of when the benefit
is realized or when it has been determined that it is more likely than not that
the benefit will be realized through future earnings.
   Reconciliation
between the provision for income tax computed by applying the statutory FEIT/CIT
and the Group's effective tax rate:
  For
      the year ended
                        
                        
                        For
      the year ended
                        
                        
                        For
      the year endedDecember 31, 2007
                        
                        
                        December 31, 2008
                        
                        
                        December 31, 2009PRC
      enterprise income tax
                        
                        
                        33
                        %
                        
                        
                        25
                        %
                        
                        
                        (25
                        )%Effect
      of permanent differences:Share
      based compensation and other permanent difference
                        
                        
                        6
                        %
                        
                        
                        5.6
                        %
                        
                        
                        15.5
                        %Tax
      credit associated with domestic fixed asset purchases
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (6.7
                        )%Effect
      of tax holiday and tax differential of subsidiary and
    holding
                        
                        
                        (39
                        )%
                        
                        
                        (31.3
                        )%
                        
                        
                        (22.6
                        )%Effect
      of tax rate change
                        
                        
                        (1.5
                        )%
                        
                        
                        3.5
                        %
                        
                        
                        13.3
                        %Valuation
      allowance
                        
                        
                        0.4
                        %
                        
                        
                        1.9
                        %
                        
                        
                        32.1
                        %(1.1
                        )%
                        
                        
                        4.7
                        %
                        
                        
                        6.6
                        %
  The
aggregate amount and per share effect of the tax holiday are as
follows:
  For
      the year ended
                        
                        
                        For
      the year ended
                        
                        
                        For
      the year endedDecember 31, 2007
                        
                        
                        December 31, 2008
                        
                        
                        December 31, 2009The
      aggregate dollar effect
                        
                        
                        193,055
                        
                        
                        
                        209,844
                        
                        
                        
                        86,710Per
      share effect-basic
                        
                        
                        1.44
                        
                        
                        
                        1.34
                        
                        
                        
                        0.54Per
      share effect-diluted
                        
                        
                        1.41
                        
                        
                        
                        1.24
                        
                        
                        
                        0.54
  The
Group adopted the provisions of ASC 740,Income Taxes.  The
Group has performed assessment on its tax positions related to ASC 740, and
concluded that the adoption of ASC 740 did not have any material impact on the
Group’s financial position as of December 31, 2008 or 2009.
  12.
                  Prepayment
      for land use rights
  The
prepayment for land use rights of the Group represented prepaid operating lease
payments in obtaining land use rights in the PRC for a period of 50
years.
  F-23
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBCost
                        
                        
                        45,853
                        
                        
                        
                        52,076Less:
      accumulated amortization
                        
                        
                        (537
                        )
                        
                        
                        (1,517
                        )Net
      book value
                        
                        
                        45,316
                        
                        
                        
                        50,559Current
      portion of prepayment for land use rights (recorded in other current
      assets)
                        
                        
                        917
                        
                        
                        
                        1,042Non-current
      portion of prepayment for land use rights
                        
                        
                        44,399
                        
                        
                        
                        49,517
 
 13.
                  Bank
      borrowings
  Lender
                                                                                    
                                                                                    Date
      of Borrowing
                                                                                    
                                                                                    Due
      Date
                                                                                    
                                                                                    Principal
      Amount ( in RMB)
                                                                                    
                                                                                    
                                                                                    Interest
      rate
                                                                                    
                                                                                    Interest
      Payment PeriodsAs
      of December 31, 2008Shanghai  Rural
      Commercial Bank
                                                                                    
                                                                                    December
      2008
                                                                                    
                                                                                    December
      2009
                                                                                    
                                                                                    
                                                                                    90,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.58
                                                                                    %
                                                                                    QuarterlyBank
      of China
                                                                                    
                                                                                    December
      2008
                                                                                    
                                                                                    December
      2009
                                                                                    
                                                                                    
                                                                                    150,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.58
                                                                                    %
                                                                                    QuarterlyAgriculture
      Bank of China
                                                                                    
                                                                                    December
      2008
                                                                                    
                                                                                    December
      2009
                                                                                    
                                                                                    
                                                                                    100,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.31
                                                                                    %
                                                                                    MonthlyIndustrial
      and Commercial Bank of China
                                                                                    
                                                                                    December
      2008
                                                                                    
                                                                                    June
      2009
                                                                                    
                                                                                    
                                                                                    40,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.04
                                                                                    %
                                                                                    MonthlyIndustrial
      and Commercial Bank of China
                                                                                    
                                                                                    December
      2008
                                                                                    
                                                                                    June
      2009
                                                                                    
                                                                                    
                                                                                    35,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    4.86
                                                                                    %
                                                                                    MonthlyIndustrial
      and Commercial Bank of China
                                                                                    
                                                                                    December
      2008
                                                                                    
                                                                                    December
      2009
                                                                                    
                                                                                    
                                                                                    75,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.31
                                                                                    %
                                                                                    MonthlyTotal
      bank borrowings
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    490,000As
      of December 31, 2009Short
      term:Agriculture
      Bank of China
                                                                                    
                                                                                    Sep
      2009
                                                                                    
                                                                                    March
      2010
                                                                                    
                                                                                    
                                                                                    10,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    4.37
                                                                                    %
                                                                                    MonthlyLong
      term:Agriculture
      Bank of China
                                                                                    
                                                                                    June
      2009
                                                                                    
                                                                                    June
      2012
                                                                                    
                                                                                    
                                                                                    20,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.4
                                                                                    %
                                                                                    MonthlyChina
      Construction Bank
                                                                                    
                                                                                    June
      2009
                                                                                    
                                                                                    June
      2011
                                                                                    
                                                                                    
                                                                                    40,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    5.4
                                                                                    %
                                                                                    MonthlyExport-Import
      Bank of China
                                                                                    
                                                                                    June
      2009
                                                                                    
                                                                                    June
      2012
                                                                                    
                                                                                    
                                                                                    500,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    3.51
                                                                                    %
                                                                                    QuarterlyExport-Import
      Bank of China
                                                                                    
                                                                                    June
      2009
                                                                                    
                                                                                    June
      2012
                                                                                    
                                                                                    
                                                                                    120,000
                                                                                    
                                                                                    
                                                                                    
                                                                                    3.51
                                                                                    %
                                                                                    QuarterlySubtotal
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    680,000Total
      bank borrowings
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    690,000
  The
bank borrowings outstanding as of December 31, 2008 and 2009 bore an
average interest rate of 5.39% and 3.69% per annum, respectively. These loans
are borrowed from various financial institutions. The borrowings have six month
to 3 years terms and expire at various times. The unused lines of credit were
RMB 730,000 as of December 31, 2009.  These facilities contain no specific
renewal terms and require no collateral.
  The
short-term bank borrowing of RMB 10,000 as of December 31, 2009 was guaranteed
by JA Hebei. In March 2010, the group repaid this short term loan to Agriculture
Bank of China.
  F-24
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  The
long-term bank borrowing of RMB 20,000 and RMB 40,000 as of December 31,
2009 was guaranteed by Jinglong Group, who is the Group’s principal silicon
wafer supplier and the majority shareholder of the Group.
  The
long-term bank borrowing of RMB 500,000 as of December 31, 2009 was
guaranteed by China Minsheng Bank, who charged an annual guarantee fee of 1% of
the principal. JA Hebei, JA Yangzhou and Jinglong Group provided
counter-guarantee to China Minsheng Bank.
  The
long-term bank borrowing of RMB 120,000 as of December 31, 2009 was
guaranteed by Shanghai Rural Commercial Bank, who charged an annual guarantee
fee of 0.3% of the principal. JA Zhabei provided counter-guarantee to Shanghai
Rural Commercial Bank with a cash deposit of RMB 20,000 and the remaining RMB
100,000 was pledged by a building with a net book value of RMB
121,071.
  Interest
incurred for the year ended December 31, 2007, 2008 and 2009 amounted to RMB
10,330, RMB 3,082 and RMB 30,275 respectively, of which RMB 3,735, RMB 1,404 and
RMB 6,696 was capitalized in the cost of property and equipment.
  14.
                  Senior
      Convertible Notes
  On
May 13, 2008, the Company entered into an underwriting agreement for the sale by
the Company to the public of $350,000 aggregate principal amount of 4.5% Senior
Convertible Notes due 2013 (the “Senior Notes”). The Company granted to the
underwriters a 30-day option to purchase up to an additional $50,000 aggregate
principal amount of Senior Notes. On May 19, 2008, the Company completed its
public offering of $400,000 aggregate principal amount of its Senior Notes which
includes the underwriter’s exercise of their option. Net proceeds to the Company
from the offering were approximately RMB 2,709,538. The Company’s financing
costs associated with the Senior Notes are amortized through interest expense
over the life of the Senior Notes from May 2008 to the first put date, or May
2013 using the effective interest rate method. The amount amortized to interest
expense for the year ended December 31, 2008 and 2009 was RMB 4,900 and RMB
7,084 respectively.  This change in the balance of deferred issuance
cost includes the pro-rate reduction of deferred issuance cost that is a
component of the extinguished gain from convertible notes bought back by the
Group.
  The
Senior Notes bear interest at the rate of 4.5% per year, payable semi-annually
in arrears on May 15 and November 15 of each year, beginning on November 15,
2008. The Senior Notes will mature on May 15, 2013 unless previously repurchased
by the Company or converted in accordance with their terms prior to such date.
On or after May 15, 2011, the Company has the option to redeem for cash all or
part of the Notes at principal if the closing sale price of the Company's ADS
exceeds 130% of the then effective conversion price for at least 20 trading days
during the period of the 30 consecutive trading days ending on the last trading
day on which notice of redemption is provided. If certain fundamental changes
occur at any time prior to maturity, holders of the Senior Notes may require the
Company to repurchase their Senior Notes in whole or in part for cash equal to
100% of the principal amount of the Senior Notes to be repurchased, plus accrued
and unpaid interest to, but excluding, the date of repurchase. The interest
expense recognized for interest payable to the Senior Notes holders was RMB
75,381 and RMB 88,731 for the year ended December 31, 2008 and 2009
respectively.
 
 Each
$1,000 principal amount of the Senior Notes will initially be convertible into
32.8138 American Depository Shares, or ADSs, par value $.0001 per share at a
conversion price of $30.475, subject to adjustment. The Senior Notes are
convertible at maturity and upon certain other events, including when the
trading price of the Company’s ADS exceeds 130% of the then effective conversion
price for at least 20 trading days during the period of the 30 consecutive
trading days ending on the last trading day of the previous fiscal
quarter.
  The
Company used the proceeds from the issuance of the convertible notes for the
purchase and construction of manufacturing equipment and facilities, the
purchase and prepayment of raw materials, working capital and other general
corporate purposes.
  F-25
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  The
Company’s functional currency is different from the denomination of the Senior
Notes and the Company’s early redemption option is contingent upon its ADS
price. Therefore, in accordance with ASC 815, Derivatives and Hedging, the
Company accounted for the conversion feature, early redemption option and
conversion rate adjustment feature (together, “Embedded Derivatives”) as a
freestanding instrument separately in the balance sheet. The Notes were recorded
with a discount equal to the value of the Embedded Derivatives at the
transaction date and will be accreted to the redemption value of the Notes over
the life of the Notes. The change in fair value of the Embedded Derivatives of
RMB 785,608 and RMB (55,106) was  recorded in the Consolidated
Statements of Operations for the year ended December 31, 2008 and 2009
respectively. This change in fair value excludes the pro-rata reduction of the
Embedded Derivatives that are a component of the extinguishment gain from
convertible notes bought back by the Group. The interest expense recognized for
accretion to the redemption value of the Senior Notes was RMB 81,808 and RMB
104,226 for the year ended December 31, 2008 and 2009 respectively.
  During
the years ended December 31, 2008 and 2009, the Company bought back US$78,526
and US$ 93,301 (par value) of the Notes at prices ranging from 28.19% to 40.46%
and 39.36% to 79.25%, respectively.  The gain from convertible notes
buyback was RMB 203,514 and RMB 22,904 respectively. As of December 31, 2009,
the notional outstanding amount of the Senior Notes was RMB 1,558,011
(US$228,173). The estimated fair value of the Senior Notes as of December 31,
2009 was RMB 1,222,628 (US$179,116).
  Capped
Call
 Concurrent
with our issuance of the Senior Notes on May 12, 2008, we entered into capped
call option transactions with two financial institutions (the “counterparties”)
that are affiliates of two of the underwriters of the Senior Notes. The capped
call transactions was designed to reduce the dilution that would otherwise occur
as a result of new common stock issuances upon conversion of the Senior Notes,
and effectively increase the conversion price of the Senior Notes for the
Company to $37.375 per ADS from the actual conversion price to the Senior Notes
holders of $30.475 per ADS. The total premium paid by the Company for the capped
call transactions was RMB 226,087.
  The
Company’s functional currency is different from the denomination of the capped
call. Therefore, in accordance with ASC 815, Derivatives and Hedging,the
Company accounted for the capped call transactions as freestanding derivative
assets in the Consolidated Balance Sheet. The derivative is marked to market
each reporting period utilizing the Black-Scholes option pricing
model.
  On
September 15, 2008 and October 3, 2008, respectively, one of the underwriters
and its affiliate filed for protection under Chapter 11 of the federal
Bankruptcy Code, an event of default under the agreement. As a result of the
default, the counterparty is not expected to perform its obligations if such
obligations were to be triggered. The Company has written down the fair value of
the derivative in relation to this counterparty to nil given the counterparty is
in bankruptcy and lacks the ability and intent to settle the contract as of
period end. The fair value of the derivative asset purchased from the other
counterparty was RMB 4,485 and RMB 4,033 as of December 31, 2008 and 2009
respectively. The loss recorded in the income statement for the change in fair
value of this derivative was RMB 221,602 and RMB 453 for the year ended December
31, 2008 and 2009 respectively.
  
 ADS
Lending Agreement
 Concurrent
with the offering and sale of the Senior Notes on May 12, 2008, the Company
entered into a share lending agreement (the “ADS Lending Agreement”) with
certain financial institutions (the “ADS Borrower (s)”), pursuant to which the
Company loaned 13,125,520 shares of its common stock (the “Borrowed Shares”) to
the ADS Borrowers. The ADS Borrowers will receive all of the proceeds from the
sale of the borrowed ADSs. We will not receive any proceeds from the sale of the
borrowed ADSs pursuant to the ADS Lending Agreement, but we will receive from
the ADS Borrowers a nominal lending fee of $0.0001 per ADS for each ADS that we
loan pursuant to the ADS Lending Agreements.  The nominal lending fee
is reported as increases to additional paid in capital. These borrowed shares
must be returned to us no later than May 15, 2013, or sooner if certain
conditions are met.
  F-26
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 These
shares were considered issued and outstanding for corporate law purposes at the
time they were loaned; however, at the time of the loan they were not considered
outstanding for the purpose of computing and reporting earnings per share
because these shares were to be returned to the Company no later than May 15,
2013, the maturity date of the Senior Notes. On September 15, 2008, one of the
ADS borrowers, who the Company had loaned 6,562,760 shares of our common stock,
filed for protection under Chapter 11 of the federal Bankruptcy Code and was
placed into administration proceeding in the United Kingdom.
 
 As
a result of the bankruptcy filing and the administration proceeding, the ADS
Lending Agreement automatically terminated and the ADS Borrower was
contractually required to return the shares to the Company. The Company has
since demanded the immediate return of all outstanding borrowed shares, however,
the shares have not yet been returned. Also under the agreement, the ADS
borrower was suppose to transfer collateral to an affiliate equal to the fair
value of the shares loaned after it received a credit downgrade on September 15,
2008. Such collateral was to be held in a collateral account for the Company. No
collateral transfer was made and the Company is not aware of any collateral
account existing. While the Company believes it is exercising all of its legal
remedies, it has included these shares in its per share calculation on a
weighted average basis due to the uncertainty regarding the recovery of the
borrowed shares.
  15.
                  Other
      payables to third parties
  Other
payables consisted of the following:
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBPurchases
      of property and equipment
                        
                        
                        127,086
                        
                        
                        
                        69,444Professional
      service fees
                        
                        
                        1,599
                        
                        
                        
                        1,392Miscellaneous
      tax payables
                        
                        
                        1,485
                        
                        
                        
                        3,907Others
                        
                        
                        2,622
                        
                        
                        
                        5,848Total
      other payables
                        
                        
                        132,792
                        
                        
                        
                        80,591
  16.
                  Accrued
      expenses
  Accrued
expenses consisted of the following:
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBOutsource
      production fee
                        
                        
                        4,824
                        
                        
                        
                        70Professional
      service fees
                        
                        
                        13,286
                        
                        
                        
                        12,773Interest
                        
                        
                        688
                        
                        
                        
                        764Travelling
      and rental expenses
                        
                        
                        837
                        
                        
                        
                        63Utilities
                        
                        
                        277
                        
                        
                        
                        3,750Others
                        
                        
                        2,854
                        
                        
                        
                        3,693Total
      accrued expenses
                        
                        
                        22,766
                        
                        
                        
                        21,113
  17.
                  Accrued
      warranty cost
  The
movement of Group's accrued warranty costs for solar module is summarized
below:
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBBeginning
      balance
                        
                        
                        929
                        
                        
                        
                        5,185Warranty
      provision
                        
                        
                        4,256
                        
                        
                        
                        746Warranty
      cost incurred
                        
                        
                        -
                        
                        
                        
                        -Ending
      balance
                        
                        
                        5,185
                        
                        
                        
                        5,931
  18.
                  Share-based
      compensation
  As
of December 31, 2009, the Company had one share-based compensation plan, which
is described below.
  F-27
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 On
August 18, 2006, the shareholders of the Company approved the 2006 Stock
Incentive Plan (the "Plan"), which permits the grant of share options and shares
to its eligible recipients for up to 8,656,000 ordinary shares plus a number of
ordinary shares equal to 10% of any additional share capital of the Company
issued following the effective date of the Plan. The Group believes that such
awards better align the interests of its employees with those of its
shareholders.
  a)
                  Options
  During
the year ended December 31, 2009, the Company granted 1,013,000 ordinary share
options to certain of its directors and employees.  The exercise price
of these options varies from $1.99 to $4.53 per option.
  All
the batches of options granted in year 2009 were granted with the exercise price
equal to the market price of the equity stock at the date of grant and have
10-year contractual terms. The Company has various vesting schedules but
generally in the range of 2 to 4 years.
  The
Company adopted the fair value recognition provision of ASC 718 on January 1,
2006. ASC 718 requires that compensation cost relating to share-based payment
transactions be recognized in the Group's statement of operations over the
service period (generally the vesting period). That cost is measured based upon
the fair value of the option issued as calculated under the Black Scholes option
pricing model. The Group's share-based compensation cost is measured at the
grant date, based on the fair value of the award, and is recognized as an
expense in correlation with the vesting percentages. Options granted to
non-employees of the Group are remeasured each period end in accordance with ASC
505.
  As
a result of the adoption of ASC 718 and ASC 505, the Group recognized a pre-tax
charge of RMB 62,828, RMB 93,432 and RMB 79,030(included in selling, general,
and administrative expenses and manufacturing overhead, of which RMB 2,850, RMB
4,694 and RMB 88 was capitalized in the cost of inventory as of December 31,
2007, 2008 and 2009, respectively), for the year ended December 31, 2007, 2008
and 2009 associated with the expensing of stock options,
respectively.
  The
weighted-average grant-date fair value of options granted during the year ended
December 31, 2007, 2008 and 2009 were US$5.955, US$5.149 and US$ 3.11,
respectively. The compensation that has been charged against income for the
plan, net of the amounts reversed for options forfeited in excess of amounts
estimated at the grant date, was RMB 59,978, RMB 88,738 and RMB 79,067 for the
year ended December 31, 2007, 2008 and 2009, respectively. The amounts reversed
associated with options forfeited were 4,799, 59,586 and 49,634 for the year
ended December 31, 2007, 2008 and 2009, respectively.  The total
income tax benefit recognized in the income statement for share-based
compensation arrangements was nil for the periods.
  As
of December 31, 2007, 2008 and 2009, there was RMB 240,543, RMB 447,602 and RMB
28,073 of total unrecognized compensation cost related to nonvested share-based
employees arrangements granted under the Plan, respectively. The cost is
expected to be recognized over a remaining weighted-average period of 30
months.
  The
Company expects to issue new shares to satisfy share option
exercises.
  These
options will become fully vested upon a change in control or on any date at the
discretion of the plan administrator. The fair value of ordinary shares granted
prior to IPO was determined retrospectively to the time at grant and at each
reporting date. The fair value of option grant is estimated on the date of grant
using the Black-Scholes-Merton model with the following assumptions for options
granted to employees and non-employees during the year ended December 31, 2007,
2008 and 2009 respectively:
  F-28
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  For
      the year ended
                        
                        
                        For
      the year ended
                        
                        
                        For
      the year endedDecember 31, 2007
                        
                        
                        December 31, 2008
                        
                        
                        December 31, 2009Average
      risk-free rate
                        
                        
                        4.06-4.58
                        %
                        
                        
                        1.99-3.82
                        %
                        
                        
                        1.59%-3.03
                        %Weighted
      average expected option life
                        
                        6.25
      years
                        
                        
                        5.75-6.33
      years
                        
                        
                        6.33yearsVolatility
      rate
                        
                        
                        55
                        %
                        
                        
                        55-75
                        %
                        
                        
                        75
                        %Dividend
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
  (1)
                  The
      risk-free interest rate is based on the U.S. Treasury yield for a term
      consistent with the expected life of theawards
      in effect at the time of grant.
  (2)
                  The
      Company utilizes the simplified method under the provision of Staff
      Accounting Bulletin No. 110, which is an amendment of SAB 107 for
      estimating expected term. The expected life of stock options granted under
      the Plan is based on the average between the vesting period and the
      contractual term for each grant, taking into account assumptions used by
      comparable companies.
  (3)
                  The
      Company has no history or expectation of paying dividends on its ordinary
      shares.
  (4)
                  Because
      of the limited stock price history, the Company does not believe that
      historical volatility would be representative of the expected volatility
      for its equity awards. Accordingly, the Company has chosen to use the
      historical volatility and implied volatility of a basket of comparable
      publicly-traded companies for a period equal to the expected term
      preceding the grant date.
  The
following table summarizes information with respect to share options outstanding
on December 31, 2009:
  Shares
                        
                        
                        Weighted
      Average Exercise Price (US$)
                        
                        
                        Weighted
      Average Remaining Contractual Life (Year)
                        
                        
                        Intrinsic
      Value (US$, in thousands)Outstanding
      at December 31, 2007
                        
                        
                        7,525,000
                        
                        
                        
                        9.67
                        
                        
                        
                        9.48
                        
                        
                        
                        102,351Granted
                        
                        
                        6,132,000
                        
                        
                        
                        8.18
                        
                        
                        
                        -
                        
                        
                        
                        -Forfeited
                        
                        
                        (3,309,000
                        )
                        
                        
                        11.22
                        
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        (798,000
                        )
                        
                        
                        3.39
                        
                        
                        
                        -
                        
                        
                        
                        -Outstanding
      at December 31, 2008
                        
                        
                        9,550,000
                        
                        
                        
                        8.7
                        
                        
                        
                        9.26
                        
                        
                        
                        (41,378
                        )Granted
                        
                        
                        1,013,000
                        
                        
                        
                        3.11
                        
                        
                        
                        -
                        
                        
                        
                        -Forfeited
                        
                        
                        (6,399,600
                        )
                        
                        
                        10.18
                        
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        (1,036,400
                        )
                        
                        
                        2.38
                        
                        
                        
                        -
                        
                        
                        
                        -Outstanding
      at December 31, 2009
                        
                        
                        3,127,000
                        
                        
                        
                        5.96
                        
                        
                        
                        7.19
                        
                        
                        
                        (800
                        )Exercisable
      at December 31, 2009
                        
                        
                        681,600
                        
                        
                        
                        7.67
                        
                        
                        
                        7.92
                        
                        
                        
                        (1,146
                        )
 
 The
total intrinsic value of options exercised during the years ended December 31,
2007, 2008, and 2009 was $15,406, $7,948 and $2,016 respectively.
  b)
                  Restricted
      share units (“RSU”)
  RSUs
are commitments made to issue ordinary shares at the time that each underlying
RSU vests. The RSUs are not legally issued ordinary shares nor do they comprise
outstanding ordinary shares and therefore, do not give their holders voting or
dividend rights.
  During
2009, the Company granted 2,242,000 restricted share units to certain employees
and independent directors, which were vested in 3 to 4 years.
  Upon
vesting, the shares will be issued by the Company.
  F-29
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  The
following table summarizes information with respect to RSUs outstanding on
December 31, 2009:
  Shares
                        
                        
                        Weighted
      Average Grant Date Fair
                          Value
      (US$)Nonvested
      at December 31, 2007
                        
                        
                        510,000
                        
                        
                        
                        13.28Granted
                        
                        
                        -
                        
                        
                        
                        -Vested
                        
                        
                        (495,000
                        )
                        
                        
                        13.31Forfeited
                        
                        
                        -
                        
                        
                        
                        -Nonvested
      at December 31, 2008
                        
                        
                        15,000
                        
                        
                        
                        12.41Granted
                        
                        
                        2,242,000
                        
                        
                        
                        5.00Vested
                        
                        
                        (15,000
                        )
                        
                        
                        12.41Forfeited
                        
                        
                        -
                        
                        
                        
                        -Nonvested
      at December 31, 2009
                        
                        
                        2,242,000
                        
                        
                        
                        5.00
  For
RSUs, the Company recognized a pre-tax charge of RMB 28,809, RMB 19,760 and RMB
17,169 (included in selling, general, and administrative expenses) for the years
ended December 31, 2007, 2008 and 2009, respectively. Unrecognized compensation
expense related to the RSUs for the years ended December 31, 2007, 2008 and 2009
were RMB 21,206, RMB 905 and RMB 10,065. The cost is expected to be recognized
over a remaining period of 43 months.  The fair value of shares vested
during the year ended December 31, 2007, 2008 and 2009 was nil, RMB 43,057 and
RMB 468, recpectively.
  Some
of the RSUs are classified as liabilities, as these RSUs can be settled through
a cash payment upon vesting and at the Employee's option and subject to
applicable laws and regulations and the memorandum of association and articles
of the Company.
  19.
                  Foreign
      currency forward contracts
  The
Company, as a result of its global operating and financing activities, is
exposed to changes in foreign currency exchange rates which may adversely affect
its results of operations and financial position. The Company uses foreign
currency forward exchange contracts to hedge the exposure to foreign currency
risk, primarily the Euro and RMB. The purpose of the Company’s foreign currency
derivative activities is to protect the Company from the risk that the Euro net
cash flows resulting from forecasted foreign currency-denominated transactions
will be negatively affected by changes in exchange rates. The Company uses
foreign currency forward exchange contracts to offset changes in the amount of
future cash flows associated with certain third-party sales expected to occur
within the next 12 months.
  The
Company accounts for derivative instruments pursuant to ASC 815, Derivatives and
Hedging, as amended and interpreted, and recognizes all derivative instruments
as either assets or liabilities at fair value in other assets or other
liabilities in the consolidated balance sheets. The Company has evaluated
various factors and determined that there is no ineffectiveness to be recorded
for the foreign-currency forward contracts entered in 2009, and the foreign
currency forward exchange contracts qualified for foreign currency cash flow
hedge accounting.  When hedging relationships are highly effective, the
effective portion of the gain or loss on the derivative cash flow hedges is
recorded in accumulated other comprehensive income, net of tax, until the
underlying hedged transaction is recognized in the consolidated income
statements. The ineffective portion of cash flow hedges, if any, is recognized
in income immediately. The effectiveness of designated hedging relationships is
tested and documented on quarterly basis. As of December 31, 2009, the Company
had outstanding foreign currency forward exchange contracts with notional
amounts of Euro 1,094, and the fair value of the open contracts was a loss of
Rmb 831, which was recorded in accumulated other comprehensive loss. 
During 2009, a loss of approximately Rmb 22,846 was recorded in the consolidated
financial statements.
  The
following table displays the outstanding notional balances and the estimated
fair value of the Company’s foreign-currency forward exchange contracts and
embedded derivatives as of December 31, 2008 and 2009:
  F-30
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 As
      of December 31,
                                As
      of December 31,
                                As
      of December 31,
                                As
      of December 31,2008
                                2008
                                2009
                                2009RMB
                                RMB
                                RMB
                                RMBNotional
      Amount
                                Estimate
      fair value
                                Notional
      Amount
                                Estimate
      fair valueForeign
      exchange forward contracts under cash flow hedge, recorded in other
      payables to third parties
                                -
                                -
                                10,716
                                831Embedded
      foreign currency derivatives recorded in derivative assets
                                -
                                -
                                491,630
                                6,488Capped
      call options recorded in derivative assets
                                -
                                4,485
                                -
                                4,033Embedded
      derivatives underlying convertible notes recorded in embedded
      derivatives
                                -
                                115,676
                                -
                                136,632
  20.
                  Mainland
      China contribution plan and profit
appropriation
  a)
                  China
      contribution plan
  Full-time
employees of the Group in the PRC participate in a government-mandated
multi-employer defined contribution plan pursuant to which certain pension
benefits, medical care, unemployment insurance, employee housing fund and other
welfare benefits are provided to employees. PRC labor regulations require the
Group to accrue for these benefits based on certain percentage of the employees'
salaries. The total contribution for such employee benefits was RMB 5,849, RMB
16,203 and RMB 27,759 for the year ended December 31, 2007, 2008 and 2009,
respectively.
  b)
                  Statutory
      reserves
  Pursuant
to laws applicable to entities incorporated in the PRC, the subsidiaries in the
PRC should make appropriations from after-tax profit to non-distributable
reserve funds. These reserve funds include the following: (i) a general reserve,
(ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund. The
subsidiaries in the PRC are required to transfer at least 10% of their profit
after taxation (as determined under accounting principles generally accepted in
the PRC at each year-end)  to the general reserve fund until the
reserve balance reaches 50% of their respective registered capital. The
appropriations to other funds are at the PRC subsidiaries'
discretion.  These reserve funds can only be used for specific
purposes of enterprises expansion, staff bonus, and welfare and not
distributable as cash dividends.
  JA
Hebei made RMB 57,031, RMB 97,957 and RMB 24,359 for the general Statutory
Reserves in the year ended December 31, 2007, 2008 and 2009,
respectively.
  JA
Yangzhou made RMB nil, RMB nil and RMB 17,267 for the general Statutory Reserves
in the year ended December 31, 2007, 2008 and 2009, respectively.
  F-31
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  c)
                    Restricted
      capital
  The
following paid-in-capital amounts are unavailable for distribution as nominal
dividends to the Company:
 Legal
      Entity
                    
                    Paid-in
      Capital
                      restrictedJingAo
      Solar Co., Ltd. (Note 1)
                    
                    RMB
      1,000,000Shanghai
      JA Solar Technology Co., Ltd.
                    
                    US$
      20,000Shanghai
      JA Solar PV Technology Co., Ltd.
                    
                    US$
      20,000JA
      Solar Technology Yangzhou Co., Ltd.
                    
                    US$
      162,000Jing 
      Hai  Yang  Semiconductor  Materials  (Donghai) 
      Co., Ltd.
                    
                    US$
      43,000JA
      Solar Yangzhou R&D Co., Ltd.
                    
                    RMB
      50,000JA
      Yangzhou PV technology Co., Ltd.
                    
                    US$
      10,000
  21.
                  Net
      income/ (loss) per share
  Basic
and diluted net income/(loss) per share for the year ended December 31, 2007,
2008 and 2009 are calculated as follows:
 December
      31, 2007
                      
                      
                      December
      31, 2008
                      
                      
                      December
      31, 2009Numerator:Net
      income
                      
                      
                      400,368
                      
                      
                      
                      479,066
                      
                      
                      
                      (128,661
                      )Preferred
      shares accretion
                      
                      
                      (515
                      )
                      
                      
                      -
                      
                      
                      
                      -Allocation
      of net income to participating preference shareholders
                      
                      
                      (1,648
                      )
                      
                      
                      -
                      
                      
                      
                      -Numerator
      for basic earnings per share
                      
                      
                      398,205
                      
                      
                      
                      479,066
                      
                      
                      
                      (128,661
                      )Dilutive
      effect of:Change
      in fair value of embedded derivatives underlying convertible
      notes**
                      
                      
                      -
                      
                      
                      
                      (785,608
                      )
                      
                      
                      -Gain
      on buyback of convertible notes**
                      
                      
                      -
                      
                      
                      
                      (203,514
                      )
                      
                      
                      -Foreign
      exchange gain on convertible notes**
                      
                      
                      -
                      
                      
                      
                      (39,115
                      )
                      
                      
                      -Accretion
      of non-cash interest charge on convertible notes
                      
                      
                      -
                      
                      
                      
                      81,808
                      
                      
                      
                      -Amortization
      of deferred issuance cost in relation to convertible notes
                      
                      
                      -
                      
                      
                      
                      4,900
                      
                      
                      
                      -Interest
      expense of convertible notes
                      
                      
                      -
                      
                      
                      
                      72,137
                      
                      
                      
                      -Numerator
      for diluted earnings/(loss) per share
                      
                      
                      398,205
                      
                      
                      
                      (390,326
                      )
                      
                      
                      (128,661
                      )Denominator:Denominator
      for basic earnings per share - weighted average ordinary shares
      outstanding*
                      
                      
                      134,525,226
                      
                      
                      
                      156,380,060
                      
                      
                      
                      161,643,312Dilutive
      effect of share options**
                      
                      
                      2,196,546
                      
                      
                      
                      1,347,053Dilutive
      effect of convertible notes**
                      
                      
                      
                      
                      
                      
                      11,058,130
                      
                      
                      
                      -Denominator
      for diluted earnings per share
                      
                      
                      136,721,772
                      
                      
                      
                      168,785,243
                      
                      
                      
                      161,643,312Basic
      earnings/(loss) per share
                      
                      
                      2.96
                      
                      
                      
                      3.06
                      
                      
                      
                      (0.80
                      )Diluted
      earnings/(loss) per share
                      
                      
                      2.93
                      
                      
                      
                      (2.31
                      )
                      
                      
                      (0.80
                      )*
      6,562,760 shares loaned pursuant to the ADS Lending Agreement that were to
      be returned to us have been included in the per share calculation on a
      weighted average basis due to the uncertainty regarding the recovery of
      the borrowed shares (see Note 14).
                        **These
      potentially dilutive factors were not included in the calculation of
      dilutive earnings per share because of there anti-dilutive effect as of
      December 31, 2009.
  F-32
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  22.
                  Related
      party transactions
  a)
                  Amounts
      due to related parties consisted of the
  following:
  As
      of December 31,
                        
                        
                        As
      of December 31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBPayables
      to Ningjin Sun New Energy Co., Ltd.
                        
                        
                        6,000
                        
                        
                        
                        -Payables
      to Jinglong Group
                        
                        
                        3,323
                        
                        
                        
                        18,772Payables
      to Solar Silicon Valley Electronic Science and Technology Co.,
      Ltd
                        
                        
                        -
                        
                        
                        
                        27,978Payables
      to Jing Wei Electronics Co., Ltd.
                        
                        
                        -
                        
                        
                        
                        4,275Payables
      to Xingtai Jinglong Electronics Co., Ltd.
                        
                        
                        -
                        
                        
                        
                        4,325Others
                        
                        
                        84
                        
                        
                        
                        2,918Total
      amounts due to related parties
                        
                        
                        9,407
                        
                        
                        
                        58,268
  b)
                  Amounts
      due from related parties consisted of the
  following:
  As
      of December 31,
                          
                          
                          As
      of December 31,2008
                          
                          
                          2009RMB
                          
                          
                          RMBReceivables
      from Ningjin Sun New Energy Co., Ltd.
                          
                          
                          23,009
                          
                          
                          
                          -Advances
      to the Jinglong Group-short term
                          
                          
                          415,950
                          
                          
                          
                          50,889Advances
      to the Jinglong Group-long term
                          
                          
                          15,055
                          
                          
                          
                          118,722Total
      amounts due from related parties
                          
                          
                          454,014
                          
                          
                          
                          169,611
  c)
                  Transactions
      with the Jinglong Group
  Supply
  The
Jinglong Group is the Group's principal silicon wafer supplier and its
shareholders are the majority shareholders of the Group.
  On
July 1, 2006, the Group entered into a long-term silicon wafer supply contract
with the Jinglong Group, which provides for the following:
  ·
                  A
      right to purchase silicon wafers from the Jinglong Group on a long-term
      basis and the Jinglong Group will take all necessary actions to meet the
      Group's silicon wafer requirements, including securing sufficient raw
      materials for wafer production. The Group, however, is not committed to
      any minimum purchase requirements;
  ·
                  Silicon
      wafers purchased from the Jinglong Group shall be at the market price that
      the Group may obtain from third-party suppliers for similar products, with
      a reasonable commercial discount based on the Group's long-term demand and
      the payment arrangement;
  ·
                  At
      the Group's request, the Jinglong Group shall use its best efforts in
      securing additional procurement of silicon wafers, including outsourcing
      the production to other silicon wafer
producers;
  ·
                  The
      Group is required to provide the Jinglong Group a monthly deposit equal to
      30% of the next month's forecasted purchases of the Group;
    and
  ·
                  The
      contract will be effective until December 31, 2010 and will be
      automatically renewed for three additional years upon
      expiration.
  F-33
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 In
August 2007, the Group revised the monthly prepayment terms under the existing
contract with Jinglong Group and made a prepayment of RMB 300,000 to Jinglong
Group in August 2007 for wafers to be delivered after January 1, 2008. Jinglong
Group will credit from future invoices a portion of the price of each wafer
purchased against the prepayment for the wafers delivered to us after January 1,
2008.
  On
September 24, 2008, the Group entered into a long-term silicon wafer supply
contract with the Solar Silicon Valley Electronic Science and Technology Co.,
Ltd (“Silicon Valley”), a wholly owned subsidiary of the Jinglong
Group.  Pursuant to the contract, the Group made a prepayment of RMB
200,000 to Silicon Valley in September 2008 for wafers to be delivered in 2009.
Silicon Valley will credit from future invoices a portion of the price of each
wafer purchased against the prepayment for the wafers delivered to us in
2009.
  In
February 2009, the Group revised the terms under the original July 2006 contract
with Jinglong Group and agreed a delivery schedule for wafers to be purchased in
2009.  The unutilized prepayment from the RMB 300,000 prepayment
previously made in August 2007 would be treated as prepayment for 2009 wafer
purchases. Jinglong Group credited from future invoices a portion of the price
of each wafer purchased against the prepayment for wafers delivered in 2009.
Both parties agreed that the Group would continue to utilize the prepayment
balance for the wafers to be delivered in 2010 and the years after
2010.
  Also
in February 2009, the Group revised the terms under the original September 2008
contract with Silicon Valley and agreed a delivery schedule for wafers to be
purchased in 2009.  The unutilized prepayment from the RMB 200,000
prepayment previously made in September 2008 would be treated as prepayment for
2009 wafer purchases. Silicon Valley credited from future invoices a portion of
the price of each wafer purchased against the prepayment for wafers delivered in
2009. Both parties agreed that the Group would continue to use the remaining
prepayment in 2010. The remaining prepayment was fully utilized in
2010.
  The
Group reviewed the contracts under ASC 815, Derivatives and Hedging, and
ASC 810, Consolidation,
and determined that it doesn't contain an embedded derivative nor would the
supplier contract cause the supplier to be a variable interest
entity.
  The
Group purchased RMB 1,208,890, RMB 1,448,150 and RMB 696,638 of silicon wafers
from the Jinglong Group for the year ended December 31, 2007, 2008 and 2009,
respectively. Outstanding supplier advances to the Jinglong Group for purchases
of silicon wafers amounted to RMB 431,005 and RMB 169,611 as of December 31,
2008 and 2009, respectively, and were recorded in advances to related party
supplier in the consolidated balance sheet.
  Sales
  The
Group sold solar cells and provided solar cells processing services to the
Jinglong Group amounted to RMB 3,682, RMB 5,168 and RMB 5,206 for the year ended
December 31, 2007, 2008 and 2009, respectively.
  Outsourcing
service
  The
Group outsourced wafer processing services to Jinglong and Silicon Valley, where
they helped the Group to turn polysilicon into wafers. The outsourcing service
fee was RMB nil, RMB 3,198 and RMB 17,422 for Jinglong, RMB nil, RMB5,412 and
RMB nil for Silicon Valley for the year ended December 31, 2007, 2008 and 2009,
respectively.
  Management
fees and leasing
  In
January 2009, the Group renewed an agreement with the Jinglong Group to pay
management fees of RMB 20 per month for facilities maintenance and security
services provided by the Jinglong Group. The term of this agreement is from
January 2009 to December 2009. Outstanding accrual for the management fees was
RMB 40, RMB 40, RMB 20 as of December 31, 2007, 2008 and 2009, and was recorded
in amounts due to related parties in the consolidated balance sheet. The Group
leases properties from Jinglong Group and a related party under operating lease
agreements. The Group incurred rental expenses under operating lease agreements
to Jinglong Group in the amounts of RMB 2,531, RMB 8,754 and RMB 16,644 for the
year ended December 31, 2007, 2008 and 2009, respectively.
  F-34
  d)
                  Transactions
      with other related parties
  The
Group sold solar cells to a related company. Its chairman is also the chairman
of the Group. The Group sold solar cells to the related company amounted to RMB
58,523, RMB 506,498 and RMB nil for the year ended December 31, 2007, 2008 and
2009, respectively.
  The
Group provided solar cell processing service to a related company. Its chairman
is also the chairman of the Group. The solar cell processing service fee
amounted to RMB 304, RMB 9,521 and RMB nil for the year ended December 31, 2007,
2008 and 2009, respectively.
  The
Group outsourced wafer processing services to three related companies where they
helped the Group to turn polysilicon into wafers.  The chairman of the
two companies is also the chairman of the Group. The outsourcing service fee was
RMB nil, RMB 80,314 and RMB 38,875 for the year ended December 31, 2007, 2008
and 2009, respectively.
  The
Group outsourced module processing service to a related company. Its chairman is
also the chairman of the Group. The module processing service fee amounted to
RMB nil, RMB 28,952 and RMB nil for the year ended December 31, 2007, 2008 and
2009 respectively.
  The
Group purchased RMB nil, RMB 60,851 and RMB 172,705 of silicon wafers from
several related companies for the year ended December 31, 2007, 2008 and 2009,
respectively. Their chairman is also the chairman of the Group.
  The
Company has granted a number of stock options under its 2006 stock incentive
plan to attract and retain key personnel. During 2009, certain option holders
exercised their already vested stock options 1,036,400 shares.
  The
Group acquired certain equipmentfrom related companies in 2009. The chairman of
these companies is also the chairman of our company.  The transactions
were completed at the aggregate amount of RMB 113,229.
  23.
                  Contingencies and
      Commitments
  a)
                  Contingencies
  In
December 2008, the Company was named as defendant in two putative securities
class actions filed in the Unite States District Court for the Southern District
of New York:  Ellenburg v. JA Solar Holdings Co., Ltd., et al., Civil
Action No. 08 CV 10475 (filed on December 3, 2008) and Zhang v. JA Solar
Holdings Co., Ltd., et al., Civil Action No. 08 CV 11366 (filed on December 31,
2008). The complaints in the two actions, which are substantially identical,
also name as defendants Mr. Huaijin Yang, the Company’s former chief executive
officer and Mr. Daniel Lui, the Company’s former chief financial officer and
former chief strategy officer and allege that the defendants committed
securities fraud in violation of Section 10(b) of the United States Securities
and Exchange Act. On April 17, 2009, the court consolidated the two cases,
appointed a lead plaintiff, and ordered the lead plaintiff to file a
consolidated complaint. The lead plaintiff filed the consolidated complaint on
June 1, 2009. We filed a motion to dismiss the consolidated complaint on
July 15, 2009. In response, lead plaintiff filed a second amended complaint on
August 21, 2009. We moved to dismiss the second amended complaint on October 8,
2009. The lead plaintiff filed a response to our motion to dismiss the second
amended complaint on November 5, 2009, and we filed our reply on November 25,
2009.  The court ordered an oral argument to be held on April 9, 2010
to hear arguments regarding our motion to dismiss.  That oral argument
was adjourned to April 20, 2010 and then to April 26, 2010, again at lead
plaintiff’s request.  On April 26, 2010, the oral arguments were heard
and we are currently awaiting the ruling.   Although it is not
possible for the Company to predict the ultimate outcome of this litigation at
this time, the Company will defend itself vigorously in this litigation and does
not believe any loss is probable and estimable.
  F-35
 
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 b)
                  Supplier
      contract
  In
order to better manage the Group’s unit costs and to secure adequate and timely
supply of polysilicon and silicon wafers during the periods of shortages of
polysilicon and silicon wafer supplies, the Group entered into a number of
multi-year supply agreements from 2006 through 2008 in amounts that were
expected to meet the Group’s anticipated production needs. As a condition to our
receiving the raw materials under those agreements, and in line with industry
practice, the Group was required to, and have made advances to suppliers for
all, or a portion, of the total contract price to the suppliers, which are then
offset against future purchases. The Group has completed re-negoiating certain
of our supplier arrangements and is currently in the process of re-negotiating
the remaining prepayment obligations with our suppliers.
 
 Set
out below are the Group’s fixed obligations under these multi-year contracts
including “take or pay” arrangements.
  Obligations
under Multi-year Supply Agreements, including “Take or Pay” Supply
Agreements
 
 The
Company’s multi-year supply agreements with some suppliers are structured as
fixed price and quantity “take or pay” arrangements which allow the supplier to
invoice the Company for the full stated purchase price of polysilicon or silicon
wafers the Company is obligated to purchase each year, whether or not the
Company actually purchases the contractual volume. In addition to the “take or
pay” supply agreements, the Company has also entered into other multi-year
supply agreements to purchase fixed volumes of polysilicon or silicon wafers
from certain suppliers. Under these agreements, the purchase price is to be
periodically adjusted based on relevant energy price index. Purchases made under
these agreements amounted to RMB 358,482, RMB 1,025,894 and RMB 415,201 for the
year ended December 31, 2007, 2008 and 2009, respectively. Our future
obligations under multi-year supply agreements, including “take or pay” supply
agreements are as follows:
 
 “Take
      or pay” supply agreements
                          
                          
                          Other Multi-year supply
      agreements*
                          
                          
                          TotalTwelve
      Months Ending December 31
                          
                          (in
      RMB)
                          
                          
                          (in
      RMB)
                          
                          
                          (in
      RMB)2010
                          
                          
                          375,690
                          
                          
                          
                          1,459,864
                          
                          
                          
                          1,835,5542011
                          
                          
                          169,650
                          
                          
                          
                          1,858,884
                          
                          
                          
                          2,028,5342012
                          
                          
                          158,760
                          
                          
                          
                          2,102,209
                          
                          
                          
                          2,260,9692013
                          
                          
                          -
                          
                          
                          
                          1,094,209
                          
                          
                          
                          1,094,2092014
                          
                          
                          -
                          
                          
                          
                          38,209
                          
                          
                          
                          38,209Thereafter
                          
                          
                          -
                          
                          
                          
                          114,626
                          
                          
                          
                          114,626Total
                          
                          
                          704,100
                          
                          
                          
                          6,668,001
                          
                          
                          
                          7,372,101
 
 *
includes only purchase commitments with fixed or minimum price provisions. In
addition, the Company has also entered into other supply agreements with
variable price provisions, under which the purchase price is based on market
prices with price adjustment terms. The Company has committed to purchase poly
with the quantity of 20,244MT during 2010 to 2015 and 31,356MT during 2015 to
2020 respectively, which are with variable price provisions,
 
 
 Outstanding
supplier advances related to the above “take or pay” arrangements amounted to
RMB 946,001 and RMB 1,171,621 as of December 31, 2008 and 2009,
respectively.
 
 If
the Company fails to meet the obligations, including purchase quantity
commitments, under the amended agreements and are unable to further renegotiate
the terms of these multi-year supply agreements, the Company may be forced to
forfeit certain prepayment amounts and be subject to claims or other disputes
which could materially and adversely affect the Company’s results of operations,
and financial position.
  F-36
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  c)
                  Operating
      lease commitments
  For
the periods covered by these consolidated financial statements, the Group leased
certain assets, including offices, dormitory and production facilities, from the
Jinglong Group, under a non-cancelable operating lease expiring in June 30,
2006, with an option to renew. During the same time, the Group also leased a
piece of land under a non-cancelable operating lease from a third party expiring
on May 31, 2019.
  On
July 1, 2006, the Group renewed its operating lease with the Jinglong Group. The
renewed operating lease with the Jinglong Group covers the previously leased
assets from the Jinglong Group, as well as the land initially leased from the
third party, the rights of which was subsequently acquired by the Jinglong
Group. The new non-cancelable operating lease with the Jinglong Group expires in
June 2010 with an annual rental of RMB 1,800, which approximates market rents.
The Group executed a lease termination agreement for the land with the third
party on June 30, 2006.  The Group also holds an operating lease with
the Jinglong Group for an automobile. This non-cancelable operating lease
expired in December 2007 and was renewed until December 2010.
  In
June 2007, the Group entered into another operating lease with the Jinglong
Group to expand its facilities to host new manufacturing lines installed. The
new non-cancelable operating lease with the Jinglong Group expires in December
2011 with an annual rental of RMB 1,200, which approximates market
rents.
  In
July 2008, the Group entered into its operating lease with the Jinglong Group.
The renewed operating lease with the Jinglong Group replaced the two
aforementioned operating leases and has an annual rental of RMB 12,000. This
non-cancelable operating lease expires in June 2012.
  In
November 2008, the Group entered into another operating lease with the Jinglong
Group. The new non-cancelable operating lease with the Jinglong Group expires in
December 2012 with an annual rental of RMB 3,780.
  In
December 2008, the Group entered into an operating lease with a related party.
The new non-cancelable operating lease with the related party expires in
December 2012 with an annual rental of RMB 840.
  In
July 2009, the Group entered into an operating lease with the Jinglong Group.
The renewed operating lease replaced the two aforementioned operating leases and
has an annual rental of RMB 12,000. This non-cancelable operating lease expires
in June 2012.
  Future
minimum obligations for operating leases are as follows:
  (in
      RMB)2010
                        
                        
                        17,3362011
                        
                        
                        16,7402012
                        
                        
                        10,7402013
                        
                        
                        1202014
                        
                        
                        120Thereafter
                        
                        
                        1,270Total
                        
                        
                        46,326
  Rent
expense under all operating leases was RMB 2,893, RMB 9,865 and RMB 17,203, for
the year ended December 31, 2007, 2008 and 2009, respectively.
  F-37
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
  d)
                  Capital
      expenditure
  As
of December 31, 2007, 2008 and 2009, the Group had contracted for capital
expenditure on machinery and equipment of RMB 423,240, RMB 233,250 and RMB
433,625, respectively.
  24.
                  Fair
      value measurements
  The
Group adopted the provisions of ASC 820, Fair Value Measurements and
Disclosures, which defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Before January 1, 2009, the
adoption of ASC 820 was limited to our financial assets and financial
liabilities only. The Group does not have any nonfinancial assets or
nonfinancial liabilities recognized or disclosed at fair value in our financial
statements on a recurring basis.
 
 In
October 2008, the FASB issued FSP 157-3 “Determining Fair Value of a Financial
Asset in a Market That Is Not Active” (FSP 157-3). FSP 157-3 clarified the
application of ASC 820 in an inactive market. It demonstrated how the fair value
of a financial asset is determined when the market for that financial asset is
inactive. FSP 157-3 was effective upon issuance, including prior periods for
which financial statements had not been issued. The implementation of this
standard did not have a material impact on the Company’s consolidated financial
position and results of operations.
 
 ASC
820 establishes a hierarchy for inputs used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the observable inputs be used when available.
Observable inputs are inputs that market participants would use in pricing the
asset or liability developed based on market data obtained from sources
independent of us. Unobservable inputs are inputs that reflect our assumptions
about the assumptions market participants would use in pricing the asset or
liability developed based on the best information available in the
circumstances. As such, fair value is a market-based measure considered from the
perspective of a market participant who holds the asset or owes the liability
rather than an entity-specific measure. The hierarchy is broken down into three
levels based on the reliability of inputs as follows:
 
 ·
                  Level
      1—Valuations based on quoted prices in active markets for identical assets
      or liabilities that we have the ability to
  access.
 ·
                  Level
      2— Valuations based on quoted prices in markets that are not active or for
      which all significant inputs are observable, directly or
      indirectly.
 ·
                  Level
      3—Valuations based on inputs that are unobservable and significant to the
      overall fair value measurement.
 
 When
available, we use quoted market prices to determine the fair value of an asset
or liability. If quoted market prices are not available, we will measure fair
value using valuation techniques that use, when possible, current market-based
or independently sourced market parameters, such as interest rates and currency
rates. Following is a description of the valuation techniques that we use to
measure the fair value of assets and liabilities that we measure and report on
our balance sheet at fair value on a recurring basis.
 
 Cash
Equivalents. As of December 31, 2008 and 2009, our cash
equivalents consisted of call deposits and money market funds. We value our cash
equivalents using observable inputs that reflect quoted prices for securities
with identical characteristics, and accordingly, we classify the valuation
techniques that use these inputs as Level 1.
 
 Short Term
Investments. As of December 31, 2008, our trading and
available-for-sale securities consisted of a currency fund, HARP index
investment and commodity related investment. We value our available-for-sale
securities using quoted prices for securities with similar characteristics and
other observable inputs (such as interest rates that are observable at commonly
quoted intervals), and accordingly, we classify the valuation techniques that
use these inputs as Level 2. We also consider the effect of our
counterparties’ credit standings in these fair value measurements. As of
December 31, 2009, we do not have short term investments.
  F-38
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 Derivative assets and
liabilities. Our derivative assets and liabilities consist of
embedded foreign currency derivatives in our sales and purchase contracts
denominated in currencies other than Renminbi or the functional currency of the
counterparty, the capped call transactions denominated in USD, embedded
derivatives underlying convertible notes and foreign currency forward contract
instruments. Since our capped call transactions and embedded derivatives
underlying convertible notes are not traded on an exchange, they are valued
using valuation models. Management is responsible for determining these fair
values and considered a number of factors including valuations. The capped call
transactions are valued using the Black Scholes Option Pricing Model. The
embedded derivatives underlying convertible notes are bifurcated using the “with
or without” approach. As there are interrelationships among the embedded
derivatives, they are valued using a Monte Carlo simulation. Interest rate yield
curves, foreign exchange rates, stock price, volatility, expected term,
risk-free rate and fundamental change event probabilities are the significant
inputs into these valuation models. The inputs used in the valuation of the
capped call transactions are observable in active markets over the terms of the
instruments we hold, and accordingly, we classify these valuation techniques as
Level 2 in the hierarchy. In regards to the embedded derivatives underlying
convertible notes, fair value was determined using a “with and without” approach
which was based on both Level 2 and Level 3 inputs. We determined that the Level
3 input, that is the fundamental change event probabilities, is significant to
the overall fair value measurement. We consider the effect of our own credit
standing and that of our counterparties in our valuations of our derivative
financial instruments. The Company entered into foreign currency forward
contracts that are designated as cash flow hedges of exchange rate risk related
to forecasted foreign currency denominated sales. The Company’s financial
instrument counterparties are high-quality commercial banks with significant
experience with such instruments.  Fair values of the Company’s forward
contracts are determined using significant other observable inputs (Level 2 fair
value measurements), and are based on the present value of expected future cash
flows considering the risks involved and using discount rates appropriate for
the duration of the contracts.
 
 Recurring
change in fair value
 
 As
of December 31, 2008, information about inputs into the fair value
measurements of our assets and liabilities that are measured at fair value on a
recurring basis in periods subsequent to their initial recognition is as
follows:
 
 Fair
      Value Measurements at Reporting Date UsingDescription
                                  
                                  Balance
      as of
                                    31
      December 2008
                                  
                                  
                                  Quoted
      Prices in Active Markets for Identical Assets (Level 1)
                                  
                                  
                                  Significant
      Other Observable Inputs (Level 2)
                                  
                                  
                                  Significant
      Unobservable Inputs
                                    (Level
      3)Assets:Cash
      equivalents
                                  
                                  
                                  71,823
                                  
                                  
                                  
                                  71,823
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Capped
      call options
                                  
                                  
                                  4,485
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  4,485
                                  
                                  
                                  
                                  -Short
      term investments
                                  
                                  
                                  421,865
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  421,865
                                  
                                  
                                  
                                  -Liabilities:Embedded
      derivatives
                                    underlying
      convertible notes
                                  
                                  
                                  (115,676
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (115,676
                                  )
  F-39
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 As
of December 31, 2009, information about inputs into the fair value
measurements of our assets and liabilities that are measured at fair value on a
recurring basis in periods subsequent to their initial recognition is as
follows:
 
 Fair
      Value Measurements at Reporting Date UsingDescription
                              
                              Balance
      as of
                                31
      December 2009
                              
                              
                              Quoted
      Prices in Active Markets for Identical Assets (Level 1)
                              
                              
                              Significant
      Other Observable Inputs (Level 2)
                              
                              
                              Significant
      Unobservable Inputs
                                (Level
      3)Assets:Cash
      equivalents
                              
                              
                              15,367
                              
                              
                              
                              15,367
                              
                              
                              
                              -
                              
                              
                              
                              -Capped
      call options
                              
                              
                              4,033
                              
                              
                              
                              -
                              
                              
                              
                              4,033
                              
                              
                              
                              -Embedded
      foreign currency derivatives
                              
                              
                              6,488
                              
                              
                              
                              -
                              
                              
                              
                              6,488
                              
                              
                              
                              -Liabilities:Embedded
      derivatives
                                underlying
      convertible notes
                              
                              
                              (136,632
                              )
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (136,632
                              )Foreign
      exchange forward contract
                                instruments
                              
                              
                              (831
                              )
                              
                              
                              -
                              
                              
                              
                              (831
                              )
                              
                              
                              -
  Assets
and liabilities measured at fair value on a recurring basis using significant
unobservable inputs (Level 3 valuation)
 
 A
summary of changes in Level 3 embedded derivatives underlying convertible notes
for the year ended December 31, 2009 was as follows:
 
 Balance
      at December 31, 2008
                          
                          
                          115,676Unrealized
      gains included in Change in fair value of derivatives
                          
                          
                          55,106Embedded
      derivatives underlying convertible notes repurchased and recognized in
      buyback gain
                          
                          
                          (34,150
                          )Balance
      at December 31, 2009
                          
                          
                          136,632
 
 
 Change
in fair value of derivatives
 
 The
Change in fair value of derivatives recognized in earnings, excluding embedded
derivatives underlying convertible notes repurchased which are recognized in
buyback gain, was as follows:
 
 For
      the year ended
                          
                          
                          For
      the year ended
                          
                          
                          For
      the year endedDecember 31, 2007
                          
                          
                          December 31, 2008
                          
                          
                          December 31, 2009Embedded
      derivatives underlying convertible notes (see note 14)
                          
                          
                          -
                          
                          
                          
                          785,608
                          
                          
                          
                          (55,106
                          )Capped
      call options (see note 14)
                          
                          
                          -
                          
                          
                          
                          (221,602
                          )
                          
                          
                          (453
                          )Embedded
      foreign exchange derivatives
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          6,488-
                          
                          
                          
                          564,006
                          
                          
                          
                          (49,071
                          )
  F-40
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 25.
                  Segment
      information
  The
Group operates in a single business segment that includes the design,
development, and manufacture of PV products. The following table summarizes the
Group's net revenues generated from different geographic locations:
  Year
      Ended December 31,2007
                      
                      
                      2008
                      
                      
                      2009RMB
                      
                      
                      RMB
                      
                      
                      RMBChina
                      
                      
                      2,310,472
                      
                      
                      
                      4,162,037
                      
                      
                      
                      2,789,798Outside
      China:Spain
                      
                      
                      154,812
                      
                      
                      
                      613,483
                      
                      
                      
                      57,516Germany
                      
                      
                      371
                      
                      
                      
                      144,936
                      
                      
                      
                      396,922Rest
      of the world
                      
                      
                      228,045
                      
                      
                      
                      537,854
                      
                      
                      
                      534,942Total
      outside China
                      
                      
                      383,228
                      
                      
                      
                      1,296,273
                      
                      
                      
                      989,380Total
      net revenue
                      
                      
                      2,693,700
                      
                      
                      
                      5,458,310
                      
                      
                      
                      3,779,178
  The
following table summarizes the Group's long-lived fixed assets by geographic
locations:
  Year
      Ended December 31,2007
                  2008
                  2009RMB
                  RMB
                  RMBChina
                  532,012
                  1,369,807
                  1,626,247Korea*
                  -
                  -
                  98,195Total
      long-lived fixed assets
                  532,012
                  1,369,807
                  1,724,442
  *
Korea assets consist of 3MW solar power plant.
  26.
                  Certain
      risks and uncertainties
  a)      Major
customers
  Details
of the customers accounting for 10% or more of total revenues were as
follows:
  Major
      customers
                      
                      Year
      ended December 31, 2007
                      
                      
                      Year
      ended December 31, 2008
                      
                      
                      Year
      ended December 31, 2009Customer
      A (third party)
                      
                      
                      18.9
                      %
                      
                      
                      -
                      
                      
                      
                      11.4
                      %Customer
      B (third party)
                      
                      
                      11.0
                      %
                      
                      
                      9.2
                      %
                      
                      
                      5.2
                      %Customer
      C (third party)
                      
                      
                      10.9
                      %
                      
                      
                      13.4
                      %
                      
                      
                      8.4
                      %Customer
      D (third party)
                      
                      
                      11.2
                      %
                      
                      
                      9.0
                      %
                      
                      
                      2.5
                      %
  Accounts
receivable from the 3 customers with the largest receivable balances represents
68% and 57% of the balance of accounts receivable at December 31, 2008 and 2009,
respectively. The Company performs ongoing credit evaluations of its customers’
financial condition whenever deemed necessary and generally does not require
collateral. The Company maintains an allowance for doubtful accounts based upon
the expected collectability of all accounts receivable, which takes into
consideration an analysis of historical bad debts, specific customer
creditworthiness and current economic trends.
  b)      Concentrations
of credit risk
  Financial
instruments that potentially subject the Group to significant concentrations of
credit risk consist principally of cash and cash equivalent, accounts
receivables and advances to suppliers.
  The
Group places its cash and cash equivalents with high quality financial
institutions in the PRC, US, Hong Kong and Singapore and limits the amount of
credit risk from any one issuer.
  F-41
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 c)      Foreign
currency risk
  The
RMB is not a freely convertible currency. The PRC State Administration for
Foreign Exchange, under the authority of the People's Bank of China, controls
the conversion of RMB into foreign currencies. The value of the RMB is subject
to changes in central government policies and to international economic and
political developments affecting supply and demand in the PRC foreign exchange
trading system market.
  27.
                  Ordinary
      shares
  The
      holders of ordinary shares in the Company are entitled to one vote per
      share and to receive ratably such dividends, if any, as may be declared by
      the board of directors of the Company. In the event of liquidation, the
      holders of ordinary shares are entitled to share ratably in all assets
      remaining after payment of liabilities. The ordinary shares have no
      preemptive, conversion, or other subscription
  rights.
  28.
                  Subsequent
      events
  Other
      than the transactions occurring in 2009 already described above, the
      following events have taken place in
2010:
  Stock
options and restricted share units
  During
January to April 2010, the Company granted 1,100,000 restricted share units and
1,650,000 ordinary share options to its employees. The exercise price of these
options is $4.88 per option, which is determined using the closing prices of the
Company’s American Depositary Shares listed on the NASDAQ at the grant
date.
  29.
                      Restricted
      net assets
  Relevant
PRC laws and regulations permit PRC companies to pay dividends only out of their
retained earnings, if any, as determined in accordance with PRC accounting
standards and regulations.  Additionally, the Company's subsidiaries
can only distribute dividends upon approval of the shareholders after they have
met the PRC requirements for appropriation to statutory reserve. The statutory
general reserve fund requires annual appropriations of 10% of net after-tax
income should be set aside prior to payment of any dividends. As a result of
these and other restrictions under PRC laws and regulations, the PRC
subsidiaries and affiliates are restricted in their ability to transfer a
portion of their net assets to the Company either in the form of dividends,
loans or advances, which restricted portion amounted to approximately RMB
3,052,831 or 64.7% of the Company total consolidated net assets as of December
31, 2009. Even though the Company currently does not require any such dividends,
loans or advances from the PRC subsidiaries and affiliates for working capital
and other funding purposes, the Company may in the future require additional
cash resources from our PRC subsidiaries and affiliates due to changes in
business conditions, to fund future acquisitions and developments, or merely
declare and pay dividends to or distributions to the Company
shareholders.
  30.
                  Additional
      information—condensed
      financial statements of the Company
 
 The
separate condensed financial statements of JA Solar Holdings Co., Ltd. as
presented below have been prepared in accordance with Securities and Exchange
Commission Regulation S-X Rule 5-04 and Rule 12-04 and present the Company’s
investments in its subsidiaries under the equity method of accounting as
prescribed in ASC 323. Such investment is presented on the separate condensed
balance sheets of the Company as “Investments in subsidiaries.”The
condensed financial information of JA Solar Holdings Co., Ltd. has been
presented for the period from January 1, 2007 to December 31,
2009.
 
 The
subsidiaries did not pay dividend to the Company for the period
presented.
  F-42
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 Except
as disclosed in the consolidated financial statements as presented above, the
Company did not have any significant contingency, commitment, long term
obligation, or gurantee as of December 31, 2009.
  For
      the year ended
                                                
                                                
                                                For
      the year ended
                                                
                                                
                                                For
      the year endedDecember
      31, 2007
                                                
                                                
                                                December
      31, 2008
                                                
                                                
                                                December
      31, 2009RMB
                                                
                                                
                                                RMB
                                                
                                                
                                                RMBRevenues
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Total
      operating expenses
                                                
                                                
                                                (30,929
                                                )
                                                
                                                
                                                (35,315
                                                )
                                                
                                                
                                                (19,829
                                                )Loss
      from operations
                                                
                                                
                                                (30,929
                                                )
                                                
                                                
                                                (35,315
                                                )
                                                
                                                
                                                (19,829
                                                )Interest
      expense
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (162,090
                                                )
                                                
                                                
                                                (198,816
                                                )Change
      in fair value of derivatives
                                                
                                                
                                                -
                                                
                                                
                                                
                                                564,006
                                                
                                                
                                                
                                                (55,559
                                                )Share
      of income from subsidiaries
                                                
                                                
                                                510,976
                                                
                                                
                                                
                                                767,682
                                                
                                                
                                                
                                                118,797Convertible
      bond buyback gain
                                                
                                                
                                                -
                                                
                                                
                                                
                                                203,514
                                                
                                                
                                                
                                                22,904Other (expenses)/income
                                                
                                                
                                                (79,679
                                                )
                                                
                                                
                                                (172,411
                                                )
                                                
                                                
                                                3,842Impairment
      on available-for-sale securities
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (686,320
                                                )
                                                
                                                
                                                -Income/(loss)
      before income taxes
                                                
                                                
                                                400,368
                                                
                                                
                                                
                                                479,066
                                                
                                                
                                                
                                                (128,661
                                                )Income
      tax benefit/(expense)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Net
      income/(loss)
                                                
                                                
                                                400,368
                                                
                                                
                                                
                                                479,066
                                                
                                                
                                                
                                                (128,661
                                                )Preferred
      shares accretion
                                                
                                                
                                                (515
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Allocation
      of net income to participating preferred shareholders
                                                
                                                
                                                (1,648
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Net
      income/(loss) available to ordinary shareholders
                                                
                                                
                                                398,205
                                                
                                                
                                                
                                                479,066
                                                
                                                
                                                
                                                (128,661
                                                )
  F-43
 JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 December
      31,
                        
                        
                        December
      31,2008
                        
                        
                        2009RMB
                        
                        
                        RMBASSETSCurrent
      assets:Cash
      and cash equivalents
                        
                        
                        112,949
                        
                        
                        
                        40,912Short-term
      investments
                        
                        
                        353,588
                        
                        
                        
                        -Other
      receivable from subsidiaries
                        
                        
                        273,942
                        
                        
                        
                        274,064Other
      current assets
                        
                        
                        1,457
                        
                        
                        
                        5,772Total
      current assets
                        
                        
                        741,936
                        
                        
                        
                        320,748Investments
      in subsidiaries
                        
                        
                        2,459,800
                        
                        
                        
                        2,651,997Derivative
      asset-capped call options
                        
                        
                        4,485
                        
                        
                        
                        4,033Deferred
      issuance cost
                        
                        
                        58,953
                        
                        
                        
                        36,070Amount
      due from subsidiaries
                        
                        
                        3,172,279
                        
                        
                        
                        3,247,833Total
      assets
                        
                        
                        6,437,453
                        
                        
                        
                        6,260,681LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilities:Other
      payables to subsidiaries and employees
                        
                        
                        6,590
                        
                        
                        
                        1,401Accrued
      and other liabilities
                        
                        
                        14,230
                        
                        
                        
                        20,849Interest
      payable
                        
                        
                        13,458
                        
                        
                        
                        10,129Total
      current liabilities
                        
                        
                        34,278
                        
                        
                        
                        32,379Long-term
      debt payable
                        
                        
                        -
                        
                        
                        
                        204,846Convertible
      notes
                        
                        
                        1,532,600
                        
                        
                        
                        1,171,438Embedded
      derivatives
                        
                        
                        115,676
                        
                        
                        
                        136,632Total
      liabilities
                        
                        
                        1,682,554
                        
                        
                        
                        1,545,295Commitments
      and Contingencies
                        
                        
                        -
                        
                        
                        
                        -Shareholders'
      equity:Ordinary
      shares (US$0.0001 par value;
                          493,480,000
      shares authorized, 167,982,020
                          and
      169,018,420 shares issued and
                          outstanding
      as of December 31, 2008 and
                          December
      31, 2009)
                        
                        
                        133
                        
                        
                        
                        134Additional
      paid-in capital
                        
                        
                        3,787,262
                        
                        
                        
                        3,884,037Retained
      earnings
                        
                        
                        967,887
                        
                        
                        
                        839,227Accumulated
      other comprehensive loss
                        
                        
                        (383
                        )
                        
                        
                        (8,012
                        )Total
      shareholders' equity
                        
                        
                        4,754,899
                        
                        
                        
                        4,715,386Total
      liabilities and shareholders' equity
                        
                        
                        6,437,453
                        
                        
                        
                        6,260,681
 
 
 F-44
  JA
SOLAR HOLDINGS CO., LTD.
  Notes
to Consolidated Financial Statements
 (In
thousands, except share and per share data)
 For
      the year ended December 31, 2007
                              
                              
                              For
      the year ended December 31, 2008
                              
                              
                              For
      the year ended December 31, 2009RMB
                              
                              
                              RMB
                              
                              
                              RMBCash
      flows from operating activities:Net
      income/(loss)
                              
                              
                              400,368
                              
                              
                              
                              479,066
                              
                              
                              
                              (128,661
                              )Adjustments
      to reconcile net income to net cash used in operating
      activities:Share
      based compensation expense
                              
                              
                              5,956
                              
                              
                              
                              8,301
                              
                              
                              
                              (1,094
                              )Share
      of income from subsidiaries
                              
                              
                              (510,976
                              )
                              
                              
                              (767,682
                              )
                              
                              
                              (118,797
                              )Amortization
      of deferred issuance cost and increase in accretion of convertible
      notes
                              
                              
                              -
                              
                              
                              
                              88,389
                              
                              
                              
                              110,076Change
      in the value of derivatives
                              
                              
                              -
                              
                              
                              
                              (564,006
                              )
                              
                              
                              55,559Exchange
      loss
                              
                              
                              90,672
                              
                              
                              
                              25,889
                              
                              
                              
                              1,956Gain
      from senior convertible notes buyback
                              
                              
                              -
                              
                              
                              
                              (203,514
                              )
                              
                              
                              (22,904
                              )Impairment
      on available-for-sale security
                              
                              
                              -
                              
                              
                              
                              686,320
                              
                              
                              
                              -Investment
      loss from available-for-sale securities
                              
                              
                              -
                              
                              
                              
                              39,893
                              
                              
                              
                              -Changes
      in operating assets and liabilities:Acquisition
      of trading securities
                              
                              
                              -
                              
                              
                              
                              (353,588
                              )
                              
                              
                              353,588(Increase)/decrease
      in receivables from subsidiaries
                              
                              
                              (292,742
                              )
                              
                              
                              18,800
                              
                              
                              
                              (122
                              )(Increase)/decrease
      in other current assets
                              
                              
                              (233
                              )
                              
                              
                              (1,224
                              )
                              
                              
                              (4,315
                              )Increase/(decrease)
      in payables to subsidiaries and employees
                              
                              
                              4,975
                              
                              
                              
                              (112,093
                              )
                              
                              
                              -Increase
      in share-based compensation liabilities
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,401Increase
      in long-term liabilities
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              204,846Increase
      in accrued and other liabilities
                              
                              
                              2,852
                              
                              
                              
                              120
                              
                              
                              
                              28Increase/(decrease)
      in interest payable
                              
                              
                              -
                              
                              
                              
                              13,458
                              
                              
                              
                              (3,328
                              )Net
      cash used in operating activities
                              
                              
                              (299,128
                              )
                              
                              
                              (641,871
                              )
                              
                              
                              448,233Cash
      flows from investing activities:Loans
      granted to subsidiaries
                              
                              
                              (1,502,191
                              )
                              
                              
                              (1,670,089
                              )
                              
                              
                              (249,269
                              )Loans
      repayment by subsidiaries
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              173,715Capital
      injection to subsidiaries
                              
                              
                              -
                              
                              
                              
                              (682,790
                              )
                              
                              
                              -Acquisition
      of short term investments
                              
                              
                              (810,762
                              )
                              
                              
                              (1,060,836
                              )
                              
                              
                              -Proceeds
      from sale of short term investments
                              
                              
                              -
                              
                              
                              
                              1,145,385
                              
                              
                              
                              -(Increase)/decrease
      in restricted cash
                              
                              
                              (409,058
                              )
                              
                              
                              409,058
                              
                              
                              
                              -Net
      cash (used in)/provided by investing activities
                              
                              
                              (2,722,011
                              )
                              
                              
                              (1,859,272
                              )
                              
                              
                              (75,554
                              )Cash
      flows from financing activities:Proceeds
      from public offerings of shares
                              
                              
                              3,341,002
                              
                              
                              
                              -
                              
                              
                              
                              -Net
      proceeds from convertible notes offerings
                              
                              
                              -
                              
                              
                              
                              2,709,538
                              
                              
                              
                              -Payment
      of capped call up-front premiums
                              
                              
                              -
                              
                              
                              
                              (226,087
                              )
                              
                              
                              -Repurchase
      of senior convertible notes
                              
                              
                              -
                              
                              
                              
                              (182,019
                              )
                              
                              
                              (459,601
                              )Proceeds
      from exercise of stock options
                              
                              
                              128,583
                              
                              
                              
                              18,876
                              
                              
                              
                              16,841Net
      cash provided by/(used in) financing activities
                              
                              
                              3,469,585
                              
                              
                              
                              2,320,308
                              
                              
                              
                              (442,760
                              )Effect
      of exchange rate changes on cash and cash equivalents
                              
                              
                              (91,320
                              )
                              
                              
                              (63,342
                              )
                              
                              
                              (1,956
                              )Net
      increase / (decrease) in cash and cash equivalents
                              
                              
                              357,126
                              
                              
                              
                              (244,177
                              )
                              
                              
                              (72,037
                              )Cash
      and cash equivalents at the beginning of the year
                              
                              
                              -
                              
                              
                              
                              357,126
                              
                              
                              
                              112,949Cash
      and cash equivalents at the end of the year
                              
                              
                              357,126
                              
                              
                              
                              112,949
                              
                              
                              
                              40,912
 
 F-45