The recent fall of China's leading solar panel maker Suntech has cast a shadow on the entire solar industry in China which is beleaguered by overcapacity and an over-reliance on exports. But, don't count the industry out just yet. Certain innovative firms in China's solar sector could buck this downward trend.

China Merchants New Energy Group is an investor and operator of photovoltaic power stations. The ongoing sluggishness has forced down prices of raw materials and costs for the company, it also stoked concerns for the sector's long-term prospects.

Zou Deyu, vice president of China Merchants New Energy Group, said, "The rapid decline in prices is unfavorable for the whole industry. If raw material providers are making losses and going bankrupt, that will affect investors and businesses down the industry chain."

But there are some industry players which could deliver outstanding performance despite the current gloomy outlook in the sector, that's largely thanks to their efforts in innovation.

Ding Yongqiang, president of Shenzhen Growatt New Energy Tech., said, "The key reason is our technological innovation. When the industry is in a slump, we are still investing heavily in R and D, which accounts for 60 percent of our company's total investment."

But the larger picture remains a cause for concern. Industry insiders say the EU's planned anti-dumping and anti-subsidy policies on Chinese solar exporters will take a further toll on the country's PV industry.