Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jesse Pichel from Piper Jaffray.
Jesse Pichel - Piper Jaffray
It looks like you were guiding down your gross margins a bit, and we're just wondering is that the ASP trends we're seeing in the market, is that the impact of a poly plant and/or is that the impact of your selling to the distribution model?. If you could you just comment on that.
Liansheng Miao
[Foreign Language]
The main reason for the guide down on the gross margin is really due to the increased competition in the whole industry and also with the global financial crisis that drove down the ASP. However, we are very confident with our poly plant that in the long-term it should be able to help us with some gross margin expansion.
Qing Miao
We are still very confident with our shipment guidance which we gave and we just reiterate our annual shipment guidance.
Jesse Pichel - Piper Jaffray
It looks like you have a large distribution customer contract that's expiring this year. I think it's a 90 megawatt contract. Can you talk a little bit about, do you have any indication there whether this contract will be extended into the following year and do you anticipate that this distributor is conducting any kind of bakeoff there amongst the different Chinese vendors there, if you could just comment on those things?
Bryan Li
[Foreign Language]
We do have some large distributors in this customer portfolio and given the long-term strategy of partnership has build up with those large distributors and so far we haven't seen any problems with orders from those distributors and in the second half of the year and the next year we're anticipating to see more orders from those largest distributors.
Jesse Pichel - Piper Jaffray
The proposed expansion in Haikou, when will you make that decision to move forward with it and can you just give us an update on what you think the timing would be when this plant would start to produce modules?
Bryan Li
We have started the order preparation work and investigation work recently. Of course, this is a project directly as sponsored by Hainan Government and also it's a provincial level investment. So the provincial government has put in a lot of efforts in all the aspects to help Yingli start audit and detail the preparation work in Hainan Province and at this moment we haven't finalized the feasibility study work and investigation work at this moment. So we can't comment when is the timing we think we will start the manufacturing schedule.
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