Guangzhou, China A year ago, China's LED industry was like a case study of a failed industrial policy. Hundreds of factories in eastern China can only sustain half of their production capacity, and most of them receive high-level clean energy subsidies from state-owned banks and local governments. The stock price of LED manufacturers plummeted.
Demand is booming now, and Chinese manufacturers suddenly see their factories running at full capacity to drive LEDs faster and at lower cost than international competitors. The price war is underway and Chinese manufacturers have taken significant steps. Industry pioneers in technology breakthroughs The United States, Europe, Japan, and the share of important manufacturers in Taiwan and South Korea, Taiwan and South Korea were the leaders in the field of low-cost LED.
For some companies in the United States, the expansion of China's LED industry is similar to that of solar modules and wind turbines, which is disturbing. In these two industries, China has grown from a small person to a global leader with high subsidies provided by the government and low-interest loans provided by state-owned banks.
Member of the US-China Economic Security Review Commission (US-China Economic and Security Review Commission). R. Wessel said that the LED lighting industry is likely to become the next solar, wind or other industry that the US will give up because it cannot cope with China's industrial policies and unfair trade products.
Sino-US trade frictions continue to increase, and these industries have been at the center of the vortex. SolarWorld, a solar module manufacturer, has protested to the US government that they believe China's competitors have an unfair advantage. The Justice Department's recently announced indictment shows that the company is a cyberattack launched by Chinese soldiers. The goal.
However, the LED industry presents a more complex story. It is not just another Western company to create, and then let the industry with Chinese rivals this is a reason why the trade problem may be different.
For example, the LED industry is highly differentiated. Chinese manufacturers dominate the low-wattage LEDs used in televisions, cell phone backlights and dim luminaires, which are equivalent to 40-watt incandescent bulbs. Western companies maintain market share in LEDs with greater brightness, higher wattage, and greater profitability.
Many Chinese producers bear a reputation for poor quality and their reputation is getting worse and worse. In the long run, this may adversely affect them.
The rise of China reflects the changing trends of the industry.
Last year, the LED industry finally began to develop rapidly in the global lighting equipment business. Regulators in the United States, Europe, and China have implemented energy efficiency regulations that phase out incandescent bulbs. Large multinational companies that manufacture light bulbs, such as Philips, Osram, and General Electric, have begun manufacturing LEDs, which use only one-fifth of the incandescent light and one-half of the fluorescent light.
Environmentalists appreciate this. In global greenhouse gas emissions, greenhouse gas emissions from lighting equipment account for about 6 and LEDs can significantly reduce emissions.
For consumers, this shift brings many benefits. Buyers and manufacturing executives said that last year, the price of low-end, low-wattage LEDs made in China fell by nearly half, and the price of high-wattage LEDs produced in other countries fell by 15 to 20.
Chinese manufacturers have large production capacity and can rapidly increase production according to demand. According to AHS, a lighting industry analyst at IHSTechnology, a global consulting firm. Alice Tao estimates that low prices have allowed Chinese companies to grab about 30% of the global market. China therefore has the largest share, with Japan, South Korea, Germany, Taiwan and the United States basically sharing the remaining market share.
But as Chinese products flood the market, quality becomes a problem. Some large buyers have warned that well-made LEDs can last for ten years, while cheap LEDs sometimes burn out in less than a year. More commonly, they begin to emit some strange colors that may cause the house to be covered in pink, green, or even the rainbow snow chromatograms in the lighting industry.
Benjamin. Benjamin Carson owns an Australian billboard company that uses LED lights to make outdoor billboards. Carson said that the stability of the lights is reduced and they don't know if they can achieve their promised service life.
Carson said that the price of LEDs for American brands is usually one-third higher than the LEDs he buys. However, he is still considering the use of American LEDs, because there are too many billboards using Chinese LEDs, which will burn out in less than a year, or strange color blocks.
Some buyers are even more vigilant. Xicato's Purchasing Director, San Jose, Calif. Mike Pugh said that we don't buy Chinese LEDs, and we don't want to take risks. The company, which provides interior lighting systems for retailers and hotels, has switched to buying LED fixtures from multinational companies such as Cree in Dehan, North Carolina, and Lumileds, based in San Jose, Calif., under Philips. Osram OptoSemiconductors in Regensburg, Germany.
China's LED industry still has liabilities due to previous investment trends, and now relies mainly on factory equipment purchased from 2009 to 2011. However, with the rapid growth of sales, Chinese companies have ordered a large number of new equipment from Western suppliers since the beginning of this year, which may improve the reliability of their products.
Like many fast-growing Chinese industries, environmental protection is also a problem for the LED industry. Wang Wei, sales director of Foshan Guoli Optoelectronics Technology Co., Ltd., said in a recent interview that the company has been struggling to control the flow of acid waste into the water.
Despite this problem, the LED industry is still part of a broader strategy for China to promote clean energy. Three-quarters of China's electricity still comes from burning coal, which causes severe air pollution and exacerbates global warming.
China’s initiatives to promote clean energy are also an important source of new jobs. The creation of China's LED industry has created tens of thousands of good jobs for young college students. Lin Lianxing, who works for Guangzhou Hongli Optoelectronics Co., Ltd., is a beneficiary. Hongli Optoelectronics is a state-owned enterprise here and is trying to manufacture high quality LEDs.
In a room with special ventilation, Lin Linxing, 26, is wearing a white coat, wearing a mask and a hat, and is working hard. She is observing the microscope and checking the quality of the micro mold. This mold is used to punch out tiny LED components on a plastic resin sheet.
Her monthly salary is 500 US dollars (about 3100 yuan), in addition to medical insurance and free accommodation. There is air conditioning in the dormitory, and there are four to six people living in one room. She looked up from the microscope and said that I like the leisure center here.
However, the trade friction of the photovoltaic industry has also made the LED industry uneasy, and the technologies of the two have many similarities. Both the United States and the European Union have accused the Chinese government of providing export subsidies to the photovoltaic industry in violation of global trade rules, and China denies this.
In the years since the global financial crisis broke out in 2008, China’s photovoltaic and LED industries have received huge amounts of low-interest loans from state-owned banks as the Chinese government has instructed to provide loans to support green energy projects. Shenzhen Ampere Technology Co., Ltd. is a major manufacturer of LED components. General Manager Meng Zhaochun said that subsidies are supported by bank loans.
China is now following the example of the Obama administration, promoting domestic energy-saving lighting and demand, and reducing subsidies. If domestic demand is boosted, foreign governments will be more difficult to accuse the violation of trade rules on the grounds of past subsidies.
Many Chinese companies are hard to make a profit. If state-owned banks stop offering low-interest loans to China's LED industry, integration is inevitable.
There are too many Chinese manufacturers in this market, and the price competition is very intense, Ms. Tao said. Many of them are not profitable and it is difficult to survive.
Although Chinese manufacturers have gained a share of the global market, problems may still emerge. Li Junfeng, China's top energy policy planner, said that fierce competition is still driving many manufacturers to cut corners.
The problem, he said, is that there are too many manufacturers with very low quality.