300 Companies Gather to Assess the LED Industry; Domestic LED 'Industry Spring' Fever Persists

　The Industry Is in Spring, Yet Companies Shout Cold

300 Companies Gather to Assess the LED Industry; Insiders Say the Fundamental Way Out Lies in "Teaming Up to Conquer the World"

　　The bankruptcy of Junduoli shocked the national LED industry after being disclosed by the Shenzhen Business Daily.

Recently, under the organization of the Shenzhen Semiconductor Industry Development Promotion Association, more than 300 LED enterprises from across the country gathered in Gao'an City, Jiangxi Province, to hold the First China LED Industry Resource Integration and Healthy Development Summit, jointly taking the pulse of the LED industry. Reporters learned from on-site interviews at the summit that, while the domestic LED industry continues to run a "fever" amid the so-called "industry spring," enterprises are approaching winter. One signal of this persistent fever is that the number of epitaxial equipment units nationwide has reached 1,400, equivalent to the total amount of epitaxial equipment in the world today.

Symptom: The LED Industry Fever Persists

Mr. Feng Jun, Chairman of Shenzhen Yite Lighting Co., Ltd., used the word "fever" to describe the current LED industry. He believes that serious misconceptions exist in the current development of China's LED industry. These misconceptions manifest themselves in four aspects: First, misconceptions in policy and market support—policy support for LED lighting is mostly focused on outdoor applications, while indoor applications receive little attention. The proper development path for LED lighting should be exactly the opposite: LED application technology should follow a path from stable indoor environments to unstable outdoor environments. Second, misconceptions in the construction of industrial parks—some enterprises build LED industrial parks merely for the purpose of land acquisition. Third, misconceptions in enterprise development positioning—many enterprises lack commitment to their core businesses. Fourth, misconceptions in product strategy positioning—some promising niche consumer markets are neglected. #p#分頁標題#e#

It should be said that, as an emerging industry, LED aligns with the national policies of energy conservation and emission reduction, green environmental protection, and a low-carbon economy, and has a replacement market for lighting products worth hundreds of billions of yuan annually, with bright prospects. In fact, the growth in total sales of the national LED industry in recent years has also proven the industry's prospects: 82.7 billion yuan in 2009, 120 billion yuan in 2010, and an expected 600 billion yuan by 2015.

Wang Dianfu, Honorary President of the Shenzhen Semiconductor Lighting Industry Development Promotion Association, said that the period from 2005 to 2010 was one of rapid development for China's semiconductor lighting industry. The number of small and medium-sized LED enterprises nationwide has now reached more than 3,500, with Shenzhen alone developing to as many as 1,350, of which 99% are small and medium-sized enterprises and 80% are enterprises engaged in application products. At the same time, relevant local governments have launched LED upstream industry projects with high subsidies and high investment. According to preliminary statistics, the number of epitaxial equipment units ordered and delivered has reached 1,400, equivalent to the total amount of epitaxial equipment currently in the world.

　　Wang Dianfu said that amid industry overheating, due to changes in the international "climate," economic crises continue to escalate, exports are blocked, and coupled with rising operating costs in domestic coastal regions, the LED industry has begun to reshuffle: companies with good product quality, refined management, and normal capital operations continue to grow at a relatively high pace; some companies, due to extensive management or blind expansion, have experienced capital chain breaks—some went bankrupt, some shut down, some were reorganized. Zhang Xiaofei, president of the Gaogong LED Industry Research Institute, said that according to their research, approximately half of the 1,400 epitaxial equipment units are currently in a state of shutdown.

　　At the summit, Guan Zhibin, Sales Director and Senior Engineer at Jingneng Optoelectronics (Jiangxi) Co., Ltd., offered a vivid metaphor for the current situation of the LED industry: "spring for the industry, winter for enterprises." #p#分页标题#e#

　　Diagnosis: Six Major Bottlenecks Troubling the LED Industry

　　Chen Jing, president of the Shenzhen Semiconductor Lighting Industry Development and Promotion Association, believes that the development of China's LED industry is currently facing six major bottlenecks.

　　Policy and legal bottleneck: although governments at all levels have introduced many regulations to develop the LED industry, a complete set of standardized regulations is lacking; talent and management bottleneck: there is a shortage of enterprises managed in accordance with modern corporate systems; technology and quality bottleneck: core LED technologies are not in our country, and many enterprises are busy copying, resulting in uneven product quality; cost and price bottleneck: LED product prices cannot be brought down, making it difficult for products to reach thousands of households; market sales bottleneck: due to product quality and other issues, the market has also become difficult to enter; capital and funding bottleneck: despite the huge development prospects of the LED industry, few banks now dare to provide large-scale loans to LED enterprises, and venture capital and guarantee companies mostly invest in small shares.

　　The prescription for the industry requires a combined strategy

　　With the LED industry growing rapidly while companies continue to go bankrupt, where should the entire industry head?

　　Wang Dianfu suggested that enterprises should adhere to technological innovation and continuously create differentiated products; should attach importance to standards and actively participate in standard-setting; should attach importance to intellectual property rights and continuously accumulate more patents; should uphold quality first and pursue a path of specialization and high precision; should transform business models and establish market channels for semiconductor lighting; and should combine industrial capital with financial capital, use capital as a link to integrate the entire industry chain, and foster leading enterprises on the basis of specialized division of labor. #p#分页标题#e#

　　Chen Jing stated that the fundamental way out for LEDs lies in taking a combined approach and joining forces to conquer the market. Given that core technology is abroad, he believes we don't necessarily need the best technology, but we must definitely have the best products—we can import chips from abroad and then export products in large volumes; first focus on specialization, then seek to grow bigger and stronger.

　　He revealed that, in order to unite forces and form a powerful group, the Shenzhen Semiconductor Industry Development Promotion Association is working to build five major platforms: establish a professional manager service company to build a talent service platform; establish an industrial fund company to build an investment and financing service platform; establish an investment and energy-saving company to build a joint procurement and sales service platform; establish a public testing and inspection center to build an industry product standard service platform; and establish an internal and external exchange system to build an information service platform.