China LED lighting subsidy program sees 110 firms compete for 20 slots

China LED lighting subsidy program sees 110 firms compete for 20 slots

Siu Han, Taipei; Alex Wolfgram, DIGITIMES[Monday 26 March 2012]

China announced an LED lighting subsidiary program at the end of February. The list of firms that are eligible has yet to be announced but industry sources noted that there are about 110 firms bidding for 20 slots, including firms such as Philips, Osram, Panasonic and Toshiba. There were few bids by Taiwan LED firms because many of them said that the announcement to apply was presented too late. They also said the rules for applying were not clear and that the guidelines were unclear.

The subsidy was developed by China's Development and Reform Commission along with the Ministry of Finance and is the first subsidy ever to be given from China's central government to promote LED products. During the second half of 2011, the LED industry saw demand slump, which caused many industries to shut down. This subsidy program is receiving much attention from industries as a result and is seen as a way to revive China's LED industry.

Industry sources said the subsidy will be divided into four categories - indoor lighting LED lamps, reflective self-ballasted LED lights, LED street lamps and outdoor lighting, and LED tunnel lights. Each category will be given five slots for firms and there will be an immense amount of competition. Chinese firms admit that the competition for the bidding is fierce even though they do not know the amount of the subsidies. However, strategic significance will be greater than actual profit gains, especially for public LED industries in China.

Bidding industries all want to win, especially the ones that are moving from the traditional lighting industry into the LED one. Companies such as Yaming does not care about costs in their pricing strategies and plan to thrust into as many LED manufacturers as possible. Sources say that the prices of products with the same type of specifications are very different. For example, the high-end price of a 9,000 lm LED street lamp can run as much as CNY9,200 with a low-end cost of CNY920. As for the 9,000 lm LED tunnel lighting, high-end prices run CNY4,000 with a low-end price of CNY869.

What's worth noting is that although Taiwan LED firms are eager to obtain a part of China's LED lighting subsidy program, the actual amount of Taiwan participants that applied were not as much as expected. Delta Electronics is one of the few Taiwan-based companies participating, but Everlight and Liteon have chosen to stay on the sidelines. Taiwan LED firms said privately that the subsidy was announced in less than a month's time and that they were worried about "hidden rules" behind the scenes.

LED firms said that even though international companies were competing for the bid, it is expected that the vast majority of subsidies will be given to Chinese firms. Although Taiwan's LED firms in large did not participate in the bidding, they will see indirect advantages of the money given to Chinese firms due to Taiwan's high-grade technology products that are within the supply chain of LED products.

Delta Electronics is one of few Taiwan-based firms competing for China's LED subsidies. Photo: Shihmin Fu, Digitimes, March 2012

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China LED lighting subsidy program sees 110 firms compete for 20 slots