Chinese LED or speculation

Chinese LED or speculation. This has led to a dilemma in the Chinese LED industry. Now the only thing these companies can look forward to is the single, largest and most unpredictable customer of the government, but when you are facing a government, you have to be careful. Government-purchased businesses tend to be very slow, and whether they can be negotiated largely depends on whether you have a strong relationship at the top of the government, not how good your product is.

Now many Chinese companies, entrepreneurs, investors and billions of government funds are madly investing in the field of LED (Light Emitting Diode). The technology that GE invented 48 years ago can really make China global. Is the technology field a leader?

LEDs, or light-emitting diodes, have been invented since half a century ago in Syracuse, New York, USA, and many predict that LEDs will replace the incandescent lamps invented by Edison into the most important lighting fixtures for humans.

In comparison, LEDs have many advantages. The most important thing is that it lasts longer than traditional incandescent lamps and neon lamps, and consumes less energy for the same amount of illumination.

In this way, it seems that the application of LED is not a problem. But in fact, the packaging technology and cost involved in producing LED lamps are higher than traditional bulbs. LED technology has made significant advances in recent years, but LEDs are solid-state components that involve complex semiconductor layering techniques.

LEDs and the like require a large number of complicated circuit designs and heat sinks, which are very sensitive to temperature. Each individual LED is just the size of a Christmas light, and the light produced is tiny. Therefore, to release the same brightness as ordinary street lights, LED lamps need to be arranged in dozens of such light-emitting components.

Like the non-polluting car engine and jet passenger aircraft, the universal use of energy-efficient LED lights will become a new bright spot in the future, getting closer and closer to our lives.

In China, the enthusiasm for LED in the commercial market is now unprecedentedly high. In this market worth tens of billions of dollars, a number of leading companies from China will emerge.

Regardless of the number of companies engaged in LED manufacturing or the amount of capital invested in this field, China is larger than other countries and regions in the world. On the Alibaba website, more than 2 million Chinese companies are selling LED products, which is hundreds of times more than Taiwanese companies that also produce LEDs. In Shenzhen alone, there are 280,000 companies supplying LED lamps or light bulbs.

Last year, I participated in a trade exhibition in the optoelectronic industry. There were hundreds of companies participating in the exhibition, but most of them were engaged in the design, production and manufacture of LED street lights, traffic lights and control systems.

Seeing this, you can't help but think about whether China is using LED traffic lights everywhere. In fact, although this technology has matured, LED traffic lights are still not common. But the Chinese government is now very willing to invest a lot of money in the future to achieve this vision. The promulgation of this policy has attracted a large number of companies to enter this field.

I have good examples to illustrate this point. One of the two business owners that our company has worked with, one of them is the leading company in the jewelry industry, they are all investing in LED street light projects. Moreover, many of the venture capital and private equity funds we work with are also very eager to invest in China's LED industry.

Of course, foreign countries are also full of confidence in the future of LED, but this enthusiasm can not be compared with China.

In order to succeed in this industry, it is necessary to have advanced large-scale production technology and superb research level. China is fortunate to have these two important factors.

However, even if these two points are achieved, the problem of LED civilian use cannot be solved. The energy-saving effect of LED lights is not short-term, it takes 8 to 10 years to be reflected. That is to say, in order to achieve green environmental protection, buyers need to pay higher prices today. In reality, how many families or individuals are willing to spend this big price to buy products that take so long to balance their income and expenses?

In this way, only the government took the lead to pay the bill. The Chinese government is the most generous in this regard. From top to bottom, governments at all levels plan to replace existing traditional street lighting with LED lights in the future. In theory, the market value of this part of the single has reached tens of billions of dollars. It is no wonder that there are millions of Chinese companies chasing this market in madness.

All governments in the world are not as decisive as private companies in considering the benefits and costs, but the Chinese government has expressed great determination in energy conservation and is determined to support the domestic LED industry. If successful, a large amount of government procurement will reduce production costs and thus make LED products reach a balance point of price competitive advantage. In this way, LEDs can be universally accepted, and China's LED market will be the largest and most dynamic in the world.

In China, I have not seen LED street lights in person. However, the samples from the trade fairs seemed to be of good quality. When the government orders fall, who can see the machine and receive these orders, everyone is still guessing.

This has led to a dilemma in the Chinese LED industry. Now the only thing these companies can look forward to is the single, largest and most unpredictable customer of the government, but when you are facing a government, you have to be careful. Government-purchased businesses tend to be very slow, and whether they can be negotiated largely depends on whether you have a strong relationship at the top of the government, not how good your product is.

Buying from friends or colleagues is more reasonable than buying from the most affordable place. Now LED technology is relatively mature and perfect, and many companies have the strength to produce these lamps. As a result, if the government distributes orders evenly to these companies, then no single company can receive enough quantities to achieve efficient scale production, and it is difficult to cultivate a world-leading production company.

In order for LED lights to achieve huge market potential, it is necessary to reduce the cost, at least to the level of fluorescent lamps. We know that fluorescent bulbs are 8 to 10 times longer than ordinary incandescent bulbs, while energy consumption is less than one-third. Fluorescent lamps have a much shorter payback period than LEDs and are very popular in homes and offices.

China has many opportunities to develop LED lighting and bring it to the next level. I am also very optimistic about the competition and vigorous entrepreneurial scene in this field. It is hope or hype, and there will be a result soon in the next three to five years.

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