Observe: Different strategies to deal with the three major problems of LED

In the first half of this year, the global economy as a whole slumped, product exports fell sharply, LED companies' costs increased, profits declined, and production and operations continued to deteriorate, revealing three serious problems. The first is the short-term problems caused by the economic cycle, the second is the inevitable problem in the development of the LED industry, and the third is the industrial environment. The three types of problems have different causes and different countermeasures.

First, enterprises should actively face the short-term problems caused by the economic cycle. The market economy is cyclical, and the boom and bust of the market occur alternately. The problems that the macroeconomic downturn has brought to the LED industry are temporary, and companies must face it correctly. Currently under the influence of the global economy, domestic and foreign demand is insufficient, and exports have fallen sharply. Many LED companies believe that the industry is facing a crisis and is unsustainable. But what needs to be affirmed is that the LED industry is still a sunrise industry. Since 2005, China's LED industry has been developing at a high growth rate of over 30%, and the demand for LED products both inside and outside is still promising. The current market penetration rate of LED lamps is about 5%. LED products also have a very large market space. The current situation is the temporary decline in exports and the relative surplus of production capacity. In the adverse market, enterprises must also seriously think about, identify the market position, and strive for survival after seeking survival and waiting for economic recovery.

Second, we must actively respond to the inevitable problems in the development of the industry. The rapid decline in prices and even accelerated decline is inevitable in the development of the LED industry. One prominent feature of the semiconductor lighting market is that LED lamps will appear as replacement products for incandescent lamps and energy-saving lamps for quite some time. Before the semiconductor lighting enters every household, the high cost and price of LED products will be one of the major obstacles. "Hayes's Law" is considered to be the "Moore's Law" of the LED industry, which states that "for a given wavelength of light (light color), the LED unit's unit lumen cost will be reduced by 90% every 10 years, and the luminous flux per 10 years Increase 20 times." LED as an alternative light source, its cost and price drop is inevitable, after 10 years LED products will be as cheap as energy-saving lamps, and performance will be better. In order to maintain a stable profit margin under this trend, companies must actively reduce costs to meet industry development requirements, so that production costs fall faster than product prices.

According to the law of economic development, rising labor costs and homogeneity of product competition are inevitable in the course of industrial development. This phenomenon has also occurred in textiles, automobiles, computers and other industries. However, looking at these issues from another perspective is the most fundamental driving force for the company's innovation and development and for improving its competitiveness. Rising labor costs force labor-intensive companies to upgrade their technology, strengthen cost control, change production methods, and increase production efficiency. Product homogeneity competition forces companies to increase profits through technological innovation and model innovation. Some companies will be eliminated from the market due to falling profits. And another part of innovative companies will form core competitiveness to promote industrial development.

Finally, the issue of industrial environment should be solved scientifically and cautiously. A good industrial environment is a necessary condition for the healthy and sustainable development of the industry. It requires the joint efforts of companies, associations, alliances, and industry-related government departments. The industrial environment can be improved through the methods of communication, coordination, negotiation, or administration. However, due to the multiple factors involved, it is easy to deal with each other, and it is necessary to solve it scientifically and cautiously.

The methods and methods of financial subsidies need careful study and careful implementation. Fiscal subsidies are a “double-edged sword”. The positive aspect is that financial subsidies have a significant effect on the promotion of industrial development. Subsidies can attract domestic and foreign investment in a very short period of time, drive high-speed growth of production capacity, and stimulate market demand; but negative impacts. It is a subsidy to the production process that can easily lead to overheated investment, overcapacity, and waste of resources. It also provides a basis for other countries to impose countervailing duties. Financial subsidies are necessary, but they must be more reasonable and compliant, and must respect the objective laws of economic development. They must also meet or circumvent the rules of the World Trade Organization (WTO).

The collection of import and export taxes and fees for certain LED related products is not synchronized with the national industrial policy. The National “12th Five-Year Plan for Energy Saving and Environmental Protection Industry Development” issued in June 2012 listed the LED as an energy-saving and environmentally friendly product. In September, the State Council issued “Several Opinions on Promoting Stable Growth of Foreign Trade” (Guofa 49). "Expanding the export of mechanical and electrical products, high-tech, high-value-added products, and energy-saving and environmentally-friendly products that are technically and financially intensive."

The national industrial policy encourages the import and export of LED-related products, but there are still some tax and fee systems for the import and export of LED products to be improved. In terms of product exports, the export tax rebate for LED lamps is still based on the "13% for other electric lamps and lighting equipment" tax rate, while the export tax rebate for energy-saving lamps is 17%. The export tax refund for LED lamps is lower than other energy-saving products. As for the import of raw materials, since 2011, imports of LED sapphire substrates have been subject to a 10% consumption tax, and LED sapphire substrates should be industrial raw materials, but consumption tax will be levied on “jewelry and jade”.

Strengthen the standardization work and guide the orderly competition in the LED market. At present, the LED market has a phenomenon of “bad money drives out good money”. Low-quality, low-priced products flood the market and disrupt market order. Consumers lack trust in the quality of domestic LED products and seriously damage the healthy development of the industry. The orderly competition in the product market requires the guidance of standards and other regulatory documents. In the market economy, regulatory documents (technical specifications, standards, rules, guidelines, etc.) provide a scientific basis for the quality of products entering the market. China's semiconductor lighting/LED industry related standards are actively being formulated. As of September 2012, a total of 146 LED-related standards have been issued, approved and developed, covering LED substrate materials, chip devices, light source components, and LED lamps. , engineering applications and testing methods and other aspects. However, it should be noted that the task of standardization is not only the establishment of standards, but also the organization of implementation standards and the supervision of the implementation of standards. To regulate market competition through standards and other normative documents and guide the healthy development of the industry, it is necessary to strengthen standardization work, and in particular to strengthen the supervision over the implementation and implementation of published standards.