LED street light enterprises are difficult to develop under the new loss model

"Happy and painful." Sitting opposite the reporter, Zhang Yusheng commented on the current status of LED, a hot emerging industry in the Chinese market.

Zhang is the executive vice president of China's large-scale LED lighting company Huaying Group, and LED street light products are one of Huaying's main business. "In the early days of the market, we once thought that LED street lights would become a breakthrough in the LED lighting market." Now he is unable to spread his hands, his eyes reveal a hint of helplessness.

But "happy and painful" has always been accompanied by the pathfinder of China's LED industry such as Huaying [18.84 0.96%]. "Happiness is because the industry has prospects and national policy support; pain is not profitable from the perspective of business management." Zhang Yusheng admitted to the reporter that Huaying entered the LED lighting industry in 2006. "There has been no money until now. in loss".

According to data from isuppli, more than 50% of the current LED lighting market in China is concentrated in streetlight projects. The ambiguity of the industry has emerged. In the early days of the LED lighting market, LED streetlights, which were supported by high-cost, government projects, were once highly anticipated.

The experience of Hua Tuo is not a case in the industry. In the interview with this reporter, many responsible persons of LED streetlights said frankly: "At present, 90% of enterprises engaged in LED street lamps are losing money."

"90% of corporate losses" traceability

"It is normal to make LED street lights, and it is not normal to lose money." Zhang Yusheng told reporters.

The reporter learned that since the LED industry is currently an emerging energy-saving industry, quite a few projects are carried out in the form of “demonstration projects”.

"The essence of the demonstration project is that the enterprise will advance the funds first, and then wait for the government to check the power saving rate and lighting effects, and then pay." Many business leaders who participated in the LED streetlight demonstration project bluntly said: "This model has a greater pressure on corporate capital. Accounts receivable are too high."

However, in the early stage of market promotion, the “demonstration project” project became a passive acceptance of enterprises without much choice.

In December 2007, the Shenzhen Hongmian Road LED replacement project installed by Hua Tuo was the first LED street light demonstration project in Shenzhen. “There was no problem after passing the test, but I have not received the payment yet.” Zhang Yusheng told the reporter that only in Shenzhen, Huaying participated in the renovation of LED street lights with more than seven sample roads, but no refunds were made.

An LED streetlight company executive who did not want to be named analyzed that although the national level supports the LED energy-saving industry in the direction of large policies, it will be greatly reduced to the implementation level of local governments.

Not only that, the above-mentioned industry insiders also believe that the relatively low electricity tariff in the Chinese market, to a certain extent, makes the government lack the motivation to promote the LED industry. Zhang Yusheng bluntly said: "The speed of government cooperation is not satisfactory."

This is not the whole situation of the loss of the LED street lamp industry. Our reporter learned that at the beginning of the LED street lamp market, the participating companies were mixed, resulting in a low-margin price fight at the beginning.

“Because municipal engineering generally does not easily replace new suppliers, the competition for the first round of winning bids is very important.” According to one industry insider, in this context, many companies adopt vicious competition of “low price”.

In the interview with this newspaper, Li Chunyong, the largest LED street lamp company in China, revealed in an interview with this newspaper that Qinshang Optoelectronics encountered many “low price” competitors in some of the bidding projects involved. “Many companies are losing quotations” .

Government-related industry

Li Chunyong analyzed that compared with the commercial market, the street lighting project consumes more power and the energy-saving effect is more obvious. Coupled with the government's guidance at the policy level, new entrants who have been transferred from other industries have taken the LED street lamp market as a breakthrough in the LED market.

“A lot of companies that have switched to the LED streetlight industry actually have more or less government relations.” Feng Jun, chairman of Shenzhen Yite Lighting, said that for a long time, the industry regarded LED street lights as a “government”. The relationship-based industry, "I think that as long as the purchaser is settled, the project will be won."

In this context, practitioners engaged in plastics, hardware, digital products and other lighting industry have poured in. "The new entrants only see the prospects, but lack technical reserves." Feng Jun bluntly said.

"In fact, the external factors are only the appearance of the loss of LED street lamps. The real reason is that the technical performance of a large number of corporate LED street lights is still unstable." Yu Wenjun, senior analyst of isuppli told reporters.

“Because of the external environment used by street lamps, it is far more complicated than indoor lighting. Therefore, LED street lamps have higher requirements for technical performance.” Li Chunyong also said.

According to a survey conducted by this reporter, the current domestic LED street lamp products are technically unstable in terms of light efficiency, illumination uniformity, color rendering, and service life. The main problem is that the light decay is too serious.

"Some LED street lamp products, less than half a year, the light decay will reach half." Zhang Yusheng analysis, the current domestic circuit control technology in LED street lights is not mature.

Our reporter learned that the "demonstration project" of LED street lights in many places is on hold due to unqualified acceptance.

In early 2009, in order to expand domestic demand, promote the development of China's LED industry, and reduce energy consumption, the Ministry of Science and Technology launched the “Ten Cities and Ten Thousands” semiconductor lighting application demonstration city program, which covers 21 domestic developed cities such as Beijing, Shanghai, Shenzhen and Wuhan. . However, according to our reporter, the current LED streetlight technology is still unstable, and many pilot cities are making slow progress.

Hold on or escape

The current status of LED street lighting industry's lack of profitability has led many LED lighting companies to re-examine industry opportunities.

"In the short term, we will not enter the LED street lamp market." Feng Jun, chairman of E-Tech Lighting, told this reporter that E-Tech will turn its attention to the industrial application market.

On June 26th, E-Tech Lighting signed a strategic cooperation agreement with the Emergency Rescue Promotion Center of the Ministry of Civil Affairs to fully enter the special LED lighting market in the emergency rescue industry.

"Although giving up the big cake in the LED street lamp market, the commercialization of LED in the sub-sector is just getting started, and the market is very malleable." Feng Jun told reporters that the technical difficulty relative to street lighting, indoor lighting and other industries is relatively Lower, the performance is relatively mature.

A similar transformation is the Huaying Group. Zhang Yusheng told reporters that in the current immature LED street lamp industry, Huaying will increase investment in the commercial market. It is reported that Huaying's indoor LED lighting products are currently being used in hotels and other markets.

"In the face of the dilemma of the LED street lamp industry, many companies choose to flee, in fact, it is not a good phenomenon." Some insiders believe that this will make the LED street lamp market concentrated to a few large manufacturers, which is not conducive to the healthy development of the industry.

Li Chunyong revealed that in 2009, the installed number of LED street lamps in the country was less than 300,000, of which more than 100,000 were used by Qinshang.

"The objective factors of the immature performance of LED street lamps do exist, but this industry needs to use the application of the market to drive the development of the industry." Zhang Yusheng said that the support of the government is crucial, "the government's assistance to the LED industry." Fall into practice."

The reporter learned that, compared with tens of thousands of enterprises in the traditional lighting industry, no one has a share of 1%. The number of domestic LED lighting companies is more than 3,000, the scale is very small, and the upstream components of the industrial chain such as LED chips and epitaxial wafers are Must be purchased from Japan Toyota Synthetic, Nichia, American Cree and other manufacturers. In October last year, the National Development and Reform Commission issued the "Opinions on the Development of Semiconductor Lighting Energy-Saving Industry", which clearly stated that by 2015, the key raw materials and more than 70% of the chips will be localized, and the upstream chip-scale production enterprises will reach 3-5.

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