The national government provides financial support to manufacturers and consumers to help enhance the sector’s competitiveness.

China continues to push its LED program to boost the energy conservation campaign while strengthening manufacturing technology and domestic lighting market share.

The Ministry of Science and Technology and the State Council of China has released two detailed subsidy policies. The guidelines take off from the 12th Five-Year specialized and development plans respectively for the semiconductor illumination and the energy-saving and environmental protection industries. General and landscape lighting, backlighting and semiconductor devices are covered.

The first measure entails the extension of fiscal funding to companies that will lower their prices for products used in hospitals, schools, office buildings, villages and other establishments. The subsidy is equal to the indirect aid given to organizations on the procurement side.

The second rule involves an allocated amount for consumers purchasing energy-saving household appliances, new-energy cars, high-efficiency motors, and CFLs and LED luminaires.

In addition, R&D investments will be sustained to set up national photonics laboratories and develop advanced LED production technologies to support the 21 Cities of 10,000 Lights venture.

LED suppliers hope the strategies will not only expand their businesses but also enhance reputation.

Guangdong's scheme

The province of Guangdong has what is said to be the most ambitious project in China. It targets the installation of 30 million indoor LED luminaires and the replacement of 2 million high-pressure sodium streetlights by 2015.

The Guangdong Green Lighting Demonstration Cities is spearheaded by the Guangdong Provincial Department of Science and Technology. It is under way in nine cities, specifically Guangzhou, Foshan, Dongguan, Zhongshan, Zhuhai, Huizhou, Jiangmen, Zhaoqing and Meizhou.

The endeavor adopts the Energy Management Contracting or EMC model, integrating supply chain management and finance. This ensures investments are compensated with savings on electricity charges.

By far, the province has published four issues of recommended street- and indoor lighting products from about 100 enterprises offering them at subsidized prices.

Shenzhen Mason Technologies Co. Ltd is one of the suppliers in the catalog. It has 11 selected categories consisting of street-, tube, canister and downlights. The maker said the luminaires meet safety and EMC requirements. The units also comply with 10 specified parameters. These are average system illumination efficiency, color tolerance, CRI, power factor, product manufacturing and color space consistency, light comfort index, optical biological safety, reliability grade evaluation and recyclability.

Guangdong has also set aside nearly $4 billion as green industry investment fund to support new-energy programs and relevant enterprises.

Early setbacks

 
Overcapacity, falling prices and stiff competition are predicted to accelerate LED chip sector consolidation in the months ahead.

Seventy-five percent of the makers are small operations with fewer than 20 MOCVD systems. Those with between eight and 10 equipment will exit from the line this year, bringing down the supplier population to less than 30,  In coming years, there will be 10 companies left.

In 2011, a total of 95 businesses, including those being set up, made up the segment. Five hubs were formed in the Yangtze River and the Pearl River Delta regions, the Fujian-Jiangxi area, the north and other places in the south. The manufacturing zones in the north include Shandong, Liaoning, Shanxi, Shaanxi, Hebei and Jilin provinces, Beijing and Inner Mongolia.